Suppose the government decides to subsidize iPhones for the greater good of society. I can just hear the good and fair minded progressives lamenting now, "gosh, I think it would be really great if everyone had an iPhone."
Currently, an iPhone sells for $299 plus another $50 monthly. This is easy to the progressive. The government just prints up some more money and issues a $1,000 iPhone credit to to everyone in America who can not afford one. What do you think happens next?
Masses of people march down to the phone store and wait outside with their government credits. Within minutes the shelves are cleared. A few people got their phones and the rest are waiting for the next shipment to arrive and for the shelves to get restocked. What happens next?
Apple sees a new opportunity to make more money so they increase the price of the iPhone and ramp up production as much as they can. However, they are not able to ramp production very much. Almost all the profit they made from increased margin was taken by the government in taxes. They have no capital left to invest. They desparately try and borrow money, but the government has borrowed all the money already and they can not even get a loan. Besides, it takes 1 to 2 years to ramp up manufacturing capacity in the semi-conductor business so the only real thing to do is raise the price in the short term and continue strategically moving more of the business overseas so they do not have to pay so much of their profit in taxes. So what happens next? What do you think would be the new market price and availability for an iPhone?
If you said they market price of an iPhone would increase to $1,000 then you are only partially correct. The correct answer is, an iPhone would increase to $1,299 which is the credit amount of $1,000 plus the original cost of $299. But that is only the price of the subsidized iPhone. What happens next? What if you did not qualify for a credit?
If you did not qualify for the credit, you are probably among the shrinking roles of people who are actually paying the massive tax bill for this country. You now have to pay $1,000 more in taxes to subsidize the credits for others. plus you must pay the new inflated price of $1,299 for your own. For the productive hard working tax payer, the price of the iPhone just went up from $299 to $2,299.
This is what the progressives like Barney Frank have already done to the housing market. So much for making housing more affordable for the poor. This is what they now want to do to health care. They do not want to increase productivity or production. They simply are not capable of thinking in terms of increasing the size of the pie. After all, that would just benefit the evil pie factory owner and he is way too rich already. They can only focus on how to divide the pie. They can only devise new ways to take bigger and bigger slices away from those who made it and give it away to others in exchange for votes.
Robert J. Ringer was right: "An election is an advance auction of stolen goods." The progressives and their merry maurading bands of community organizers and other assorted liberals and theives must think they really have it figured out this time.
