December 23, 2009
Quote of the Day
Duquesne Light carries extra weight here because health-insurance industries are far from natural monopolies, so that regulating their rates calls for an extra dollop of judicial scrutiny. At this point, the Reid bill is on a collision course with the Constitution. I take it for granted that, constitutionally, the federal government could not just require all private health insurers to liquidate tomorrow, without compensation. -- Richard Epstein
Posted by John Kranz at December 23, 2009 10:53 AM
Sigh, I've had the pleasure of meeting Epstein (and having a chance to talk about a paper of his that I discovered preceded an idea I had) and know he's brilliant, but he's so naive here, and also wrong.
Fine, so the federal government will compensate insurers (rather, their owners) for being driven out of business. How will that be done? The people, whether through taxation or the Federal Reserve monetizing more debt. This isn't, as Lenin said, capitalists selling the rope that will be used to hang them. This is Nazis making us dig our own graves.
It's such a lose-lose situation that the best we could hope for is that insurance company owners will be paid out based on crashed stock prices. That means, on top of all the destroyed wealth, our taxes will not have to increase as much, or the Fed won't print as many new dollars, to compensate us for any shares we might own. Lots of people, via 401Ks and regular mutual fund holdings, have shares of publicly traded insurance companies that they don't know about.
Now, Epstein mentions "the constitutional guarantee that all regulated industries have to a reasonable, risk-adjusted, rate of return on their invested capital." And where is that? None of that phrasing exists in the Constitution. The only argument toward such a notion is merely interpretation, based on the takings and equal protections clauses.