Sunday, July 26, 2009

Sounds Familiar

President Obama, in his weekly radio address on Saturday, referenced a new White House study indicating that small businesses pay far more per employee for health insurance than big companies. The disparity, he said, is "unsustainable--it's unacceptable."

First, I would point our esteemed President to any reasonable dictionary, and ask that he look up "economies of scale". had this to say:

The increase in efficiency of production as the number of goods being produced increases. Typically, a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods.

It stands to reason that a company who is providing health insurance for 5,000 employees would pay less per employee than a company insuring 30 employees; the administrative cost per employee is much less for the larger company, and there's much lower average risk per employee with the larger group than there is with the smaller group.

So, of course the big company get's a better rate.

From Obama's Saturday radio address next week:

"My fellow Americans: I found out today that Wal-Mart and Costco get tires cheaper on a per tire basis than does your local mom-and-pop tire shop. That's unsustainable--and it's unacceptable! I pledge to force Wal-Mart and Costco to pay an extra fee for each and every tire they purchase, in order to subsidize your local mom-and-pop tire shop's purchases just to make it fair."

I'm reading a story about a guy who became famous preaching a similar message to his countrymen. He rose from nothing (like Mr. Obama), and lead something of a grassroots effort (again, like Mr. Obama), crying out loudly and eloquently for "change" (like--you got it--Mr. Obama). And he ultimately won power by demonizing the industrialists in his country, the "big businesses" who had "unfair advantages" over the little guy.

His name was Adolf Hitler.

1 comment:

The Eccles said...

Scary... That's all I can say... He really does scare me!