pencils2 Local Coordinator Location: Nevada City, CA Last login: 11/19/09 RSS feed
My name is David Kretzmann. I am 16 years old and have been a supporter of Ron Paul since 2007. I've been interested in stocks and economics for several years now, I started purchasing individual stocks on my own in 2005 when I was 12 years old. After my interest and investments in individual businesses, I started researching economics, upon which I soon realized that most public policies didn't make any sense. Right around this time I heard Ron Paul in the Republican debates, I loved what I heard, and have been hooked ever since.
I have recently launched a new web site, www.DavidKretzmann.com, that I hope you find of interest.
Congressman Ron Paul recently gave a speech on the House floor covering the topic of health care. In it he brought up the Flexner Report, an item that few individuals have even heard about that is worthy of much more attention than it currently receives.
"A lot of problems were created in 20th century as a consequence the Flexner Report (1910), which was financed by the Carnegie Foundation and strongly supported by the AMA. Many medical schools were closed and the number of doctors was drastically reduced." - Ron Paul; September 24, 2009
The seeds of the Flexner Report were planted in 1908 when the Carnegie Foundation for the Advancement of Teaching commissioned Abraham Flexner, a high school principle, to research and report on medical schools in the U.S. Flexner himself was not involved in the medical industry, but after being asked to take on the report he researched and grew fond of the medical systems in England, France, and Germany.
In the report, which was officially published in 1910, Flexner called homeopathic schools "a striking demonstration of the incompatibility of science and dogma." What's curious is that Flexner points out that between 1900 and 1909 homeopathic schools decreased from 22 to 15 and students within the schools decreased from 1,909 to 1,009. Flexner uses these figures to conclude that "the rise of legal standard must inevitably affect homeopathic practitioners." In short, even with the marketplace whittling out the unproductive and unsustainable homeopathic colleges (or any colleges, for that matter) that Flexner clearly did not appreciate, he still advocated increased government intervention to further clear out homeopathic schools.
Flexner believed the problems in medicine were primarily because there were too many doctors and medical colleges. "The country needs fewer and better doctors; and...the way to get them better is to produce fewer." The flaws of Flexner's arguments and his general report is that he may indeed have made some noticable observations, but he did not consider the economic consequences of increased government intervention, a centralized medical system in the hands of the American Medical Assossiation (AMA), and the impact of fewer doctors and medical schools.
Basic economic common sense tells us that when you forcibly remove one product without subsequently lowering demand, you will increase the price of that product. Less supply without less demand means higher prices. The homeopathic schools that Flexner so strongly criticized may have lacked in some areas of educational standards compared to more traditional health schools, but they provided a key element of competition for allopathic medicine and an essential choice for individuals who needed health care.
Basic economics also tells us that weak products and services are bound to fail to the competition due to inefficiency and poor judgment. As I previously mentioned, Flexner's own research displayed that homeopathic schools were struggling to stay open and maintain steady attendance. Their services had difficulty competing in some cases, and those schools (or services) disappeared or were in the process of failing.
The publishing of the Flexner Report in 1910 led to many educational reforms. Among Flexner's final proposals included extending years spent in health education (two years in undergraduate collegiate studies and four years in medical school), increasing the caliber of medical schools to universities, expanding government involvement in medicine, decreasing total graduates to 3,500 from 4,500, and bringing the total amount of medical schools in the U.S. from 150 to roughly 31. In short, Flexner proposed a medical system driven not by the free market and individuals, but a manipulated system molded by some of the wealthiest men and foundations in the world. In fact, the Rockefeller Foundation donated large sums of money to schools who followed the model recommended by the Flexner Report.
One of the unfortunate impacts the Flexner Report had on medical education was the shut-down of many schools geared toward disadvantaged rural areas, African-Americans, and women. Because of mandated school time regulated by the AMA and state governments, only those wealthy enough to afford at least six years of college had a chance at becoming a licensed doctor. This essentially limited the market for prospective doctors to wealthy white males. (All but two African-American medical colleges were closed.)
The flaw with the Flexner Report is the same flaw that has brought us to today's broken medical system. When a product is forcefully limited to be provided by a certain central group (in this case the AMA), it will reduce choice and competition. Choice and competition in a free marketplace are what drive businesses to become more efficient and productive, which provides the greatest possible benefits to individuals who are able to freely buy and sell in the market. A strong, sustainable system built for individuals cannot come from a manipulative central source, it must come from the demands and choices of the people whom it is intended to help.
Government regulatory standards do not necessarily serve the individual as many people believe. In the case of medical care, the Flexner Report recognized many flaws with education that the free market was already weeding out on its own. Rather than allow people and communities to make their own choices with doctors, medicine, and education, it was all placed in the hands of the AMA and state governments, thus limiting the supply. This resulted in less doctors, more expensive education, and decreased access to medical care.
A central system concentrates power into the hands of a select few individuals, groups, and organizations who have the means to control that respective market. A free market divides that power among individuals who have the ability to make their own decisions themselves and through their communities.
Concentrated control, as proposed and implemented in the Flexner Report, is the direct cause of the majority of problems with health care today. The solution does not lie with more government intervention and centralized power, but rather with increased individual freedom. The answer is not centralized power in government, but centralized power within ourselves.
"In fact, the Rockefeller Foundation donated large sums of money to schools who followed the model recommended by the Flexner Report."
Have you ever heard of the Leipzig Connection. One of our other C4Ler's, Robert Walker, told us about this little known publication, which I looked up and then read. It expounded on the history of the Rockefeller connection to medicine and psychiatry. It is a very interesting, yet concise book. You might enjoy it.
The FDIC attempts to universalize risk in banking. Regardless of whether or not you even deposit money in a financial institution, whether or not you discriminate between different banks and the practices thereof, we are forced into subsidizing risk through government deposit insurance. The FDIC normally guarantees deposit insurance up to $100,000, while the insurance temporarily covers $250,000 of deposits until 2013. It does not take much to realize that bank management will make different decisions, pursue riskier ventures, and accept financially-qualified clients if they know the FDIC has their back. The moral hazard that comes with the FDIC is undeniable.
The main flaw with the FDIC and the current banking system is that the control does not lie with the individual. Government's history in banking has amounted to protecting banks, offering special and unnatural privileges to financial institutions (what other industry has a "lender of last resort" and a government program to help pay for risk?), and diminishing the regulatory power of the individual. A free market encourages and generally requires individual initiative, research, and understanding of the product, all of which the FDIC has assumed as its proper role.
What other industry needs a government agency to fall back on if they make unsustainable and irrational decisions? The truth is that the FDIC's role is nothing more than to bail out bad management decisions and an inefficiently run business. Can you imagine what such a system would have done to an industry like technology? Tech companies would have much less incentive to improve their products if they knew they had the federal government guaranteeing major consumer losses.
By attempting to cover different risks in banking, the FDIC removes the incentives of banks to avoid those risks. It removes the incentive for individuals to scrutinize their potential banking options more carefully. If you know that all or the majority of your deposit is insured by the government, why bother with the details of bank management, financial health, etc.? Like economist Peter Schiff said, people spend more time researching a toaster than they do opening a bank account.
The FDIC's softening or total removal of incentives to avoid and search for risk also slows the development of other options to banking. The amount of banks and the style with which they operate has not significantly changed since the FDIC came into existence in the 1930s. Nearly any other industry you can think of has undergone some major changes in operation over the past seventy years, while banking is essentially the same.
The FDIC locks people and businesses into a certain style of banking. (What banks and individuals wouldn't want government guarantees of deposit insurance?) This may be fine and dandy for a time, but it stalls the development of what could be much more sustainable and sensible financial options for individuals, such as credit unions. With government regulators and bureaucrats calling the shots, rather than the free individuals of the country, new developments that would better serve the individual have been heavily limited and discouraged.
The slightly hilarious part is that in the event of a true banking meltdown, the FDIC wouldn't have near the amount of necessary funds to ensure depositors got their money back. According to the FDIC's own website, they manage an "insurance fund" of more than "$52.8 billion," yet the agency "insures more than $4.3 trillion of deposits in 8,494 U.S. banks and thrifts." Let's see... $52.8 billion of funds to cover $4.3 trillion of deposits. Yes, the FDIC carries enough cash to cover a whopping 1.23% of the total deposits that it claims to insure.
The FDIC does not expand the power of the individual to make his own choices in the marketplace; it builds corporate loyalty to government standards, not individual standards. The problem with the banking system to begin with was the neglect of the individual's regulatory abilities, the FDIC is simply an expansion of that unfortunate trend. The folly of the modern banking system is that it does not encourage individual initiative, research, and involvement in banking as a free market system would.
Rather than encourage free and alternative choices like individual deposit insurance plans, community credit unions (where individuals have a stake in where their deposits are spent), or discretion as to where one saves or invests their hard-earned money, we have consistently moved toward a centralized, bureaucratized, planned banking system. Such a system makes it extremely difficult for individuals to effect real change with their own local regulatory power, and prevents a truly sustainable and involved financial industry from coming about. Only the free market can guarantee a system swayed not by the government, but by free men and women exercising their ultimate regulatory authority as individuals.
When the Federal Reserve was signed into law in 1913, it was largely on the basis that the independent organization would assume the role of "lender of last resort" to struggling banks and institutions. This would allow the Fed to extend credit in order to prevent short-term economic hardships. As I wrote in my article, Deception in "Free Market" Banking, banks had not experienced troubles because of the free market as is regularly assumed, but through the government-protected fractional reserve system that allowed banks to overextend themselves and deceive depositors:
After the Panic of 1907 and the umpteenth failure of fractional reserve lending, the attacks still were not aimed at the fractional reserve system. This system, when protected through law, gave banks the undoubted opportunity to inflate the money supply, overextend themselves in ways that would never be sustainable in a free market economy, and give little regard to the customers' original property. Instead, economists began calling for a "lender of last resort" to bail out banks if they were caught overstretched in commitments. Many people don't realize it, but the U.S. financial system has been in bailout mode for nearly a century since this event.
The Federal Reserve's "last resort" lending powers did not meet the expectation of politicians. Banks still overextended themselves with depositors' money despite the new powers of the central bank. In fact, between 1921 and 1929 there was an average of 600 bank failures every year, which exceeded the previous decade's average (the one in which the Fed was created) by ten times.
During the last few months of 1930 people grew increasingly weary and cautious of the banking system. Understandably, people did not react well when they realized the banks did not have their deposited money. Banks retracted credit and liquidated assets, building up a financial perfect storm that resulted in 9,096 banks suspending operations between 1930 and 1934.
Many politicians reacted by proposing a system (that had been discussed in recent years) of deposit insurance backed and paid by a federal agency, despite the failure of similar state setups of deposit insurance in the same era. Since the early 1800s many states had attempted to offer some form of deposit insurance, many failing to live up to their initial claims. All of them were broke by 1930 (some reached their demise many years earlier, such as Michigan, New York, and Vermont in the mid-1800s).
This all changed when The Banking Act of 1933 was signed into law by Franklin D. Roosevelt on June 16, 1933. The Federal Deposit Insurance Corporation (FDIC) was established as a temporary agency that started operating on January 1, 1934. In its first year the FDIC fund carried a balance of $292 million. In 1935, with President Roosevelt's signing of The Banking Act of 1935, the FDIC was established as a permanent government agency.The act also strengthened the Federal Reserve Board of Governors, the group of seven individuals who play a major role in controlling monetary policy.
The primary functions of the FDIC include insuring deposits through the Deposit Insurance Fund (DIF) and examining/supervising "financial institutions for safety and soundness and consumer protection." This has been the basic mission of the FDIC in its 75 year existence, the details of which I won't fully cover in this article.
Modern economics and politics often praise the development of the FDIC as a great and necessary banking program (this alone might be reason enough to question the FDIC's role). The main curiosity that I have is the fact that rather than recognize the failure of a government-protected banking system that had failed numerous times leading up to the Great Depression, politicians decided to once again prop up the government system. According to information on the fdic.gov website, the original FDIC legislation drew support from those "who were determined to end destruction of circulating medium due to bank failures and those who sought to preserve the existing banking structure." (Emphasis added.) These people either failed to realize or downright ignored that it was precisely the banking structure of the fractional reserve system that made such booms and busts so dreadful.
The failure of many banks in the Great Depression was not due to the free market. Fractional reserve banking, the process of banks loaning and investing more money than they actually have in reserve, had been shot down by market forces many times throughout the 1800s in the U.S. The numerous "financial panics" of the 19th century that people often pin on the free market would not have been possible had the states and federal government ceased in protecting the ability of banks to deceitfully loan away depositors' money. A free market system would not involve government protecting banks in this process, but enforcing the distinction of contracts between demand deposits and time deposits.
Part 2 will be posted on the Freedom Chatter Blog this Friday, September 4.
The swine flu, or H1N1 virus, has been declared a "pandemic" by the World Health Organization. In response to fears of the flu spreading, many government health agencies have stepped up to the plate and are now rushing vaccines into the marketplace. European health officials have declared that lives potentially lost through largely untested vaccines are worth the gamble in order to save lives. The Greek government recently announced its intentions to vaccinate all 12 million of its citizens, "without any exception."
The swine flu outbreak of 1976 is not often brought up in the current H1N1 discussion. In February 1976 one soldier, Private David Lewis, died from and several of his peers fell ill to the swine flu in Fort Nix, New Jersey. Due to the strength and the quickness with which the flu could potentially spread, President Gerald Ford ordered nationwide vaccinations, which started up in October 1976. However, soon after receiving the vaccinations, roughly 500 people were developing a disease paralyzing the nerves, Guillain-Barré syndrome (GBS). Private Lewis ended up being the only individual to die directly from the swine flu itself, while more than 25 people died because of the vaccinations. After more than 40 million people received vaccinations, the $137 million program was canceled on December 16.
The reasoning behind massive mandatory vaccinations, particularly today (as well as 30 years ago) with the swine flu, is to avoid another disaster such as the 1918 Spanish flu pandemic which killed millions of individuals around the world. This despite recent research suggests that the swine and Spanish flu may not be as connected as previously thought, primarily because the swine flu is spread through pigs, while the Spanish flu is passed from birds to humans.
I am not downplaying the positive effects that some vaccines have had on humanity. I am simply questioning the principle of compulsory vaccinations, coerced medical care, and forceful quarantines supposedly justified by government-declared health emergencies. These have been the topics of increased discussion of the WHO and many government health agencies around the world, and certainly are not to be dismissed as mere crackpot theories.
Mandatory vaccinations limit the soundness and viability of vaccinations. If a certain vaccination is proven to prevent disease, increase strength of health, and protect the body, clearly it would not require force to be implemented in society. The very idea of mandatory vaccinations implies that you must impose on someone's beliefs, preferences, and reasoning.
If an individual decides to reject a vaccination that the majority of people are receiving, how does his decision impact others? If the vaccinations are effective and voluntarily received by many people, the individual is only placing himself at risk. If people feel they are exposing themselves to too great of a risk by not taking a vaccine, they are free by all means to get a vaccine. Individuals receive or decline vaccinations at their own risk.
As far as the swine flu situation goes, people will not need a government mandate or forceful coercion to take a vaccine if they feel a major potential risk is looming. In the case of 1976 it was government officials who determined that the swine flu might turn into a disastrous situation, and in turn imposed their frights on millions of Americans. The actions the government carried out were primarily based on the information and beliefs of unelected officials who felt it was worth the risk to potentially sacrifice lives in the name of protecting people against a potential disaster.
The idea that if someone doesn't take a vaccine they are therefore a potential risk to other individuals makes no sense whatsoever. If one group of people chooses to get vaccinated while another group declines the opportunity, the vaccinated group is supposed to be protected against that particular disease. They are not put in danger by those who decided to opt out of the vaccine. They are also taking the chance that they could possibly grow more ill from the injection. In the event of a true pandemic you can bet that if proven vaccines are available, the majority of people will choose to get vaccinated; you do not need government officials determining the weight of different risks. It is the responsibility and free choice of the individual, plain and simple.
The Merriam-Webster definition of freedom is "the absence of necessity, coercion, or constraint in choice or action." Can anyone seriously defend the potential policies of mandatory vaccinations and still make the argument that we live in a free country? Freedom does not suddenly become a doormat to new and abusive government powers in times of potential health problems as declared by government; last I checked the Constitution, anyway.
It is illogical to expect government to constitutionally take on the job of keeping people healthy. It is the responsibility of the individual, not government, to decide what food to eat, which medications are most helpful, and whether or not to receive vaccines. The federal government has already attempted to regulate and control substances in this way through the Drug War, and it has not lessened drug use or violence. Whenever government has tried to protect individuals from themselves it has always failed and led to far worse consequences.
The reality is that it cannot be up to government officials and politicians to decide when or if a vaccination will truly protect the individual. Who can push away the possibility that politicians aren't trying to score a victory for the pharmaceutical companies providing the vaccines? The potential for deadly abuse of mandatory vaccinations alone proves the insanity of giving the president, Congress, or a government agency the power to mandate medications and vaccinations.
No person or group, no matter how powerful, has the moral or legal authority to force or deny substances like vaccines and drugs. The 5th Amendment mandates that no one is to "be deprived of life, liberty, or property, without due process of law," while the 4th Amendment protects the "right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." Whether it's an individual or government holding a gun to your head, mandatory vaccinations are an unequivocal infringement on free will, choice, and individual discretion.
Mandatory vaccinations destroy individual liberty, individual sovereignty, and any concept of freedom. If the vaccinations the government feels must be forced on the entire country are as fantastic as officials claim, force and coercion certainly would not be necessary to convince people of their benefits.
Vaccinations must treated and managed like any other good or service: through individual choice, discretion, responsibility, and freedom. It is the only method that guarantees the absolute control is where it belongs: with the individual.
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty."
—Thomas Jefferson
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