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ObamaCare’s Website vs. Austrian Economics

Written by Gary North on November 14, 2013

A showdown is coming on November 30: ObamaCare’s crippled website vs. Austrian School economic theory.

President Obama’s chief technology advisor is Todd Park. He testified before Congress on Wednesday regarding www.Healthcare.gov.

Mr. Park is the man who, as chief technology advisor, failed to warn the President on the condition of the website. Mr. Park was either out of the loop or else he decided not to bring bad news to the President. When the site opened for business on October 1, the site was dead in the political water.

In private industry, he would have been fired on October 2. But he is in government. He keeps his job. He now gets to testify in Congress.

He assured the committee that the site will be operational on November 30 for most Americans.

How does he know this? He apparently knew nothing on September 30. Why does he know what is happening now?

Why will the site be operational on November 30? Because, as he said, the programming team is working around the clock. Which team is this? The A-Team. The team that was not hired to design it back in 2010. The team that supposedly knows what it is doing. The team that is expected to clean up the mess in two months — the mess that took three years and $174 million (Kathleen Sebelius), or $350 million (Washington Post, pre-Sebelius), or $630 million (initial media estimate), for the B-Team to create.

Why should Congress believe Mr. Park? Because of the labor theory of value. “The team is working very hard.”

In 1871, Austrian economist Carl Menger’s book appeared, Principles of Economics. The Mises Institute makes it available for free here. Menger took issue with the classical economists, including Karl Marx, who had argued that the value of any asset is derived from the value of the labor that was used to create it. Not so, said Menger. Economic value today derives from forecasters’ expectation of future demand by consumers.

Of course, this expectation may be wrong. Future consumers may decide not to buy the item or service. In this case, the asset’s value will be close to zero. The producer will suffer a big loss. The fact remains that the labor invested in the production of the item is a sunk cost. It’s gone forever. Its value is gone forever. Think “dry hole so far”

In short, economic value is not intrinsic and objective. It is imputed and subjective. This insight launched Austrian economics.

What would anyone the private sector pay today for www.Healthcare.gov? The tavern owner in My Fair Lady expressed it best, when asked by Eliza Doolittle’s father to extend credit to him for a drink. “Not a brass farthing.”

Mr. Park wants Congress to be satisfied with his explanation of looming success: “The team is working very hard.”

In two weeks, Congress — and everyone else — will know about the value of the site. If it fails to work, we will have one more example of the labor theory of value’s failure to explain economic cause and effect. If it fails to work, the labor of the A-Team will prove to have been worthless in creating value.

Well, not quite worthless. Mr. Park will be able to stall Congress longer by invoking the hard work of the A-Team. He will say that January 2 will be the day of deliverance. He will assure Congress that the A-Team will work on Christmas day and New Year’s day. Such dedication will deliver a valuable product.

Hard work will do the trick. It will create value.

It did not create any value from 2010 to now. But it soon will, Mr. Park assured Congress.

All those Americans who have had their health insurance policies canceled will be able to buy really good policies on November 30. Mr. Park has assured Congress of this. Trust him.

If there were a way for me to short www.healthcare.gov, delivery date November 30, I would do it. But even if the contract existed in the futures market, I don’t think anyone would go long. Not even the Federal Reserve.

Continue Reading on www.usatoday.com

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10 thoughts on “ObamaCare’s Website vs. Austrian Economics

  1. You might be able to place your bet on InTrade??? 🙂

  2. By November 30, they expect demand will be so low that the site will finally be able to support the volume (maybe). We know it can do 6 per day.

  3. old_salty_dawg says:

    It took these IDIOTS three months to create a mess and that mess cost TAXPAYERS over $500,000,000 and now it is going to take two weeks and millions more. Sounds like a fleece job to me. Is it Obammy or Sebelius that is getting the kick back of the century or is it both??? Three young men took less than three days to create a website that worked and it cost them NOTHING to build so why is it costing close to $1 billion dollars to make theirs and to get it to work. What happened to getting what you pay for and only paying when the job is done and done right???? Now we have a MASSIVE PILE of GOOD for NOTHING WORTHLESS FECAL MATTER that is just like the man it is named after a WASTE. Obammycare was rightly named since Obammy is also a WORTHLESS GOOD for NOTHING MASSIVE PILE of FECAL MATTER. Both need to go. Dems who proudly claimed they voted for it are now working to stop the Damage it is causing and denying it in every way they can. They are even trying to turn back the clock so those who have lost their insurance can have it back but cannot do so. This says one thing to anyone with a brain they and Obammy need to GO ASAP.

  4. For n. pelousy to claim a wish for more are of the parasitic clasds and have flung themselves onto the medicaid dung heap.. good luck to them in finding anyone to give them care as there are not enough medicals to give this care.. obama lies and citizens die. will speak-fingers will snap and all will be as he wishes.. this monstrosity of a marxist wet dream is all but finished.. it was built on lies and will die under it's own weight. many innocent citizens have been hurt and more cancellations are on the way. obama knew all along that this day was coming–it was written into this piece of trash called obamacare which attempted to completely control 17% of the entire economy of the united states.. the very fact that most of the new enrollees .are of the parasitic class and want more from the overburdened taxpayer class. who will care for them–most cannot afford to give away their services. let this obamanation of a so called law aka dictatorial grab die in peace.

  5. The problem here is that the labor theory of value does work in many cases. If you go to a high school class in auto-mechanics and ask them to build you a Rolls Royce, the labor theory does not work. If you go to the Rolls Royce Company and make the same request the labor theory will work just fine. The problem with Obamacare is that it was given to the political equivalent of a kindergarten class. See my blog at http://cranky-conservative.blogspot.com

  6. Texas Chris says:

    Not from an American back account.

  7. Texas Chris says:

    I disagree. The effort expended means absolutely nothing when determining value. What you are referencing is quality.

    If I "worked really hard" at building something, and spend thousands of hours, and the product was crap, then the value is low, or nil. Conversely, if I spent but a few minutes on construction, and the product was somehow of superior quality, the value would be very high.

  8. but them how does the "labour imputes value" theory work when I find a flawless six month old Rolls on offer for seventy percent of new cost? Has the labour suddenly decreaded in value some thirty percent in the past six months? No, certainly not. The reduced value of that Rolls han naught to do with the actual labour expended in constructing it.

    Further, when I worked as a mechanic, we billed labour by the hour, but not actual labour expended, rather what some "flat rate table" CALCULATED it should take under normal circumstances. I regularly beat that calculation by forty, fifty percent. Did that render my TIME of any less value? No, again. Rather, it rendered it MORE valuable precisely BECAUSE I could do MORE in each hour than the "normal" technician. Did we cheat the customers by billing them for more hours than actually expended? No, not once. They got full value, which was the RESULT they desired, NOT the time it took ME to acheive it.

    The entire "time equals set value" equation is a construct of the industrial age, and, in part, a collectivist mentality. "Did we not all labour six hours? Thus should we not all then receive the same in pay?" No, YOU completed the half of what George did in the same time, thus I cannot pay YOU the same as I will George. Learn to work faster with no loss in quality and I will GLADLY pay you more. MY profit is dependent upon my revenues less cost of goods sold, which inclludes my outlay for labour."

  9. Sailblazer says:

    The value of something has only to do what a consumer is willing to pay for it. The labor input is irrelevant. A Picasso produced on a restaurant napkin in 2 minutes is valuable. My 20 hours of a paint by the numbers art is worth nothing.

  10. This law was passed on the information given the legislators. The information was false. Recall the law it is bad and will always be bad. The government needs to be removed from everything possible. The department of education should be eliminated. Let the states take care of their own education programs.
    National defense only and even then should be controlled by the states collectively. The government should not own property and the property taxes should be replaced with some other form of revenue.