Hsieh RCM OpEd: Why is Creating Value Good, Profits Bad?

Jan 192012

The 1/17/2012 edition of Real Clear Markets has just published my latest OpEd, “Why Is Creating Value Good, Profits Bad?

It’s not directly related to health care policy, but rather the broader theme of defending the virtue of the profit motive in a free, capitalistic society. (I do use insurance as an example of how value is created). Here is the opening:

“Profit” is a dirty word. Profit-seeking businessmen are stock villains in Hollywood movies. “Occupy Wall Street” protestors demand, “People not profits” (whatever that means). Companies reporting healthy profits are automatically assumed to be exploiting customers and can only atone for this by “giving back” to their communities. “Making a profit” has an unsavory, morally suspect taint.

Yet simultaneously, Americans have a far more positive view of the concept of “creating value.” The mainstream press lauds visionary businessmen who “create value,” such as the late Steve Jobs of Apple. The business literature routinely emphasizes the importance of “creating value.” So many organizations wish to be seen as “creating value” that it has become a business cliche, like “best practices” and “thinking outside the box.”

But in a free society, “creating value” and “making a profit” are just two sides of the same coin…

(Read the full text of “Why Is Creating Value Good, Profits Bad?“)

Those who earn honest profits by creating value should be proud of this fact.

I’d like to thank attorney-blogger Doug Mataconis for providing the Tweet which I cited later in the OpEd, as well as pointing me towards the Wall Street Journal piece on Bain Capital that I cited.

Dubai: Slave Society

Jan 112012

Last week, I ran across a fascinating article on the society and economy of Dubai: The dark side of Dubai by Johann Hari. (It’s from 2009, but no less interesting because of that.)

The whole shining metropolis — recently featured in MI4 — is built on a horrifying foundation of slave labor:

Sahinal Monir, a slim 24-year-old from the deltas of Bangladesh. “To get you here, they tell you Dubai is heaven. Then you get here and realise it is hell,” he says. Four years ago, an employment agent arrived in Sahinal’s village in Southern Bangladesh. He told the men of the village that there was a place where they could earn 40,000 takka a month (£400) just for working nine-to-five on construction projects. It was a place where they would be given great accommodation, great food, and treated well. All they had to do was pay an up-front fee of 220,000 takka (£2,300) for the work visa – a fee they’d pay off in the first six months, easy. So Sahinal sold his family land, and took out a loan from the local lender, to head to this paradise.

As soon as he arrived at Dubai airport, his passport was taken from him by his construction company. He has not seen it since. He was told brusquely that from now on he would be working 14-hour days in the desert heat – where western tourists are advised not to stay outside for even five minutes in summer, when it hits 55 degrees – for 500 dirhams a month (£90), less than a quarter of the wage he was promised. If you don’t like it, the company told him, go home. “But how can I go home? You have my passport, and I have no money for the ticket,” he said. “Well, then you’d better get to work,” they replied.

Sahinal was in a panic. His family back home – his son, daughter, wife and parents – were waiting for money, excited that their boy had finally made it. But he was going to have to work for more than two years just to pay for the cost of getting here – and all to earn less than he did in Bangladesh.

Then, at the air-conditioned luxury of the mall:

I approach a blonde 17-year-old Dutch girl wandering around in hotpants, oblivious to the swarms of men gaping at her. “I love it here!” she says. “The heat, the malls, the beach!” Does it ever bother you that it’s a slave society? She puts her head down, just as Sohinal did. “I try not to see,” she says. Even at 17, she has learned not to look, and not to ask; that, she senses, is a transgression too far.

That kind of evasion is bad enough. Even worse is the evasion required by the Westerners who actively participate in this slavery:

…one theme unites every expat I speak to: their joy at having staff to do the work that would clog their lives up Back Home. Everyone, it seems, has a maid. The maids used to be predominantly Filipino, but with the recession, Filipinos have been judged to be too expensive, so a nice Ethiopian servant girl is the latest fashionable accessory.

It is an open secret that once you hire a maid, you have absolute power over her. You take her passport – everyone does; you decide when to pay her, and when – if ever – she can take a break; and you decide who she talks to. She speaks no Arabic. She cannot escape.

In a Burger King, a Filipino girl tells me it is “terrifying” for her to wander the malls in Dubai because Filipino maids or nannies always sneak away from the family they are with and beg her for help. “They say – ‘Please, I am being held prisoner, they don’t let me call home, they make me work every waking hour seven days a week.’ At first I would say – my God, I will tell the consulate, where are you staying? But they never know their address, and the consulate isn’t interested. I avoid them now. I keep thinking about a woman who told me she hadn’t eaten any fruit in four years. They think I have power because I can walk around on my own, but I’m powerless.”

The only hostel for women in Dubai – a filthy private villa on the brink of being repossessed – is filled with escaped maids. Mela Matari, a 25-year-old Ethiopian woman with a drooping smile, tells me what happened to her – and thousands like her. She was promised a paradise in the sands by an agency, so she left her four year-old daughter at home and headed here to earn money for a better future. “But they paid me half what they promised. I was put with an Australian family – four children – and Madam made me work from 6am to 1am every day, with no day off. I was exhausted and pleaded for a break, but they just shouted: ‘You came here to work, not sleep!’ Then one day I just couldn’t go on, and Madam beat me. She beat me with her fists and kicked me. My ear still hurts. They wouldn’t give me my wages: they said they’d pay me at the end of the two years. What could I do? I didn’t know anybody here. I was terrified.”

One day, after yet another beating, Mela ran out onto the streets, and asked – in broken English – how to find the Ethiopian consulate. After walking for two days, she found it, but they told her she had to get her passport back from Madam. “Well, how could I?” she asks. She has been in this hostel for six months. She has spoken to her daughter twice. “I lost my country, I lost my daughter, I lost everything,” she says.

As she says this, I remember a stray sentence I heard back at Double Decker. I asked a British woman called Hermione Frayling what the best thing about Dubai was. “Oh, the servant class!” she trilled. “You do nothing. They’ll do anything!”

The psychological contortions required to willingly relocate to a slave society, then actively participate in such slavery, is just mind-boggling. As one woman was quoted in the article, “All the people who couldn’t succeed in their own countries end up here, and suddenly they’re rich and promoted way above their abilities and bragging about how great they are. I’ve never met so many incompetent people in such senior positions anywhere in the world.” That mentality — delusional and incompetent yet ambitious — seems to be fertile ground for embracing the practice of slavery.

I’ve already quoted too much of the article, but so much else in it is deeply fascinating — and heartbreaking. So go read the whole article. You won’t be sorry to know what “exploitation of the workers” and “environmental destruction” really means.

Finally, my friend Kirez posted the following comment on Facebook, which I’m including here with his permission:

I recall reading this article when it was published. I witnessed many of these labor camps firsthand; it was a horrifying experience.

It’s not easy to see if you’re there simply as a tourist. But even when I wasn’t exploring where I wasn’t supposed to be, if I simply went into a grocery near one of these labor camps where the pakistanis and indians and burmese in large groups would go to buy their groceries, the racism (in these places even more than most others) was so palpable, it seemed a theatre spectacle: I would walk into a store, where gangs of pakistanis or indians were trudging along, and the (Indian) owners of the stores would come running, falling over themselves, bowing to me and calling me sir, and offering to help me with my shopping and finding me special products or deals… for no reason whatsoever except that I was white and had honored their store with my presence.

I first noticed the workers when I was acting as a tourist, and went out to the construction sites of the islands to look at the buildings (I saw a lot of really bad construction practices… not only safety issues, which were normal, but severely faulty lack of fortification and structural issues, like neglecting rebar through cinderblock walls, etc.) I saw buses full of pakistani workers coming to and from the work sites. I knew the city (Dubai) pretty well, but these workers didn’t live in the city; the buses went out of the city into the desert. At first I simply watched the buses coming and going and felt very sorry for the workers, because the heat was overbearing for us in an air conditioned luxury car… and I could see them slumped against windows, sleeping, in the burning sunshine. These images burned into my mind, and caused me to start noticing the shanty towns in the desert outside the city. Eventually I would visit several; later I would meet the workers as they worked on projects where I was working — later I even hired some workers to build pullup bars, squat racks, jump boxes and other equipment for me.

The cases of abuse were innumerable; it seemed to be the norm.

But I was overworked with my own projects… in a final, ultimately painful and frustrating insult to my powerlessness there, I learned that the mysterious traffic of men to the apartment underneath ours was explained by the slavery of a 9-year-old girl. They had kept her very effectively hidden from me for months, while I had watched men come to the apartment in singles or couples at all hours of the night, but I never saw them leave with bundles, never smelled anything, never saw weapons… I didn’t get it. I had only 72 hours left in the country when a pakistani tried to steal some of my exercise equipment (outside — this attempted theft was very unusual), and the woman who kept the girl, downstairs, came running out of her apartment to tell me, in arabic, that they were stealing my equipment… and the 9-year-old girl appeared in the door she had left open. I then got to watch local police detectives bumble the investigation, while I was completing my work, packing my household, selling my possessions and preparing to depart.


Videos: An Early Look at the Election and GOP Candidates

Dec 162011

In Sunday’s Philosophy in Action Webcast, I took an early look at the 2012 election, then surveyed four GOP candidates — Mitt Romney, Newt Gingrich, Ron Paul, and Gary Johnson. I’ve posted all five questions as videos, and so here they are!

The first question was:

What’s your view of the upcoming 2012 election? By what standards do you judge the presidential candidates?

My answer, in brief:

In a presidential candidate, I’m not looking for either John Galt or “Anyone But Obama.” I’m looking for someone who will do more good than harm to the cause of liberty in America.

Here’s the video of my full answer:

The second question was:

Should I support Mitt Romney for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Romney deserve the vote of advocates of individual rights in the primary or the general election?

My answer, in brief:

Mitt Romney is a smooth talker, but his proposal reveal that he has no understanding of individual rights or the economic problems facing America. He’s no better than Obama – and likely worse, because the opposition will vanish. I cannot recommend voting for him in the primary or the general election.

Here’s the video of my full answer:

The third question was:

Should I support Newt Gingrinch for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Gingrinch deserve the vote of advocates of individual rights in the primary or the general election?

My answer, in brief:

Newt Gingrich is explicitly theocratic, and a major threat to the separation of church and state. He advocates and practices “active governance,” meaning right-wing social engineering, not liberty. Like Obama, he is enamored of bold transformative ideas, which could be okay or horrible for liberty. I cannot recommend voting for him in the primary or the general election.

Here’s the video of my full answer:

The fourth question was:

Should I support Ron Paul for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Paul deserve the vote of advocates of individual rights in the primary or the general election?

My answer, in brief:

Ron Paul is not even libertarian, but a neo-confederate conservative Christian, albeit with some grasp of basic economics. He’s a rationalist, driven by ideology, and not open to facts. He would be very dangerous to elect as president, not just for actual policies, but as a supposed advocate of liberty. I cannot recommend voting for him in the primary or the general election.

Here’s the video of my full answer:

The fifth question was:

Should I support Gary Johnson for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Johnson deserve the vote of advocates of individual rights in the primary or the general election? Also, should supporters of Gary Johnson vote for him on a Libertarian Party ticket?

My answer, in brief:

Gary Johnson is not John Galt. However, he’s fundamentally oriented toward facts, plus he has good basic principles about liberty. Alas, he was shut out from the race by the media and the establishment GOP. I recommend voting for him in the primary, as well as in the general election, if he runs as the Libertarian Party candidate. I still reject the Libertarian Party, but a protest vote can be delimited to endorse him and not the party.

Here’s the video of my full answer:

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All posted webcast videos can be found in the Webcast Archives and on my YouTube channel.

Real World Effects of ObamaCare

Dec 142011

One of my friends posted the following to Facebook, and she has graciously given me her permission to repost it here. She has asked that I refer to her as “Dr. Monica H.”:

In Which I Detail How Obamacare Will Work for Me

Currently, I am a college professor at 3 campuses in the Denver area. I prefer not having administrative duties and would rather focus on teaching and research. Until we move (this is complicated), finding a FT job isn’t likely, but I’m basically happy. I make what a full time faculty member makes, but that means I don’t get healthcare because my work is split at multiple institutions, 2 of them community colleges. So I am responsible for my own healthcare, but I am OK with that, since I don’t really use the traditional healthcare system for anything but very serious emergencies. I am not a big fan of medicine as it is practiced in this country, so I do most of my own lab testing and “alternative” treatment.

But never fear. My healthcare “problem” will be solved in 2014 when Obamacare kicks in. That’s because the college has been told by the Feds that they must provide community college instructors who work more than 3/4 time (that’s me) with health insurance. That would be me. I’m going to get health insurance! Yay, right?

How will the college respond to this? Likely by hiring more very part time instructors and taking work away from current instructors that teach nearly a full-time load. This is not speculation: I expect this to gradually be implemented over the coming 2 years, as detailed in an email I just received from the administration. This will be so they don’t have to pay the insurance mandated by the federal government. I won’t simply be able to spread out my work over 4-5 community colleges in response, because the new regulations apply to all community colleges in Colorado as a whole. In other words, the state won’t view, say, Front Range CC and CC of Denver as two separate institutions when it comes to health insurance. It will view them as one. That means instead of teaching 4-5 classes per semester, I’ll be limited to 1. The number of instructors will probably triple, depending on the department.

Yep, I’m sure on a salary 1/4 to 1/5 what I make now, I’ll be ever so capable of paying for mandated insurance! Thanks, Obama!

A very practical example of the types of unanticipated effects of such legislation. For those of you who wonder why I’m no longer all that excited about the government thinking it knows best for me and every aspect of my life, this is why.

First, I very much appreciate this sort of “in the trenches” real-world report of how ObamaCare is hurting Americans. I hope more of our elected officials take heed of what their policies are doing to their constituents.

Second, many on the Left actively want Americans to be frustrated with private insurance industry under ObamaCare. That way they can say, “See, we tried it the ‘free market’ way and it failed; that’s why we need a government ‘single-payer’ system”. (Of course, the failure would be due to government policies that destroyed the free market, not the free market itself.)

Finally, these perverse effects of ObamaCare will affect many people all across the economic spectrum by making it harder for employers to offer full-time jobs to willing employees. For more details, see the following from James Sherk of The Heritage Foundation: “Obamacare Will Price Less Skilled Workers Out of Full-Time Jobs“.

Here’s a critical image:

[Crossposted from FIRM blog.]

Hsieh PJM OpEd: In Praise of Capitalist Inequality

Nov 072011

The 11/6/2011 PJ Media has published my latest OpEd, “In Praise of Capitalist Inequality“.

My theme is that the economic inequality that the “Occupy Wall Street” protestors oppose is not something to be condemned, but to be celebrated. Here is the opening:

For several weeks now, the Occupy Wall Street protestors in New York City and around the country have been demanding “economic justice,” which includes a mishmash of leftist goals including universal health care, forgiveness of student loan debt, and higher taxes on the wealthy. To the extent the OWS protestors have a unifying theme, it’s that capitalism is bad and that redistributing wealth to reduce “inequality” is good.

The Irish socialist playwright George Bernard Shaw once wrote, “A government that robs Peter to pay Paul can always depend on the support of Paul.” The Occupy Wall Street protestors demanding government redistribution of wealth from the richest Americans (“the 1%”) to themselves (“the 99%”) would certainly agree. But as some of them are starting to learn, if their ideas were actually put into practice they’d end up being the Peters, not the Pauls.

Already, some of the OWS protestors are finding their ideas coming back to bite them…

And as to the dirty little secret that motivates many who want to “redistribute” (i.e., steal) others’ wealth, read the full text of “In Praise of Capitalist Inequality“.

I was especially glad to be able to include extended quotes from both Ayn Rand and regular NoodleFood commenter William Stoddard in my piece.

Hsieh in AT: Thank You, Steve Jobs

Aug 252011

The 8/25/2011 American Thinker published my short piece: “Thank You, Steve Jobs“.

He became wealthy offering value for value. In the end, we and his customers (and his employees and the people who wrote iPad apps, etc.) all won. This is why free market capitalism is a wonderful, moral system.

On a related note, Glenn Reynolds of Instapundit has a nice interview with former BB&T CEO John Allison on how the government caused the financial crisis and why capitalism is the only moral economic system:

Hsieh PJM OpEd: Don’t Shoot the Downgrade Messenger

Aug 122011

The 8/10/2011 PajamasMedia has just published my latest OpEd, “Don’t Shoot the Downgrade Messenger“.

My theme is that attacking S&P for the U.S. credit downgrade is like criticizing your doctor for diagnosing your cancer. Here is the opening:

Suppose you saw your doctor for a persistent headache. After performing a full battery of tests, he told you that your MRI scan showed a malignant brain tumor. Would you (1) work with him on a plan to treat your cancer, or (2) threaten the MRI manufacturer with a government investigation? Although most normal people would choose option 1, our government is responding to the news of the S&P credit downgrade with option 2.

The Senate Banking Committee has responded to S&P’s downgrading of the U.S. government’s credit rating by “gathering information” in preparation for possible formal hearings on S&P’s action. Committee Chairman Tim Johnson (D-S.D.) called S&P’s move “irresponsible” because it would make it more difficult for cash-strapped state and local governments to borrow more money. In other words, the problem wasn’t the fact that the federal, state, and local governments were borrowing money that might not ever get paid back. Rather, the problem was that S&P was pointing out that fact to the rest of the world.

Unfortunately, our government’s tactic of blaming the messenger has been all too common these past few years…

(Read the full text of “Don’t Shoot the Downgrade Messenger“.)

The unrest in Great Britain and Greece are a wakeup call to America as to what to expect if we continue on our current unsustainable welfare-state spending spree. Let’s hope Americans take heed before it’s too late.

Broken Windows, Broken Bodies

Aug 062011

Often, I hear that the standard American diet cannot pose any kind of health risk, given that Americans are living longer than ever. This argument is wrong, and a while back, I thought of an analogy that might help explain why.

Statists of various stripes often offer a pseudo-self-interested argument for the myriad controls and welfare instituted in recent decades. They claim that the controls prevent soulless corporations and greedy bastards from stomping all over us little guys. Even welfare is claimed to benefit us, because it prevents poor from revolting by keeping them content. So without these government interventions, the argument says, we’d be far worse off. Moreover, clearly such interventions aren’t stifling innovation… just look at the iPhones, streaming video, and other awesome new gadgets at our disposal now. Sure, these statists claim, any more freedom and capitalism would only make us worse off!

However, the fact is that we’re better off in spite of those government controls and regulations. Productive people keep fighting against the tide of government to create awesome new products and services. But surely they’d be doing even more — and hence, we’d be so much better off — if people didn’t have to fight against the government in the process.

Similarly, I think that we’re living longer today because of advances in medical technology, e.g. in cancer treatment and heart surgery. Yet the tide of bad diet is working hard against that trend. We’d likely see even more advances in longevity — not to mention in quality-of-life (which I think is pretty abysmal for many people) — if people ate better.

In essence, the broken window fallacy is often at work in people’s thinking about diet, just as much as it’s at work in people’s thinking about politics and economics. It’s just too easy to ignore what might have been, if we’d taken a different path.

Hsieh LTE in Boston Globe on Fleeing Higher Taxes

Jul 132011

The 7/12/2011 Boston Globe published LTEs from both Sylvia Bokor and myself responding to their July 8, 2011 story on how New Hampshire is luring businesses away from Massachusetts using the sneaky tactic of — get this — lower taxes and fewer regulations!

(The Boston Globe called a New Hampshire official a “thief” for using these as a selling points.)

Here’s my letter:

Liberator, not thief
July 12, 2011

RE “New Hampshire’s secret salesman luring Bay State firms across the line,” Page A1, July 8: If Michael Bergeron can get businesses to defect from Massachusetts because of lower taxes and fewer regulations, then I’d call him a liberator, not a “thief”!

Paul Hsieh, Sedalia, Colo.

Here’s Sylvia’s letter:

N.H. right to avoid overregulation
July 12, 2011

MICHAEL BERGERON, the New Hampshire business recruiter who is enticing Massachusetts businesses across the state line, evidently understands the importance of freeing businesspeople from the onerous regulations that are strangling our economy (“New Hampshire’s secret salesman luring Bay State firms across the line,” Page A1, July 8). If such consequences do not open the eyes of other business-choking states, they deserved to be vacated by businesspeople.

Sylvia Bokor, Albuquerque

This is the original story we’re both replying to:

New Hampshire’s secret salesman luring Bay State firms across the line
By Jenn Abelson, Globe Staff / July 8, 2011

CONCORD, N.H. – New Hampshire pays Michael Bergeron to be a full-time thief, sending him across the border in an unmarked black sedan to poach Massachusetts companies…

I’m pleasantly surprised that the Boston Globe would publish two out-of-state LTEs (and both on the free-market side) on this issue!

Hsieh PJM OpEd: Why the ‘Unexpected’ Keeps Happening

Jun 302011

The 6/29/2011 edition of PajamasMedia has just published my latest OpEd, “Why the ‘Unexpected’ Keeps Happening“.

Here is the opening:

If an irresponsible teenager repeatedly crashed his car into a tree whenever he had a few beers, we would never say his accidents were “unexpected.” Rather, they would be foreseeable consequences of driving while drinking. Similarly, we shouldn’t let journalists get away with describing as “unexpected” the foreseeable negative consequences of bad government policies.

Blogger Glenn Reynolds recently highlighted numerous examples of the media’s increasingly frequent use of “unexpected” to describe bad economic news. Unemployment “unexpectedly” rose despite federal “stimulus.” Home sales “unexpectedly” fell despite taxpayer bailouts. ER visits unexpectedly rose in Massachusetts despite RomneyCare. Similarly, the Pundit Press blog has rounded-up dozens of examples of such “unexpected” developments since January 2011…

Read the full text of “Why the ‘Unexpected’ Keeps Happening” for the answer!

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