Monthly Archives: September 2012

You Will Buy This

In my book Never Allow A Crisis To Go To Waste, I discuss how German industrialist, Walther Rathenau, attempted to create a third way socialism called Zwangswirtshaft (controlled economy) where the government did not own the means of production, but rather used its regulatory, taxing and spending power to achieve the socialist goals of directing the economy to redistribute wealth. Under Zwangswirtshaft, the state would tell industry what to make and then eliminate competing goods to compel the citizens of Germany to buy the government directed goods and services.

Barack Obama’s “clean energy economy” and Obamacare policies are implementations of German Zwangswirtshaft socialism.

Obamacare directs the health insurance industry to issue policies designed by the Department of Health and Human Services and then requires you and I to buy these policies or pay a fine.

One of the elements of Obama’s “clean energy economy” is to promote the use of “renewable” ethanol based fuels. The promotion started with the government compelling the oil industry to produce the E10 blend of 10% ethanol and 90% gasoline, which the government subsidizes to make it cheaper than straight regular gasoline.

When American consumers in a free market declined to buy enough E10 to suit the Obama administration, the EPA compelled oil refineries to produce an E15 blend with 15% ethanol in it. When the bureaucracy realized that a 15% ethanol blend was so corrosive that only certain more expensive cars and trucks made after 2001 could run on the stuff and almost no other vehicles and appliances, the EPA like true commissars then decided to correct their mistake by imposing a regulation requiring you to buy a minimum of four gallons if you made a purchase of E15 fuel.

It is doubtful that American consumers will take too kindly to being ordered to buy more of a product they do not want. Sometimes the dogs just do not like the dog food.

Then next step will be for the Obama EPA to command us all to buy ethanol blends of gasoline like we are being commanded to buy Obamacare insurance policies. Unless we run the commissars out of Washington first, that is.

We Are Practically Giving Them Away!

Barack Obama’s nationalized automaker, General Motors, has been bragging of late that it is now selling thousands of the battery car the president directed them to produce – the Chevy Volt.

What “Government Motors” studiously avoids discussing is the massive $30,000 a vehicle loss it takes with the sale of each Volt in order to get this green Edsel off the lots. The Washington Times reports:

It costs $60,000 to $75,000 to build a Volt, including development, manufacturing and raw materials, estimates Sandy Munro, president of Munro & Associates, a Troy, Mich., a company that analyzes vehicle production expenses for automakers. Much of the cost comes from an expensive combination of two power systems — electric and gasoline. With a sticker price of $40,000, minus the $10,000 the company pays in incentives, GM gets roughly $30,000 for every Volt. So it could be losing at least $30,000 per car.

2/3 of the Volts reported as sold by “Government Motors” are actually rented out for a couple years under cut-rate leases subsidized by our tax money. Forbes magazine reports:

With additional subsidies from GM (that would be you and me), Chevrolet dealers in August were offering two-year Volt leases for as little as $250 down and $199/month…

The giveaway lease cars are initially bought by dealerships at cost, which Bob Lutz says is $37,000. Then they pocket an additional $7,500—the Volt subsidy that Obama proposes raising to $10,000—paid by you and me.

Two years later they get the car back. Given the ridiculous lease terms, there’s probably a pretty low limit on the free mileage, say, around 20,000. Now there’s a low-mileage used Volt out there that they can probably sell for $34,000 (a price lower than the average new one minus the subsidy) So each dealer makes a hefty $5,000 in lease fees, $7,500 in our money, and an unknown (lowball: $3,000) “incentive” from GM for the giveaway lease that’s matched by the lower price for the resale car. That’s $12,500 per car. Not a bad margin, and with good PR to boot.

Hell, they are practically giving cars away!

Of course, “Government Motor’s” current losses on the Volt do not even begin to account for the billions of dollars of our tax money the Obama administration has spent to develop battery cars in order to save gas and the planet. By one estimate, we taxpayers have paid between $3 and $7 per gallon saved by the president’s battery cars.

This is what happens when a socialist government operates an auto manufacturer using your tax money.

Rationing Socialism – Part II

Socialized health insurance always ends up imposing care rationing because offering care for below cost or “free” creates an artificially high demand the government cannot afford. In my book Never Allow A Crisis To Go To Waste, is discuss how Obamacare rations care to the elderly by imposing a cap on Medicare expenditures and then tasking an unelected board – the IPAB – to decide what the government will and will not pay for. After insurance premium inflation spiked from 2.5% in 2010 to 9% in 2011, the same folks that brought us Obamacare proposed to ration all health care in the United States:

Under the proposal, the major public and private players in each state would negotiate payment rates with service providers such as hospitals. The idea is to get away from paying for each individual test and procedure. Negotiated rates could be based on an entire course of treatment. Payments would have to fit within an overall budget that could grow no faster than the average rise in wages.

The spending limits would be enforced by an independent council, but crucial details need to be spelled out. In Massachusetts, for example, budget-busting providers will be required to file plans with the state laying out how they’ll amend their spendthrift ways.

The plan here is to have the government direct American health care like a giant HMO – paying providers a flat rate per patient and then depending on the providers to ration care to keep their own expenses under control. The difference between this proposed government HMO and a private HMO is that you could buy additional insurance in a free market, but cannot under a government global spending cap.


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