Tag Archives: Economics

Commentary

Walter Williams evaluates Sweden’s single-payer health care system

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Walter Williams is my second favorite active economist, just behind Thomas Sowell. (I also like John Lott, Robert P. Murphy and Jennifer Roback Morse – see my blogroll for links) In a recent article, Williams takes a look at how well Sweden’s single-payer, socialized health-care system is working out for its customers. The productive Swedish taxpayer forks over a lot of money to the government. What do they get in return?

First, what is socialized medicine? (which we are moving toward, since porkulus passed)

  1. Producers pay huge amounts of taxes to the government .
  2. Low-achievers pay nothing, since they have no income.
  3. When you want treatment, you have to get in line behind everyone else – especially behind special interest groups, such as people wanting sex-changes.
  4. The taxation is compulsory, the treatment of patients is at the government’s discretion.

Williams begins his article by evaluating the UK’s National Health Service:

A recent study by David Green and Laura Casper, “Delay, Denial and Dilution,” written for the London-based Institute of Economic Affairs, concludes that the NHS health care services are just about the worst in the developed world. The head of the World Health Organization calculated that Britain has as many as 25,000 unnecessary cancer deaths a year because of under-provision of care. Twelve percent of specialists surveyed admitted refusing kidney dialysis to patients suffering from kidney failure because of limits on cash. Waiting lists for medical treatment have become so long that there are now “waiting lists” for the waiting list.

And then there’s Canada single-payer socialized system:

…after a Canadian has been referred to a specialist, the waiting list for gynecological surgery is four to 12 weeks, cataract removal 12 to 18 weeks, tonsillectomy three to 36 weeks and neurosurgery five to 30 weeks. Toronto-area hospitals, concerned about lawsuits, ask patients to sign a legal release accepting that while delays in treatment may jeopardize their health, they nevertheless hold the hospital blameless. Canadians have an option Britainers don’t: close proximity of American hospitals. In fact, the Canadian government spends over $1 billion each year for Canadians to receive medical treatment in our country.

The article cites Sven R. Larson, who recently completed the book “Lesson from Sweden’s Universal Health System: Tales from the Health-care Crypt,” published in the Journal of American Physicians and Surgeons (Spring 2008). The first thing about socialized health care is that you don’t pay for treatment like you shop at Wal-Mart. The government takes your money and makes sure that everyone is treated equally, regardless of each individual’s earned income and lifestyle choices.

Mr. D., a Gothenburg multiple sclerosis patient, was prescribed a new drug. His doctor’s request was denied because the drug was 33 percent more expensive than the older medicine. Mr. D. offered to pay for the medicine himself but was prevented from doing so. The bureaucrats said it would set a bad precedent and lead to unequal access to medicine.

When health care is free for consumers, demand increases. Doctors and drug companies stop producing since the government won’t let them make a profit. Since the government is the single-payer, then the only way to stop the shortage is to ration medical services, often based on leftist victim ideology. Socialists don’t trust you to make your own decisions about how you earn income or how you spend it.

Here’s a bit more from the article:

Malmo, with its 280,000 residents, is Sweden’s third-largest city. To see a physician, a patient must go to one of two local clinics before they can see a specialist. The clinics have security guards to keep patients from getting unruly as they wait hours to see a doctor. The guards also prevent new patients from entering the clinic when the waiting room is considered full. Uppsala, a city with 200,000 people, has only one specialist in mammography. Sweden’s National Cancer Foundation reports that in a few years most Swedish women will not have access to mammography.

Wow, that smacks of fascism! But that is where socialism inevitably leads. In Canada, you can’t even buy your own drugs and treatment, even if the government puts you on a waiting list (dying list?), or if it won’t pay for treatment at all. Private purchases of health care or medical drugs are illegal in Canada. (except for Quebec, oddly enough, because of a recent court decision).

The problem with a system in which low-risk producers pay for the services, but don’t use them while high-risk victims use the services, but don’t pay for them, is that there is no incentive for people to be healthy. As people act more and more recklessly, the government steps in and starts controlling their lives in order to reduce costs. Fascism.

Socialized medicine redistributes wealth in order to equalize the outcomes of good lifestyle choices and poor lifestyle choices. The more that lifestyles are equalized, the less personal responsibility there is among the citizens. Eventually, the government takes control of people’s lives to reduce costs. This article shows how it’s happening in Canada, as they try to ban trans fats:

A mammoth government program is a poor excuse for further encroachment on people’s lives–maybe fewer government entitlements would encourage smarter and healthier habits. If the ban is the sword of the nanny-state crusader, surely the health-care system represents his shield.

Freedom means deciding how much security to want, based on your own free choices and the risks you assume.

A useful podcast on health care and government, featuring Sally C. Pipes on the Dennis Prager show is here. For a good explanation of supply, demand and shortages, see this Von Mises Institute article.

UPDATE: Saw this UK Telegraph story on a single NHS hospital (H/T Stop the ACLU):

NHS managers were yesterday accused of putting targets and cost-cutting ahead of patients as a report into at Mid-Staffordshire Hospitals trust found up to 1,200 people may have died needlessly due to “appalling standards of care” at a single hospital.

…Last night patient groups voiced concern that managers who should have spotted failings at the trust but did not raise the alarm have been promoted to key jobs in the NHS and health care regulation.

…The investigation into care between 2005 and 2008 found overstretched and poorly trained nurses who turned off equipment because they did not know how to work it, newly qualified doctors left to care for patients recovering from surgery at night, patients left for hours in soiled bedclothes and reception staff expected to judge the seriousness of the condition of patients arriving at Accident and Emergency.

Doctors were diverted from seriously ill patients to treat ones with minor problems to make the trust look better because it was in danger of breaching the Government’s four-hour waiting time target.

Commentary

Why Obama’s big government socialism leads to secularism

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I have been browsing on a few forums, including forums that discuss Christian apologetics. Imagine my surprise when I encountered pro-Obama, pro-socialism statements by people who are supposed to be informed about these issues.

Well, I found an article over at Mercator Net, (an Australian web site), which might be useful for Christians who are sympathetic with Obama’s pacifism, redistribution of wealth and creeping fascism. I want to argue that his policies are inconsistent with Christianity.

First of all, the article notes that Obama did gain a significant number of votes  from religious Christians.

In 2008, according to CNN exit polls, Obama won forty-three percent of the presidential vote among voters who attend religious services once a week or more, up from Senator John Kerry’s thirty-nine percent in 2004. Obama did especially well with Black and Latino believers. But he also made real inroads among traditional white Catholics, according to a recent article by John Green in First Things.

The article describes Obama’s spending, (which I discussed here), and then comments on the significance of that spending for religious institutions, like churches and charities.

To fund his bold efforts to revive the American economy and expand the welfare state, Obama is proposing to spend a staggering $3.6 trillion in the 2010 fiscal year. Obama’s revolutionary agenda would push federal, state, and local spending to approximately 40 percent of Gross Domestic Product, up from about 33 percent in 2000. It would also put the size of government in the United States within reach of Europe, where government spending currently makes up 46 percent of GDP.

Why is this significant for the vitality of religion in America? A recent study of 33 countries around the world by Anthony Gill and Erik Lundsgaarde, political scientists at the University of Washington, indicates that there is an inverse relationship between state welfare spending and religiosity. Specifically, they found that countries with larger welfare states had markedly lower levels of religious attendance, had higher rates of citizens indicating no religious affiliation whatsoever, and their people took less comfort in religion in general. In their words, “Countries with higher levels of per capita welfare have a proclivity for less religious participation and tend to have higher percentages of non-religious individuals.”

The article goes on to explain the chain of casusation from big government to secularization. Read the whole thing.

But this should be no surprise when you recall Nobel prize winning economist F. A. Hayek’s thesis in his landmark book “The Road to Serfdom”. His thesis is that the natural endpoint to all systems of government that control the means of production is fascism.

Fascism is a left-wing ideology, in which the state substitutes its own values, meanings and purposes for the values, meanings and purposes of individuals. There is no such thing as fascism on the right, because people on the right are free market capitalists who prefer small government and individual liberty.

To see how fascism destroys individual liberty and freedom of conscience, consider:

  • Obama’s plan to force hospital workers to perform abortions against their conscience
  • Obama’s forcing of taxpayers to pay for abortions here and abroad against their conscience
  • Obama’s forcing of taxpayers to pay for embryonic stem cell research against their conscience
  • Obama’s forcing of students to attend government run schools instead of private schools of their choice
  • Obama’s discrimination against religious schools in his spendulus bill
  • Obama’s plan to force some workers to join unions against their will and fun left-wing union political activism against their will
  • Obama’s forcing individuals to let Washington run their health-care

I could go on. And on. And on and on and on. But the point is that electing a socialist put us on the road to fascism. As IBD notes, socialists want to force-feed (podcast audio) their worldview onto an unwilling populace by any means – from government-run schools to news media.

I think that Christians need to do a much better job of understanding how our religious liberty hangs on small government and the free market. And remember: this crisis that Obama is “fixing”: it’s the Democrats who caused it, while Republicans tried to stop it.

News

China cuts sales tax on cars and auto sales shoot up 25 percent

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Here are the details of China’s sales tax cuts on new vehicle sales from Time Magazine:

On Jan. 20, the Beijing government slashed the sales tax on cars with engines of up to 1.6 liters from 10% to 5%. The measure, designed to get Chinese to buy smaller, more fuel-efficient vehicles, has had an immediate impact. January sales of small cars jumped 19% compared with the previous month, according to the China Association of Automobile Manufacturers. Also boosting buyer interest: Lower road taxes and fuel prices, which are set by the government.

…The surge in small-car sales helped China pass a milestone. For the first time ever, more cars were sold in China (735,000 vehicles) in a month than were sold in the U.S. (657,000). In January at least, China was the world’s largest car market. “The tax reduction was an obvious help to our sales,” says a sales manager surnamed Feng at the biggest Hyundai dealer in Beijing. “Since the new policy started, sales of our three models with 1.6 liter engines or below have gone up by 30% compared to the same period last year.“

…China’s stimulus plans “could have an enormous difference in whether or not people want to buy cars,” says Ben Simpfendorfer, chief China economist for the Royal Bank of Scotland. “What’s unusual about this cycle is that China faces the same problems as everywhere else in the world. The big question is how to spur consumer spending. Strong auto sales will help China, just like they’ll help America or Europe.”

And it works the same way for jobs! If you want to create jobs, what should you do? Should you waste 1.5 trillion dollars of money stolen from the private sector in order to expand government, pay off special interests, fund pork projects and thousands wasteful earmarks? Of course not! What you need to do is what China did. They made cars go on sale. We need to make employees go on sale. How?

The answer is to do what the Arnold Kling of the Cato Institute says and temporarily cut the employer portion of payroll taxes. This means that employers get all of the productive capacity of new employees hired within the United States, but the cost of hiring new employees is reduced. All the productivity at a much cheaper cost. Total cost of this stimulus plan: 230 billion dollars!

This plan is actually from Harvard economics professor Greg Mankiw, who describes it more fully here, but couples it with off-setting gas tax hikes.

I would institute an immediate and permanent reduction in the payroll tax, financed by a gradual, permanent, and substantial increase in the gasoline tax. I would make the two tax changes equal in present value, so while the package results in a short-run budget deficit, there is no long-term budget impact. Call it the create-jobs, save-the-environment, reduce-traffic-congestion, budget-neutral tax shift.

But who cares what Harvard economists think? The tax-cheat says that you can fix the economy by raising taxes on companies that actually hire people:

The Treasury chief today also defended the carbon emissions cap-and-trade proposals in the plan, saying the policy would raise hundreds of billions of dollars and help the country achieve energy independence. “It is critically important for our country that we begin the process now of changing the incentives Americans face for how they use energy,” he said. “It’s important to reduce our dependence on foreign oil, it is critical for climate change.”

Who cares if consumers have to pay more for oil and gas in a recession? We need to think of the trees and whales! Won’t someone please think of the sea-kittens?

Don Surber summarizes the problem:

That’s a good bailout because it allows people to spend their own money to buy cars instead of forcing them to pay for not buying cars.

…50 years ago, President Eisenhower dreamed of the day when China would abandon communism in favor of capitalism.

That dream is coming true.

Little did he know that we would be doing the reverse.

And here is Monica Crowley’s take:

China cut taxes, and auto sales spiked.

China cut taxes, and a part of its economy started to boom.

Cutting taxes equals economic growth.

The Chinese Commies get it.

…Still waiting for the American Democrats to get it.

Tax cuts = Jobs. Jobs = economic recovery. Why is it that we are disregarding capitalist recommendations from former communist countries like Russia and China? Why is it that we insist on angering the world with our socialist policies? Why is that we are going out of our way to impose new taxes on products that consumers rely on? We can’t afford this much spending no matter how much we tax the rich.