(Dr.) Paul Hsieh: The free market is not another form of rationing:
Supporters of the free market should not allow opponents to characterize the marketplace as a form of rationing, let alone an unjust one. Instead, supporters should defend the free market as morally just because it respects individual rights.
Respect for individual rights is in pretty short supply in Washington these days.
Hsieh writes:
Hence, if Bill makes more money than Joe and can purchase a $500 MRI scan that Joe can’t, then Bill deserves it.
A sentence that could only be written by someone who is sure he will never need a medical procedure that he can’t afford. He may well be right, because he possesses not only talent and brains, but also a medical education — a lucrative and tightly rationed commodity subsidized by us taxpayers.
But by all means, the opponents of health care reform should take up Hsieh’s free market banner and call for the abolition of Medicare and Medicaid. If those kids and seniors can’t afford their medical care they don’t deserve to receive it.
I am always amused when I see so called free-market libertarians making insensitive remarks like these. Then they are surprised at why the USA has more lawyers, population in jail, murders than countries with more social safeguards. The mind boggles.
It’s about freedom. “Market” is merely a metaphor for what emerges when individuals are free to make their own decisions.
On an unrelated note, “Jim” adopts the logical fallacy that says that if we tolerate a little bit of something, such as socialized medicine under Medicare, we are illogical to object to the imposition of that thing universally. This is a fallacy because it is essentially a non sequitur: it ignores the possibility that we may object to the lesser thing but consider the greater thing as more worthy of immediate concern because it is a greater evil.
I am always amused when I see so called free-market libertarians making insensitive remarks like these. Then they are surprised at why the USA has more lawyers, population in jail, murders than countries with more social safeguards. The mind boggles.
It’s not about sensitivity. It’s about who gets to make decisions for each of us: ourselves or some bureaucrat. People who want bureaucrats to make our decisions always insist that they are more sensitive to our own interests than we ourselves are.
If people are poor there are numerous ways to channel private or even public money to them that not only respect their abilities to make their own medical decisions but also avoid taking choice away from everyone else. The fact that most prominent advocates of socialized medicine never discuss subsidizing individuals, a la food stamps, but instead insist that the priority is to have the government take over personal medical decisions on an even greater scale than is currently the case, makes clear that they are more interested in social control than medical reform.
The fact that most prominent advocates of socialized medicine never discuss subsidizing individuals, a la food stamps,
Huh? One of the prominent features of the health reform bills being debated is individual subsidies for health insurance, a la food stamps.
but instead insist that the priority is to have the government take over personal medical decisions on an even greater scale than is currently the case
Do you have a single example of this? The only people I’ve heard talking about a “government takeover of personal medical decisions” have been opponents of reform who are lying or misinformed about the proposals before Congress.
The principal virtue of a free market lies in its facilitation of the liberty of its the participants. It places only one restriction on any transaction: all parties to it must agree of their own free will. If you believe in liberty, this is enough to recommend the use of free markets. (Although there is reason to think that free markets are very good at facilitating wealth creation as well.)
“Deserve” is a difficult concept. Hsieh seems to be asserting something like: the mere existence of a free market transaction is evidence of both parties being deserving of the outcome. I can’t say I agree with that. In the words of Clint Eastwood as the outlaw Will Munny in Unforgiven, “Deserve’s got nothin’ to do with it.”
What produces and allocates resources more efficiently than the free market? Just about everyone has a TV, and a large percentage of the population–including the poor–have cellphones. That’s the free market. While keep screwing with that when the evidence that it works better than government control is overwhelming?
It’s not about sensitivity. It’s about who gets to make decisions for each of us: ourselves or some bureaucrat. People who want bureaucrats to make our decisions always insist that they are more sensitive to our own interests than we ourselves are.
If your “decision” spectrum is to get shafted because you cannot afford an MRI for detecting your cancer while someone else can get their MRI for checking some arm bone damage who cares? You might as well be telling the other person to have cake instead.
This kind of stuff is not fungible. I know someone who had back pain for a long time. His doctor ordered “cheaper” X-rays and CAT scans and neither of them showed up any problem. Turns out the pinched nerve only showed up when he did an MRI because X-rays suck at imaging soft tissue.
I find interesting all these claims about how private enterprise pushes medical imaging in leaps and bounds. MRI machines, in particular, are based in technology developed for government funded fusion plasma physics including cryocoolers and superconducting magnets. PET scans are also based around technology from nuclear physics. Where private enterprise has innovated, and by no small amount to be sure, is in making these systems cheaper and more compact.
Computer aided diagnosis has been studied since the 1980s as a set of technologies that can substantially reduce the cost of doing medicine but physicians have been opposed to it every step along the way.
Why is it not understood that insurance is a free market solution (no govt. required) to the problem of not being able to afford something?
Insurance is also a business requiring profit to remain in business.
The government (non-)solution would take this solution away from people by driving at least some of them out of business.
Even the so called rich can’t afford medicine. Insurance allows both the rich and the poor to afford something they couldn’t afford alone.
Hence, if Bill makes more money than Joe and can purchase a $500 MRI scan that Joe can’t, then Bill deserves it.
Yeah, I agree that deserves is a bit of a fuzzy concept here and does seem a bit insensitive. The question is does Bill deserve being forced to pay for Joe (outside of buying the same insurance of there own initiative?) If Bill is rich because he unfairly kept Joe poor you might have an argument. If not, then Bill deserves it insensitive or not, is a true statement.
Speaking of insensitivity, how insensitive is it to demand that govt. provide a (non-)solution that pretty much guarantees that Joe will never be among the rich?
Whereas if your decision spectrum requires that you be given something for free that would not exist if not for the toil and treasure of others, well, that’s just being compassionate.
With other people’s toil and treasure, but let’s not quibble, eh?
And speaking of insensitivity, how insensitive is it to assume that “the people”, if left at liberty to express their own sensitivity to the plight of others, wouldn’t meet the needs of the needy as a well as or better than the government?
IMHO, we would be a lot better off emphasizing self-reliance and charity — along with liberty — as the way to address society’s needs than turning to the government to impose totalitarian solutions.
What produces and allocates resources more efficiently than the free market?
Nothing. But efficient production and allocation is not the only value.
IMHO, we would be a lot better off emphasizing self-reliance and charity — along with liberty — as the way to address society’s needs than turning to the government to impose totalitarian solutions.
What institutions will inform people of those values? Looking at the top two (Government schools and American Idol) value informers, I’ve found no such message. In fact, I’m positive that Ryan Seacrest did not even touch on Edmund Burke last season, but I’ll need to double-check the TiVo to be sure.
One of the prominent features of the health reform bills being debated is individual subsidies for health insurance, a la food stamps.
Which phase out completely once you start making more than a whopping $40K/year. Have fun spending $10K/year on HMO premiums you otherwise wouldn’t buy without a gun to your head.
What institutions will inform people of those values?
Hmmm… just off the top of my head: churches, marriages, schools (not necessarily government ones), charitable organizations? I’m sure there’s more. I’d agree that we wouldn’t want to depend entirely on pop culture to elevate the angels of our better natures — any more than we should want to depend on politicians and bureaucrats.
Jim,
I don’t understand. If the free market provides more stuff–goods and services–and it distributes it more effectively than any other system, what values are we talking about? Even as far as economic inequities are concerned, the poor in the relatively liberal U.S. are incredibly better off than the poor in pretty much any other country without free(ish) markets and liberal government.
churches, marriages, schools (not necessarily government ones), charitable organizations?
All of which except for marriage (more nebulous of a concept) the left/government (the two are inseperable since FDR) has or is in the process of divesting of resources and influence.
If the free market provides more stuff–goods and services–and it distributes it more effectively than any other system, what values are we talking about?
It distributes stuff more efficiently, not more effectively. Efficiency is an important goal, but isn’t the only one. You might want an educated populace, or good public health — achieving those requires more than efficiency, it requires putting resources where they are needed, which is not necessarily where the money is to pay for them.
Even as far as economic inequities are concerned, the poor in the relatively liberal U.S. are incredibly better off than the poor in pretty much any other country without free(ish) markets and liberal government.
The poor in the U.S. are not better off than the poor in, say, Denmark, which has a much larger public sector. And it should be noted that the lot of the poor in the U.S. has improved tremendously since the introduction of Medicaid, food stamps, school lunch programs, EITC, Title 1, etc.
And it should be noted that the lot of the poor in the U.S. has improved tremendously since the introduction of Medicaid, food stamps, school lunch programs, EITC, Title 1, etc.
Correlation is not causation.
Well when we already have 59 trillion dollars in unfunded liabilities why not just throw another ponzi scheme or 2 into the mix. At this point who will notice? 59 trillion is such a incomprehensibly big number it really just doesn’t have any meaning any longer. At this point we could just use some make believe gazillion-bagillion-Obamabillion number. So what if Obamacare goes bankrupt in 40 years? We will all be dead or at least planning our end of life wishes with a federally provided double good unlife counselor by then. Let the young people of that era worry about getting their own entitlement. Just like the Baby Boomers got theirs we deserve our piece of the pie today — Gimme gimme gimme.
Notanexpert – the “let charity do it” argument misses the simple fact that we already have a large number of charities in the US working on medical care. For example, Easter Seals (originally the Crippled Children’s Society) or the Elks Hospital. These charities are simply not able to keep up with demand.
Regarding your “correlation is not causation” argument, I think you miss the point – the improvements seen to the lives of the poor are because we’re giving them things of value (like free lunches) in place of them doing without.
These charities are simply not able to keep up with demand.
Hardly a surprise, in a world in which we tax “the rich,” making it harder for them to be philanthropic, and tell people that it’s the government’s responsibility to take care of things like this, diminishing their urge to do so.
Rand – Easter Seals was founded before we had an income tax, and they never came near to covering the need for services.
Jim,
Your response (“But efficient production and allocation is not the only value”) is an interesting one, and I applaud your honesty in making it. I cannot, however, agree. If one accepts (as you explicitly do) that the Free Market(tm) is most efficient at producing and distributing the ‘goodies’, then you also implicitly acknowlege that any departure from that approach will inevitably reduce the goodies available, and thus limit the options for all involved. With this in mind the ‘other values’ (I presume you mean equity/social justice/etc….the usual laundry list of lefty values) fade into insignificance, particularly because the approaches you favor rarely give any but the annointed experts appointed by our ‘betters’ any say in how they will be implemented.
As for the free market being a poor method of ‘effectively’ distributing medical resources, this is a rather silly canard that I don’t blame you for, but still find almost unworthy of refutation. Most of the effectiveness metrics are typical examples of comparing apples to oranges (infant mortality rates, for instance…in the US we attempt to keep infants alive that would be discarded by any other society, yet this is hardly an issue of which delivery system is being used, but rather the values of the society which is using the system), or carefully slanted studies that ignore differences across populations (eliminate the US racial diversity, for instance, or the number of deaths by violence or accident, and the US life expectancy is significantly better than societies with socialized medicine)…
Finally, your suggestion that the healthcare proposals currently on the table (there is no single Obamacare proposal out there, rather there are at least 5 bills winding their way through the bowels of the House) represent ‘socialized medicine’ is somewhat disingenuous at best. The public option would inevitably drive out private insurance, as it would provide a lowest-cost alternative that could never go broke by undercutting its competitors while at the same time enjoying regulatory benefits that its competitors could not match. Ignoring this simple piece of analysis suggests a lack of candor on the part of most public-option proponents (a candor that candidate Obama was happy to put on display last year when talking to the faithful, and that many on the Left are happy to display even now when they don’t believe that they are going to be quoted in public), which isn’t too difficult to understand.
These charities are simply not able to keep up with demand.
How much potential charitable giving is being suppressed by the huge tax burden that people feel? And what about the other half of my prescription — self-reliance? What if as a society we lionized self-reliance instead of enabling dependency via entitlement programs and romanticizing it as a sort of righteous victimization. What if we could increase the capacity for private giving by an amount somewhat equal to the current federal entitlement budget and at the same time reduce the number of the needy by fostering self-reliance instead of its opposite? I think you need to consider all that before concluding what private sector charity would be capable of.
I think you miss the point – the improvements seen to the lives of the poor are because we’re giving them things of value (like free lunches) in place of them doing without.
I was pointing out a basic logical fallacy. Some specific examples: 1) whatever improvement there has been cannot simply be attribute to that list of government programs just because they were enacted over the period of the improvement. The Vietnam War occurred during that period of time, too Can we say the same thing about it? 2) whatever improvement there has been, one cannot simply assume that the improvement would not have been greater had those programs not been enacted. Shall I go on?
How much potential charitable giving is being suppressed by the huge tax burden that people feel? And what about the other half of my prescription — self-reliance? We tried that in the period 1870 – 1910. It did not work.
whatever improvement there has been the improvement in question is that we gave people who didn’t have a little more. Your argument is like saying “the fact that the faucet doesn’t drip is not correlated to the fact that we replaced the faucet.”
There’s no comparing the productive capacity of the 19th century to today. Historical and trans-national comparisons always fall short on these matters due to confounds.
A sentence that could only be written by someone who is sure he will never need a medical procedure that he can’t afford.
We all will need medical procedures we can’t afford. In a narrow view, that’s why we die. Who or what decides that? That’s the insensitive fact for current health care. The “faucet” has to turn off at some point. My view is that it is better for me not to have a medical procedure I can’t afford, than to drain someone else’s life for that procedure.
It distributes stuff more efficiently, not more effectively.
Jim I think you’ve hit the bulls-eye with this comment, but need a little more analysis of ‘effectively.’
Both the free market and govt. need to first identify a problem. It happens in different ways, but both are capable of doing that.
Govt. has just one basic solution to any problem, take money away from people and use it in the least efficient way (something you already agreed is the case) to provide their solution (often with the law of unintended consequences rearing it’s ugly head.)
Free enterprise solutions require either a profit, such as the insurance industry, or charitable giving. In both cases morally superior to the government solution since they operate by the consent of those involved.
Can the government solution (which involves taking without consent and the reduction of efficiency… lowering the overall service provided) be justified because some would receive services that they otherwise would not?
Who are those people?
Let’s start with those I have the most empathy for… uninsurable because of pre-existing conditions. Let’s divide them further into those that had and lost insurance and those that never had any.
There is a free market solution to the first case. The person rather than the employer owns their insurance and it continues should they lose their job. Responsible people would choose such an option (which would be offered alongside less expensive insurance.)
For those that never had any insurance the responsibility lies with their parents or charities.
The idea that the responsible should subsidize the irresponsible is morally repugnant. It invites even more irresponsibility which eventually would overwhelm any system.
In every other class of people needing insurance the free market can provide a better solution if you accept the argument that people need to be responsible and the irresponsible should not be allowed to destroy the good solutions that are better provided by free enterprise than by govt.
I would classify illegal aliens as mostly in the irresponsible class. While I understand them wanting to make a better life for themselves, this does not give them the right to destroy the lives of others by overwhelming a system.
Life isn’t fair. Don’t delude yourself into thinking the government can make it more so. The govt. is NOT more effective. Both can be slow to respond to a need.
To put it in a little more perspective, I have multiple physical, mental and neurological health problems. Doctors have been giving me two years to live since 1987. I’m fifty, but shooting for 98.
I got my forty quarters in long ago and have been paying $96 a month for about a year now for medicare. If medicare didn’t exist, free enterprise could easily have provided me with a better solution. If medicare goes away, I’m not going to cry about it and probably would not be able to get any other kind of insurance.
The reason that better solution doesn’t exist is because medicare does. This really pisses me off.
In case you’re wondering how life long health insurance would work.
Two cases… responsible parents and irresponsible.
Responsible parents can purchase a policy that builds to an annuity during the healthiest (low cost) years to their 18th birthdays which pays their health premiums for the rest of their life.
The child of an irresponsible parent can begin paying slightly higher premiums once they start working during their good health years.
Both policies would provide some health coverage before the annuity matures and would cover catastrophic health as well.
Charities can cover the rest. The irresponsible tend to suffer more but do not overwhelm the system for anybody else.
Life still isn’t fair, but nothing you can do is going to make it so.
The insurance companies make profit, encouraging more insurance companies to exist.
We tried that in the period 1870 – 1910. It did not work.
Chris, I seem to recall you’ve said mean things about this period before. Sure there was considerable racism (not just in the parts of the country which are stereotyped by you as being racist) and economic collapses. But it was also a key part of the transition from colony to superpower. During this time, the US developed a modern academic system, better than anywhere else in the world, developed most of the major inventions that make US society what it is today (with the exception of the computer), and substantially expanded the US in a number of ways.
My view is that self-reliance worked quite well in that time period just as it works now. For your consideration, are we better off now because a quarter of black males have seen jail? It’ll be interesting to compare incarceration rates of that period with the far more racially enlightened times of today.
Karl Hallowell – during the Gilded Age, we tried a libertarian approach to government. It failed. Much like communism always results in totalitarianism, libertarianism always results in corporatism. Simply put, power abhors a vacuum.
Corporatism as a system of government sucks for the governed. It results in private police forces shooting strikers, low wages, company stores, child labor and limited availability of health care. It sucked so hard that in the 1900 election, both major parties were for reform – the issue was how much reform.
Now, you are correct in saying that the US did develop a lot of new technology, industrialize, and expanded into our final boundaries. Although you should note that this industrialization and invention was by no means limited to the US. So it was not all bad. Few eras are – even the Dark Ages gave us stirrups and clocks.
You are also correct that the modern War on Drugs has resulted in many social issues, including very high incarceration rates.
My point remains the same. Self-reliance did not work at the time. Even considering that health care technology was very limited (the first antibotics, sulfa drugs, wouldn’t be introduced until the 1920s), working people did not get very good health care. Charities were overwhelmed by the need. Factory laborers, store clerks, and general working people were simply unable to generate enough excess resources to provide for any sort of cushion, be it for health care or layoffs.
This failure is why Otto von Bismarck created the modern socialized health care system in the 1880s. Even a conservative could see that the existing system didn’t work.
Chris, you keep saying self-reliance “didn’t work”. What’s your evidence? I see the above list of facts and conjecture as a long sequence of non sequiturs. Sure it sucked being a laborer in that time. But that was because labor didn’t have a lot of value. I don’t see a connection to self-reliance there. Even so, labor in the US had more value than labor in Europe.
And so what about poor health care? I’m sure some future generation will consider us to have poor health care too just because we don’t have access to the wonderful technologies of the future. What does that have to do with self-reliance?
Now, you are correct in saying that the US did develop a lot of new technology, industrialize, and expanded into our final boundaries. Although you should note that this industrialization and invention was by no means limited to the US. So it was not all bad. Few eras are – even the Dark Ages gave us stirrups and clocks.
I consider it not just “not all bad”, but one of the best times in the US. You really don’t seem to understand the changes that occurred in the US over this time. For example, the US’s remarkable shift from a backwater to a leader in the academic world. I suggest reading “The Master of Light: A Biography of Albert A. Michelson”, for example. This notable physicist participated in the formation of three world class research universities (Clark University, University of Chicago, and Stanford University) and ended up in California at a time when that state was not considered even remotely an intellectual haven.
I also recently read a book on the 1918 epidemic which discussed the researchers and doctors of the time who fought the disease. The US had many key figures in that struggle and Johns Hopkins University (created by a bequeathment somewhere around 1875) was considered even at that time one of the best medical universities in the world. If that influenza had struck in 1870 instead, we’d just be another victim, unable to make much of a contribution.
Who created these universities that continue to change the world? Their names would be reviled today by you, Chris: Carnegie, Vanderbilt, Duke, Hopkins, Stanford, etc. In 1870, if an American (anywhere in the Americas) wished to be a world-class scientist, they had to go to Europe. In 1910, that was unnecessary.
What happened is that the “corporatist” money of the US was invested over the course of the last part of the 19th century and beyond in a large number of colleges and universities, some public. This drew over many of the best and brightest from Europe as well as encouraged a number of US citizens to become scientists. The greater freedom, wealth, and ambition of the US colleges resulted in a rapid advance to parity (for the top US institutions) with their foreign counterparts. In addition, the first serious research businesses like Edison’s Menlo Park lab (and his General Electric corporation) were created.
IMHO, the real seeds of today’s global research juggernaut were planted during this period in the US.
If one were lucky and smart, the Gilded Age offered great advancement. If one were unlucky, like getting injured, sick or having one’s investments in the wrong bank, the period sucked. The determination of whether a social system is good or bad is not how it treats its most favored group. Kings and the rich always have it good.
The determination of whether a social system is good or bad is made by how it treats its least favored group. In the US, labor got very shabby treatment. Laborers were unable to become self-reliant because of this shabby treatment.
You point to the rise of strong universities and research organizations. This was not a uniquely American phenomenon. Germany was creating some of the world’s best chemists and chemical research organizations. France was doing great work in modern physics (Madame Curie, originally from Poland) as well as architecture (Effiel’s iron frames made for modern skyscrapers).
Actually, Carnegie or any of the other names you mentioned would be reviled by me. I have no objection to gathering personal wealth. My objection is to setting up a system of government where personal wealth, unbridled, rules all. That is exactly what libertarianism evolves into.
The determination of whether a social system is good or bad is made by how it treats its least favored group.
I disagree. It’s who is favored. A good system favors those who contribute to society.
You point to the rise of strong universities and research organizations. This was not a uniquely American phenomenon. Germany was creating some of the world’s best chemists and chemical research organizations. France was doing great work in modern physics (Madame Curie, originally from Poland) as well as architecture (Effiel’s iron frames made for modern skyscrapers).
The thing to remember here is that Europe already started with the best research organizations in the world. The US was playing catch up. The uniquely American aspect was that the US caught up to the best in the world in a single generation.
My objection is to setting up a system of government where personal wealth, unbridled, rules all. That is exactly what libertarianism evolves into.
As I’ve done so far, I’ll ignore yet another irrelevant bash at libertarianism. The problem with your viewpoint is that personal unbridled wealth never has ruled all. Throughout history a lot of people have tried to rule via wealth, be it Crassus of the dying Roman Republic or Lord Neville the Kingmaker of England, some have tried for ultimate power via the collecting of extravagant wealth. The problem is that if you go that route, then you have to take wealth from someone else. And everyone looks forward to the comeuppance for greedy bastards that try to buy their way into that level of power. The extravagantly wealthy also have plenty of property to seize.
To be blunt, the rich people who are really successful in such things do so by influencing the powerful not by competing with them directly.