When I was in high school, I had a job as a counselor in a summer camp. One of the things I remember doing was stocking the cola vending machines. The camp director could buy the colas in bulk (this was before Sam's Clubs made this task easier). The average retail price of a single cold soda was 35 cents. But the camp director set all of the machines to accept two quarters and not give any change. The reason he gave was that he did not want the grade-school campers to have to worry about putting in exact change, or forgetting their change in the machines when the soda was dispensed.
What do you think was the economic effect of the 30% increase in the price? There was no reduction in the number of colas sold. The kids didn't care what it cost. Their mothers had given them money to spend at camp, and they were going to spend it all, either on snacks or T-shirts. They didn't care.
To paraphrase the Apostle Paul, when I was a child, I spent like a child.
Fast forward to today. President Obama was giving a speech on the radio recently, touting the benefits of his Health Care Plan. He pointed out that now young people can be covered under their parent's health plan up to age 26. A co-worker was surprised and pleased to hear this, as she has a son who was just released from prison, and he needs dental work. They were wondering how to get his extensive dental work paid for since he had no insurance of his own. Now she plans to add him to her family policy, and claim his dental treatment against our company's group health policy.
She asked me what I thought of the new policy. I need my job, so I didn't tell her what I really thought. I said it was nice that her son, who had a need, could now find a way to get that need met without a huge cost to the family.
What I really wanted to say was this is a huge cost to society. My insurance premiums are now going to go through the roof because your son can't find a job or pay for his own treatment. When Congress was debating this bill, the Obama administration put out the word that insurance premiums would go down as a result of this legislation. But after the bill was passed, the Office of Management and Budget estimated that premiums would go up as a result of the new changes in the law. So we were lied to in order to get this bill passed, and Obama can now cite this as a major accomplishment of his presidency.
Responsible adults have to bear additional costs so that children can enjoy a new government benefit. And in this case, the word "children" refers to persons older than 21 years of age, who are able bodied and should shoulder their own load and pay their own way. This is what happens when children choose the government. Remember that Obama was swept into office by a rise in first time voters, 18 to 24 year olds who have not had sufficient life experience to understand the consequences of government intervention.
Alas, it has always been thus. I remember when colas were 35 cents in a machine, 25 cents if you bought them at the grocery store. But then someone in the FDA decided that all edible consumables needed to be labeled with calories, fat grams, sugars, etc. This caused a huge cost to the cola companies and packagers. And they passed those costs on to consumers. And even though this was a one-time cost, the companies continued to charge the higher prices, because the consumers showed that they were willing to pay the extra cost. Overnight, colas went up from 35 cents to 50 cents. Today, a cola can cost from $1.25 to $2.00. Part of the price increase is from the government mandated FDA labels years back. But when is the last time you read the calorie or fat content on your cola can?
I am afraid the same thing will happen with the increased premiums on health insurance. Unless somebody rises up and repeals the health care reforms, then consumers will all take it for granted. They will not look at their paycheck stubs and notice that last year their insurance premiums were 30% less. Or if they do, they will not link it with the government reforms that caused the increases. We will still be like children--we don't care what it costs, we just want more sugar.
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