Tag Archives: Capitalism

Polemics

Government-run health care is bad for patients and liberty

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Proponents of government-run health care, (i.e. – socialists), want to redistribute wealth from producers to victims. Producers create wealth and victims engage in risky and/or immoral activities that are likely to require medical treatment. (I am concentrating on medical treatment for culpable activities here). Wealth redistribution reduces economic growth because producers stop producing while victims incur more costs, since they do not pay much for their treatment. Eventually, reduced economic growth leads to poor health care, as seen in socialist countries like North Korea, Cuba, Venezuela, Zimbabwe, etc.

Socialists do not trust people to make their own health care decisions, and to deal with the consequences, (i.e. – liberty). In a socialized system, a producer might have his wealth redistributed to victims for services he would never need himself, because of his lifestyle decisions. He might even have his wealth redistributed to victims for services that he objects to on moral grounds, like abortions or sex-changes. He may pay into a mandatory government program for his entire life, without ever making a claim. If at the end of his life, he finally makes a claim, he may be told that he must get in line behind the government’s favored victims – victims who may not have even paid into the system. To see how this actually happens in Canada, watch these excellent 5-minute films from On the Fence Films: Two Women, A Short Course in Brain Surgery, The Lemon, and Dead Meat. Also see this Fraser Institute article.

Imagine how socialism would work if applied to a different business, like auto insurance. Everyone would have to carry mandatory auto insurance, whether they owned a vehicle or not. People would pay into the system based on earned income, not based on personal choices, desired coverages or risks. Different vehicles, driving infractions, vehicle usage, and other risk factors like age would be irrelevant to the price charged. Socialized auto insurance would just be a huge transfer of wealth from non-drivers and safe drivers to risky drivers. The socialist system of redistributing wealth to equalize health care outcomes, destroys productivity and personal responsibility. For further details, see this Heritage Foundation lecture transcript.

Socialized medicine involves price-fixing. The government is the single-payer, and set the prices that doctors can charge for services. Since doctors cannot make a fair profit practicing medicine, compared to other fields, we get fewer doctors. But since health care is “free” to victims, we get more risky and/or immoral behavior, and increased demand for medical care. Fewer doctors, and more victims results in a shortage of medical care, and waiting lists. Medical costs also increase because doctors often practice “defensive medicine” to avoid exposure to lawsuits from lawyers, worsening the shortage, (Investors Business Daily editorial, podcast). Another factor that increases medical costs is mandatory licensing, which forces hospitals to pay more for labor and supplies, (Cato Institute podcast). For further details, see this Cato Institute research paper.

Even if the socialist claims that he wants to set up a parallel system to compete alongside the private medical insurers, the government can easily engage in predatory pricing in order to drive out private businesses from the market. The government is far more able to price medical services lower than private alternatives, and run deficits, until their private rivals go out of business. The government does not have stock that private companies could short in order to prevent this predatory pricing. Monopolies are never good for the consumer, because consumers can’t shop around for the best deal. In a government system, you are forced to pay for services you don’t need. The government is already woefully mismanaging Medicare, and Medicaid, (Investors Business Daily editorial, podcast), do we really really want to give them the whole system to manage?

People need to be responsible for their lifestyle choices, and their medical bills. The free market approach preserves liberty, and economic growth. Medical providers have an incentive to lower costs and improve quality. Consumers keep their liberty by taking responsibility for managing their own risks and costs, (see Investors Business Daily editorial, podcast).

It is important to note that upholding traditional morality and traditional relationships, like marriage, helps to reduce medical costs. Government should therefore avoid assaulting religious beliefs, and moral values. An additional problem with socialized medicine is that Christian medical practitioners often have their religious liberty infringed by the government, (see examples here, and here).

These Cato Institute podcasts describe Obama’s medical policy proposal, (first, second). For more on Obama’s plan, see this Heritage Foundation research paper. For more about socialized health care in other countries, see this Cato Institute research paper. A recent debate on this topic, hosted by the left-wing National Public Radio is here. If you prefer books, there is David Gratzer’s book, Sally C. Pipes’ book, Arnold Kling’s book, and Michael F. Cannon and Michael D. Tanner’s book.

Polemics

Obama’s anti-free-trade policy angers the world

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Well, I thought that Obama was too smart to enact protectionist policies, but it looks like he does indeed mean to try to plunge the USA into a new depression, just like Hoover did when he signed the Smoot-Hawley Tariff Act in 1930. What protectionism says to consumers is this: working families must pay more for inferior products manufactured by government’s favored special interest groups, (e.g. – unions). The standard of living of consumers of those protected products will be reduced, because consumers are overpaying for something that they could get cheaper elsewhere.

What this means that those of us who prefer to use our dollars for purchases that are important to our worldviews (e.g. – Christianity), is that we will have less purchasing power to spend on charity, private schools, apologetics resources, or anything else we want to buy to express our values. Money is the fuel that people use to live out their worldviews in the public square. The more money is wasted by government, the less money we have for our individual priorities. And the way that a secular government spends money is never as good as the way an informed Christian individual will spend it.

Reactions to Obama’s “Buy American” plan worldwide have been swift and alarming:

Over at Pat Toomey’s Club for Growth, Andrew Roth notes that India is angered at the prospect of having their exports taxed. The headline from Reuters India is “Policymakers sound alarm over protectionism“. We can expect to pay more for goods imported from other countries, because they will retaliate against our tariffs. More consumer purchasing power is lost!

Over at William J. O’Neill’s Investors Business Daily, an editorial describes how firms such as GE and Caterpillar faces job losses because they are denied access to cheap foreign steel. By the way, if you haven’t clicked on the IBD podcasts over there on the rightmost column, what are you waiting for? Those are the best podcasts on the Internet!

Over at the Cato Institute blog, Daniel Ikenson notes that the American Steel industry has been enjoying record profits, and that the steel tarrifs supported by Obama’s plan cause other companies to lose exports to foreign nations, because businesses here are forced to pay too much for steel that they could get cheaper abroad.

It was Adam Smith who first explained so long ago:

It is a maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes but employs a tailor.… What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. (Adam Smith, The Wealth of Nations, Book IV, Chapter II)

A more complete explanation of the effects of imposing tariffs on imports can be found in Robert P. Murphy’s new introductory book to free market capitalism, The Politically Incorrect Guide to Capitalism. A review of this book is here. Another good book analyzing free market capitalism applied to a number of different areas including crime and abortion, is Freedomnomics by John R. Lott. A review of this book, by the eminent economist Walter Williams, is here.