Surgery Center of Oklahoma Blog

July 22, 2011

Static Analysis vs Dynamic Analysis

Filed under: Uncategorized — surgerycenterok @ 2:21 pm

Economists from the “Austrian” school of thought (this includes brilliant men like Hayek, Mises, Rothbard, Hoppe, Salerno, Higgs, Herbener, and many, many others) reject the idea of economic modeling, as human actors have different ideas of value.  This is called, I think, the subjective theory of value….that a painting or a bottle of wine or a mansion might be worth different amounts to different people…more for a collector or tycoon than for a monk, for instance.  Economic modeling is used to predict what groups or populations of people will do in response to a change…like a tax increase.  Governments typically rely on economists who subscribe to the validity of modeling and issue statements such as, “…an increase in the income tax for the wealthiest Americans will raise X billion dollars.”  The Austrians reject this type of analysis and so do I.  It’s really common sense when you think about it.  What the government economists are really saying is..”..we are going to change this one variable (the tax rate) and no one else is going to make a change or adjustment on their end, therefore producing the result we are predicting.”  This is not just stupid.  This is dishonest. Stupid?  If taxes are increased, what will you do?  If the rate goes to 70% are you going to continue to work hard just so you can have it taken from you?  Dishonest?  Every time taxes have been lowered, federal revenues have increased.  Why?  Because people changed their behavior.  This is what I think is an example of what economists call “dynamic analysis.”

Dynamic analysis is the prediction method used by entrepreneurs.  If their predictions about the changes in human behavior are correct, they get rich.  If they are wrong, they lose their shirt.  This is why the free market works.  Static analysis is the prediction method used by governments and ultimately why they fail.  You see, if we raise taxes on corporate jet ownership, fewer corporate jets will be flown/used/sold.  What does that mean for the aluminum welder at the plant making the jet wings?  Could one more person be unemployed by this insanity and cease to be one of the tax slaves?

“If we institute price controls on physicians so that they are paid half of what they are now, think of the money that would save and all of the people that could get health care with the savings.”  That’s if the physicians come to work at all.

“I am going to wait to have my knee replaced until Obamacare kicks in so it will be free!”  There won’t be any knee replacements if it’s “free.”

This brings me to my point.  You don’t have a right to health care.  You can’t make me come to work.  You can’t prevent me from seeking some other line of work.  You can’t make me be a doctor.  Any “action” by our wonderful government will cause consequences and “reactions” by many people affected by the change.  And the folks that continue to be doctors when health care is “free,” you won’t want to see…just ask Hugo Chavez.

G. Keith Smith, M.D.

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