Here are six resolutions for a saner, faster-growing, and more prosperous 2014:
#1: Privatize USPS.
The United States should follow the lead of other western nations (including Finland, Sweden, the Netherlands, and Britain) in deregulating and privatizing mail service. It is a form of economic insanity (which can only be explained by the power of the postal union and its political friends) to require daily delivery of mountains of mostly junk mail to households throughout the U.S. The U.S. Postal Service should have to compete with FedEx, UPS, and other private concerns in the delivery of first-class mail. Shame on members of the U.S. Congress — both Democrats and Republicans — for refusing to go along with the Postal Service’s stated desire to end Saturday service and close little-used offices.
#2: Follow suit with airports, utilities, etc.
Don’t stop there; look for ways to benefit consumers and taxpayers alike by deregulating or privatizing other public services, with airports, roads, and public utilities at the top of the list. There is a reason why vacation travel is much cheaper and more convenient within European and Mediterranean countries than it is in North American and the Caribbean. It is because of widespread airport privatization in Europe and greater reliance on private concessionaires and market forces to allocate scarce resources. As the well-known travel writer Rick Steves says on his website, “Ryanair routinely flies from London to any one of dozens of European cities for less than $20” (through its most heavily discounted fares paid weeks or months in advance).
#3: Don't buy the "living wage" rhetoric.
Recognize the folly of calls to increase the minimum wage (now $7.25 nationally) to $10 or more at a time of sky-high youth and minority unemployment. Why would a fast-food restaurant (or any other business) want to hire someone for $10 an hour who adds — say — only $6 an hour in additional profit (before counting the cost of his wages)? To do so would be to accept a $4 an hour loss. Raising the minimum wage thus has the perverse effect of causing unemployment. It artificially reduces the demand for labor and makes the first rung on the job ladder higher than it ought to be for young and unskilled workers.
#4: Break the health care oligopoly.
The next stage in the seemingly never-ending debate over health care (now entering its sixth year) may be between full-scale nationalization — as one way of rescuing the Affordable Care Act from going into a full-scale “death spiral” in 2014 — and the creation of a much more market-oriented system than the status quo ante. The starting point for a market-oriented approach should be in freeing (and, indeed, forcing) insurers to compete across state lines on both price and range of product offerings, without a great assortment of government dictates or mandates at either the state or federal level.
That would give individual consumers the right to buy low-cost, low-priced health insurance — from a far larger universe of sellers. And it would cause big insurers to lose the monopolistic or oligopolistic positions they have built up over the years through assiduous lobbying at statehouses around the country. Their cozy arrangements with state regulatory offices have resulted in mandates to cover everything from hairpieces and contraceptives to acupuncture and marriage counseling. Opening the insurance market to open-ended interstate commerce would be an all-important first step away from ever-increasing regulation and government control to a more competitive marketplace causing all producers (both insurers and health care providers) to reduce costs and offer products that meet customer demand.
#5: Get comfortable with free markets.
Recognize the failure — and fatuity — of endlessly repeated government attempts since the Russian Revolution of almost a century ago to mastermind economic growth and job creation.
Like it or not, the proponents of big government will never fail to out-promise those who deplore the waste and misallocation of resources that inevitably occur whenever government does not feel obliged to set priorities or to live within its means. On the other hand, as Margaret Thatcher put it, there is strength and consolation in knowing that “The facts of life are conservative.”
# 6: Choose growth over class warfare.
Be prepared for the proponents of big government to try to turn every debate (whether it is about health care, privatization, the minimum wage, entitlement reform, curbing the power and privileges of public sector unions, or any other issue) into another rant on what President Obama has called “the defining challenge of our time, (namely) a dangerous and growing inequality and lack of upward mobility.” As Robert E. Grady pointed out in an article in the Wall Street Journal on Dec. 23 (“Obama’s Misguided Obsession With Inequality”), Obama greatly exaggerates income disparities between different quintiles in the distribution of income by ignoring the effects of high taxes on high earners and — for lower earners — the effects of income tax rebates, food stamps, and other welfare. His numbers also ignore the considerable indirect benefits such as employer-provided and taxpayer-subsidized health insurance going to many people in middle income tax brackets.
But the real take-away from Grady’s article is that faster growth is what the poor and the middle class really need in order to achieve a better life for themselves and their children. That’s faster growth, not more income redistribution. It’s the opportunity for self-improvement, not the fall back of welfare dependency.