Here is a splendid post about the economics of health care from Ben Shapiro, writing for National Review.
He responds to a view held by those on the radical left: people need health care, therefore health care is a right.
Excerpt:
The idea here seems to be that unless you declare medical care a right rather than a commodity, you are soulless — that as Marx might put it, necessity, rather than autonomy, creates rights.
This is foolhardy, both morally and practically.
Morally, you have no right to demand medical care of me. I may recognize your necessity and offer charity; my friends and I may choose to band together and fund your medical care. But your necessity does not change the basic math: Medical care is a service and a good provided by a third party. No matter how much I need bread, I do not have a right to steal your wallet or hold up the local bakery to obtain it. Theft may end up being my least immoral choice under the circumstances, but that does not make it a moral choice, or suggest that I have not violated your rights in pursuing my own needs.
But the left believes that declaring necessities rights somehow overcomes the individual rights of others. If you are sick, you now have the right to demand that my wife, who is a doctor, care for you. Is there any limit to this right? Do you have the right to demand that the medical system provide life-saving care forever, to the tune of millions of dollars of other people’s taxpayer dollars or services? How, exactly, can there be such a right without the government’s rationing care, using compulsion to force individuals to provide it, and confiscating mass sums of wealth to pay for it?
The answer: There can’t be. Rights that derive from individual need inevitably violate individual autonomy.
But there are ways to make a commodity less expensive, and of higher quality. It happens all the times in free markets, where innovators are rewarded with profits – just think of the people who sell smartphones.
More:
To make a commodity cheaper and better, two elements are necessary: profit incentive and freedom of labor. The government destroys both of these elements in the health-care industry. It decides medical reimbursement rates for millions of Americans, particularly poor Americans; this, in turn, creates an incentive for doctors not to take government-sponsored health insurance. It regulates how doctors deal with patients, the sorts of training doctors must undergo, and the sorts of insurance they must maintain; all of this convinces fewer Americans to become doctors. Undersupply of doctors generally and of doctors who will accept insurance specifically, along with overdemand stimulated by government-driven health-insurance coverage, leads to mass shortages. The result is an overreliance on emergency care, costs for which are distributed among government, hospitals, and insurance payers.
So, what’s the solution for poor people? Not to declare medical care a “right,” and certainly not to dismiss reliance on the market as perverse cruelty. Markets are the solution in medical care, just as they are in virtually every other area.
Treating medical care as a commodity means temporary shortages, and it means that some people will not get everything we would wish them to have. But that’s also true of government-sponsored medical care, as the most honest advocates will admit. And whereas government-sponsored medical care requires a top-down approach that violates individual liberties, generates overdemand, and quashes supply, markets prize individual liberties, reduce demand (you generally demand less of what you must pay for), and heighten supply through profit incentive.
It’s always a good idea to look at how health care is working in countries that do have single payer health care systems. Canada has a single-payer system. How is that working out?
Waiting for treatment has become a defining characteristic of Canadian health care. In order to document the lengthy queues for visits to specialists and for diagnostic and surgical procedures in the country, the Fraser Institute has—for over two decades—surveyed specialist physicians across 12 specialties and 10 provinces.
This edition of Waiting Your Turn indicates that, overall, waiting times for medically necessary treatment have in-creased since last year. Specialist physicians surveyed report a median waiting time of 20.0 weeks between referral from a general practitioner and receipt of treatment—longer than the wait of 18.3 weeks reported in 2015. This year’s wait time—the longest ever recorded in this survey’s history—is 115% longer than in 1993, when it was just 9.3 weeks.
[…]It is estimated that, across the 10 provinces, the total number of procedures for which people are waiting in 2016 is 973,505. This means that, assuming that each person waits for only one procedure, 2.7% of Canadians are waiting for treatment in 2016.
[…]Patients also experience significant waiting times for various diagnostic technologies across the provinces. This year, Canadians could expect to wait 3.7 weeks for a computed tomography (CT) scan, 11.1 weeks for a magnetic resonance imaging (MRI) scan, and 4.0 weeks for an ultrasound.
Research has repeatedly indicated that wait times for medically necessary treatment are not benign inconveniences. Wait times can, and do, have serious consequences such as increased pain, suffering, and mental anguish. In certain instances, they can also result in poorer medical outcomes—transforming potentially reversible illnesses or injuries into chronic, irreversible conditions, or even permanent disabilities. In many instances, patients may also have to forgo their wages while they wait for treatment, resulting in an economic cost to the individuals themselves and the economy in general.
The typical cost of the single-payer health care system to a Canadian family is nearly $12,000.
Socialist Canada has been doing a lot of taxing and spending to try to fix this problem, but the problem is getting worse. And no wonder: when the government controls health care, it becomes a tool for buying votes. Abortions and sex changes are “health care” in Canada. Breast enlargements and IVF are “health care” in the UK. Of course, good luck getting treatment when you are in your old age and will not be voting much in the future : both Canada and the UK have euthanasia programs to get rid of elderly people who are no longer as useful to politicians as young people who still have lots of voting ahead of them.
Economist Thomas Sowell changed the minds of a generation of young people, including me
I had written enough posts to carry me through the Christmas and New Year’s vacation. But then something happened that caused me to come off vacation and postpone today’s scheduled post in order to write about the retirement of a man who influenced my worldview as much as anyone has. And I am not exaggerating when I say that this man contributed the most of anyone to the economic views of libertarians and conservatives. (Although his views on social and foreign policy issues were largely conservative, as well). I never disagreed with his views, or maybe it’s just that he always convinced me to change to agree with him. He’s that kind of man – if you liked having a friend who knew how to think through just about anything, then this was the guy for you.
But now he has announced his retirement. Here is his farewell column. (H/T Mary)
Excerpt:
After enjoying a quarter of a century of writing this column for Creators Syndicate, I have decided to stop. Age 86 is well past the usual retirement age, so the question is not why I am quitting, but why I kept at it so long.
[…]Looking back over the years, as old-timers are apt to do, I see huge changes, both for the better and for the worse.
In material things, there has been almost unbelievable progress. Most Americans did not have refrigerators back in 1930, when I was born. Television was little more than an experiment, and such things as air-conditioning or air travel were only for the very rich.
My own family did not have electricity or hot running water, in my early childhood, which was not unusual for blacks in the South in those days.
It is hard to convey to today’s generation the fear that the paralyzing disease of polio inspired, until vaccines put an abrupt end to its long reign of terror in the 1950s.
[…]Most people living in officially defined poverty in the 21st century have things like cable television, microwave ovens and air-conditioning. Most Americans did not have such things, as late as the 1980s. People whom the intelligentsia continue to call the “have-nots” today have things that the “haves” did not have, just a generation ago.
[…]With all the advances of blacks over the years, nothing so brought home to me the social degeneration in black ghettoes like a visit to a Harlem high school some years ago.
When I looked out the window at the park across the street, I mentioned that, as a child, I used to walk my dog in that park. Looks of horror came over the students’ faces, at the thought of a kid going into the hell hole which that park had become in their time.
When I have mentioned sleeping out on a fire escape in Harlem during hot summer nights, before most people could afford air-conditioning, young people have looked at me like I was a man from Mars. But blacks and whites alike had been sleeping out on fire escapes in New York since the 19th century. They did not have to contend with gunshots flying around during the night.
We cannot return to the past, even if we wanted to, but let us hope that we can learn something from the past to make for a better present and future.
It’s a tragedy that Thomas Sowell is not more recognized in our culture. Thomas Sowell makes public appearances, but mostly to conservatives. Although I am not a Rush Limbaugh listener, I once heard Thomas Sowell sitting in for Rush, and he had another conservative black economist Walter Williams on with him. Rank-and-file conservatives bought Sowell’s books by the bushel and we went through them one after another. The first girl I ever dated went though 6 Thomas Sowell books in 2 months, then enrolled in university to study economics. That’s the kind of effect that Thomas Sowell had on people – you couldn’t read just one of his books. You read as many as you get from the public library, then you read all could afford to buy. Then you asked for them on birthdays and Christmases from your dumbfounded liberal relatives. It was fresh air – you read Thomas Sowell to get the lies and dishonesty of the progressive culture out of your mind.
But most people on the left have never heard of Thomas Sowell. Despite Sowell’s splendid scholarly credentials and academic publications, the leftist gatekeepers don’t want their liberal followers to know that the real intellect behind economic conservative is a black economist. Instead of fighting against Sowell’s ideas, their response has been to ignore him.
Let’s take a quick look at some of the institutions who are recognizing the great man’s retirement.
In my opinion, there is no economist alive today who has done more to eloquently, articulately, and persuasively advance the principles of economic freedom, limited government, individual liberty, and a free society than Thomas Sowell. In terms of both his quantity of work (at least 40 books and several thousand newspaper columns) and the consistently excellent and crystal-clear quality of his writing, I don’t think any living free-market economist even comes close to matching Sowell’s prolific record of writing about economics. And I don’t think there is any writer today, economist or non-economist, who can match Thomas Sowell’s “idea density” and his ability to consistently pack so much profound economic wisdom into a single sentence and a single paragraph.
Even at 86 years old, Thomas Sowell has remained intellectually active with his syndicated newspaper columns and the publication last year of his 40th book — Wealth, Poverty and Politics: An International Perspective — which was, amazingly, his 13th book in the last decade! To honor Thomas Sowell’s well-deserved retirement from writing his invaluable weekly column for the last quarter century, I present below some of my favorite quotations from Dr. Thomas Sowell (most were featured on a CD post in June on Sowell’s birthday) and a bonus video of the great economist:
I had to choose just a few of these, so here goes:
6. Politicians as Santa Claus. The big question that seldom— if ever— gets asked in the mainstream media is whether these are a net increase in jobs. Since the only resources that the government has are the resources it takes from the private sector, using those resources to create jobs means reducing the resources available to create jobs in the private sector.
So long as most people do not look beyond superficial appearances, politicians can get away with playing Santa Claus on all sorts of issues, while leaving havoc in their wake— such as growing unemployment, despite all the jobs being “created.”
If you show or read the quote below to anyone who is a serious conservative, they will immediately tell you that the author is Thomas Sowell, or someone summarizing Sowell’s work:
10. The Anointed Ones. In their haste to be wiser and nobler than others, the anointed have misconceived two basic issues. They seem to assume: 1) that they have more knowledge than the average member of the benighted, and 2) that this is the relevant comparison. The real comparison, however, is not between the knowledge possessed by the average member of the educated elite versus the average member of the general public, but rather the total direct knowledge brought to bear through social processes (the competition of the marketplace, social sorting, etc.), involving millions of people, versus the secondhand knowledge of generalities possessed by a smaller elite group.
The vision of the anointed is one in which ills as poverty, irresponsible sex, and crime derive primarily from ‘society,’ rather than from individual choices and behavior. To believe in personal responsibility would be to destroy the whole special role of the anointed, whose vision casts them in the role of rescuers of people treated unfairly by ‘society.’
Celebrating entrepreneurs:
12. Helping the Poor. It was Thomas Edison who brought us electricity, not the Sierra Club. It was the Wright brothers who got us off the ground, not the Federal Aviation Administration. It was Henry Ford who ended the isolation of millions of Americans by making the automobile affordable, not Ralph Nader.
Those who have helped the poor the most have not been those who have gone around loudly expressing “compassion” for the poor, but those who found ways to make industry more productive and distribution more efficient, so that the poor of today can afford things that the affluent of yesterday could only dream about.
Distinctions like this is what gave so many ordinary people the desire to read more and more of Thomas Sowell to clean popular culture socialist pablum out of their minds:
13. Income Mobility. Only by focusing on the income brackets, instead of the actual people moving between those brackets, have the intelligentsia been able to verbally create a “problem” for which a “solution” is necessary. They have created a powerful vision of “classes” with “disparities” and “inequities” in income, caused by “barriers” created by “society.” But the routine rise of millions of people out of the lowest quintile over time makes a mockery of the “barriers” assumed by many, if not most, of the intelligentsia.
Everything becomes clear – as spiderwebs – with a little Thomas Sowell. And for evidence, he used the best studies from all over the world, from across all different times and places, so that you always had the evidence at your fingertips. His books are filled with footnotes for further study.
The Weekly Standard
The Weekly Standard has an article entitled “Thomas Sowell, America’s Greatest Public Intellectual, Says ‘Farewell'” by Fred Barnes.
Excerpt:
Thomas Sowell is giving up his column. I can think of lots of columnists whose writing we wouldn’t miss. Sowell isn’t one of them. Every column he wrote in a quarter-century career as a columnist was eminently worth reading. I say this having read nearly every one of them.
What made his columns so good? He wrote with sparkling clarity. He relied on facts. He didn’t showcase his scholarship, but his range of subjects was impressive. He understood his readers and didn’t write down to them. He was prolific. He wrote two columns a week and, when he had more to say, sometimes three or four. Best of all, he analyzed things from conservative—and somewhat libertarian—perspective better than anyone else and in fewer words.
If you wanted more words, you could always look to his books, and that’s what my friends and I did.
National Review
National Review has an article entitled “Thank You, Professor Sowell” by Michelle Malkin. They also re-posted an article from 2011, entitled “A Lion in High Summer”.
One quote from Michelle Malkin:
I first read Thomas Sowell in college — no thanks to my college.
At the majority of America’s institutions of “higher learning,” reading Thomas Sowell was a subversive act in the early 1990s when I was a student. It remains so today. Why? Because the prolific libertarian economist’s vast body of work is a clarion rejection of all that the liberal intelligentsia hold dear.
[…]The former leftist playwright David Mamet, in his 2008 manifesto “Why I Am No Longer a Brain-Dead Liberal,” cited his exposure to Sowell, whom he dubbed “our greatest contemporary philosopher,” as a critical factor in his conversion. Whether tackling the “bait and switch media,” the “organized noisemakers,” or the lawless enablers of “social disintegration,” Thomas Sowell’s dozens of academic books and thousands of newspaper columns have sparked generations of his readers across the political spectrum to think independently and challenge imposed visions.
Asked once how he would like to be remembered, Sowell responded: “Oh, heavens, I’m not sure I want to be particularly remembered. I would like the ideas that I’ve put out there to be remembered.” Mission accomplished. Though it has been decades since he taught in a formal classroom, his students are legion.
This is where today’s conservatives came from – we read the Thomas Sowell. Many conservatives (e.g. – Michelle and myself) came from non-white families and cultures, just like Sowell. We were convinced to give up on the socialism popular in our families and cultures by his writing. He convinced himself, then he convinced us. In contrast, there isn’t much convincing on the secular left – most people just accept secular leftism in order to be liked – it’s not cognitive, it’s just virtue signaling. Conservatives are convinced by Thomas Sowell’s writing, whereas liberals blindly follow Hollywood celebrities. It’s just tribalism.
Ben Shapiro
Jewish conservative Ben Shapiro wrote an article in The Daily Wire entitled “Farewell to Thomas Sowell, Dean of Conservative Columnists”.
One excerpt:
In what we can only hope is the final heartbreak of 2016, Senior Fellow at the Hoover Institution Thomas Sowell announced his retirement from his syndicated column. Sowell isn’t just one of the great thinkers of our time. He’s a genuine voice of decency and truth in a time when screaming and hysterics gain headlines. His voice will be missed every week.
[…]For years, I’ve named Sowell as the man I’d most love to see as president. That doesn’t end just because his column has.
At the end, he lists his favorite Thomas Sowell books.
That’s to show you how real conservatives like Ben Shapiro who are having a real influence (his podcast is the #1 conservative podcast, it has exploded in popularity) were influenced by Thomas Sowell. Shapiro always says that people new to conservatism should always start with a study of basic economics, e.g. – books by Thomas Sowell. No one in my own family started out conservative. I read Thomas Sowell, then they read Thomas Sowell. That’s how we became conservatives.
Wintery Knight
I’m busy cleaning stuff out of my parents basement this holiday season. This trip, I am taking some of my books back with me. I made the choices about what to take before I saw Sowell’s retirement. Without any sentiment at all, I chose:
Basic Economics, 4th edition
Applied Economics, 2nd edition
Economics Facts and Fallacies, 2nd edition
Intellectuals and Society, 2nd edition
The Housing Boom and Bust, 2nd edition
Inside American Education
A Personal Odyssey
A Conflict of Visions
The Vision of the Anointed (best book for beginners)
Barbarians Inside the Gates
Black Rednecks and White Liberals
I am leaving my second edition of Basic Economics for my Dad. I understand that a new 5th edition is now out, and I might get that. I have many, many more on audio books – I buy all the audio books editions that I can get, and listen to them over and over. This is where my worldview on economic issues (not to mention marriage, gun rights, education, war, etc.) came from.
Have you read Jay Richards’ book “Money, Greed and God?” Because if you haven’t, he’s written a series of articles that summarize the main points of the book.
Part 1: The Eight Most Common Myths about Wealth, Poverty, and Free Enterprise
Part 2: Can’t We Build A Just Society?
Part 3: The Piety Myth
Part 4: The Myth of the Zero Sum Game
Part 5: Is Wealth Created or Transferred?
Part 6: Is Free Enterprise Based on Greed?
Part 7: Hasn’t Christianity Always Opposed Free Enterprise?
Part 8: Does Free Enterprise Lead to An Ugly Consumerist Culture?
Part 9: Will We Use Up All Our Resources?
Part 10: Are Markets An Example of Providence?
Parts 4 and 5 are my favorites. It’s so hard to choose one to excerpt, but I must. I will choose… Part 4.
Here’s the problem:
Myth #3: The Zero Sum Game Myth – believing that trade requires a winner and a loser.
One reason people believe this myth is because they misunderstand how economic value is determined. Economic thinkers with views as diverse as Adam Smith and Karl Marx believed economic value was determined by the labor theory of value. This theory stipulates that the cost to produce an object determines its economic value.
According to this theory, if you build a house that costs you $500,000 to build, that house is worth $500,000. But what if no one can or wants to buy the house? Then what is it worth?
Medieval church scholars put forth a very different theory, one derived from human nature: economic value is in the eye of the beholder. The economic value of an object is determined by how much someone is willing to give up to get that object. This is the subjective theory of value.
And here’s an example of how to avoid the problem:
How you determine economic value affects whether you view free enterprise as a zero-sum game, or a win-win game in which both participants benefit.
Let’s return to the example of the $500,000 house. As the developer of the house, you hire workers to build the house. You then sell it for more than $500,000. According to the labor theory of value, you have taken more than the good is actually worth. You’ve exploited the buyer and your workers by taking this surplus value. You win, they lose.
Yet this situation looks different according to the subjective theory of value. Here, everybody wins. You market and sell the house for more than it cost to produce, but not more than customers will freely pay. The buyer is not forced to pay a cost he doesn’t agree to. You are rewarded for your entrepreneurial effort. Your workers benefit, because you paid them the wages they agreed to when you hired them.
This illustration brings up a couple important points about free enterprise that are often overlooked:
1. Free exchange is a win-win game.
In win-win games, some players may end up better off than others, but everyone ends up better off than they were at the beginning. As the developer, you might make more than your workers. Yet the workers determined they would be better off by freely exchanging their labor for wages, than if they didn’t have the job at all.
A free market doesn’t guarantee that everyone wins in every competition. Rather, it allows many more win-win encounters than any other alternative.
2. The game is win-win because of rules set-up beforehand.
A free market is not a free-for-all in which everybody can do what they want. Any exchange must be free on both sides. Rule of law, contracts, and property rights are needed to ensure exchanges are conducted rightly. As the developer of the house, you’d be held accountable if you broke your contract and failed to pay workers what you promised.
An exchange that is free on both sides, in which no one is forced or tricked into participating, is a win-win game.
On this view, what you really need to fear as a consumer is government intervention that restricts your choices in the marketplace, or makes some choices more expensive than they need to be (tariffs).
If you care about poverty, it’s often tempting to think that it can only be solved one way – by transferring wealth from the rich to the poor. But that is a very mistaken view, as any economist will tell you. The right way to create prosperity is by creating laws and policies that unleash individual creativity. Letting individuals create innovative products and services, letting them keep what they earn, making sure that the law doesn’t punish entrepreneurs – that incentivizes wealth creation. Fixing poverty does not mean transferring wealth, it means giving people more freedom to create wealth on their own. Free trade between nations is an important way that we encourage people to create better products and services that what they have available in their own countries.
Economists agree on the benefits of free trade
Who could possibly disagree with free trade? Well, many people on the left do. But economists across the spectrum of ideology (university and private sector and public sector) agree on the benefits of free trade.
Here is the list, together with the percentage of economists who agree:
A ceiling on rents reduces the quantity and quality of housing available. (93%)
Tariffs and import quotas usually reduce general economic welfare. (93%)
Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
The United States should not restrict employers from outsourcing work to foreign countries. (90%)
The United States should eliminate agricultural subsidies. (85%)
Local and state governments should eliminate subsidies to professional sports franchises. (85%)
If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
A large federal budget deficit has an adverse effect on the economy. (83%)
A minimum wage increases unemployment among young and unskilled workers. (79%)
The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)
Socialist economic policies don’t work because they are making policies that are based on economic myths. We know that these myths are myths because of economics is a mathematical science, and because we have tried good and bad policies in different times and places. We have calculations and we have experience to know what works and what doesn’t work. If you want to help the poor, you have to respect what economists know about how wealth is created. The solution is not to “spread the wealth around”, it’s to encourage people to create more wealth by inventing things that people freely choose to buy.
WINTERY KNIGHT 