Tuesday, November 10, 2009

A Democrat Goes Free Market...kind of

The Atlantic published a very interesting article written by an honest democrat, David Goldhill, who began a thorough examination of the health care system after his father's tragic death in an American hospital. The article summary reads:
After the needless death of his father, the author, a business executive, began a personal exploration of a health-care industry that for years has delivered poor service and irregular quality at astonishingly high cost. It is a system, he argues, that is not worth preserving in anything like its current form. And the health-care reform now being contemplated will not fix it. Here’s a radical solution to an agonizing problem.
In the essay, Goldhill provides this excellent survey of the problem:
Indeed, I suspect that our collective search for villains—for someone to blame—has distracted us and our political leaders from addressing the fundamental causes of our nation’s health-care crisis. All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.
Near the end, Goldhill concludes:
Would our health-care system be so outrageously expensive if each American family directly spent even half of that $1.77 million that it will contribute to health insurance and Medicare over a lifetime, instead of entrusting care to massive government and private intermediaries? Like its predecessors, the Obama administration treats additional government funding as a solution to unaffordable health care, rather than its cause. The current reform will likely expand our government’s already massive role in health-care decision-making—all just to continue the illusion that someone else is paying for our care.
Although long, this is a very comprehensive and detailed exposition of the problems and causes underlying the health care crisis. Since I advocate a fully free, unregulated market, I do not entirely agree with some of his recommendations which still involve government subsidies, but his approach is sensible and at least would move us in the right direction towards what he calls a "consumer-driven" model (which appears to be a liberal euphemism for free-market).

Interestingly, this article was sent to me by a liberal friend. Apparently, liberals only consider free market solutions if offered by another liberal in a liberal magazine. Nonetheless, it demonstrated that this article might have broad appeal.


brian said...

Interestingly, as a "liberal" I advocate a free market system in most enterprises.I also believe in a social contract in some cases. The bottom line is this; until we as a society are prepared (which we are not) to leave a dying child (without the means to pay) to die on the sidewalk in front of the hospital, a burning building (without insurance) to burn to the ground, A car accident with severe injuries (and no insurance) to go untended, boats the are up heaved in storms (who cannot prove means to repay) to go without search and rescue etc. etc. etc.....(Christ, we can't even let a deer drown). We in the USA are stuck in social contracts that we may not all agree with. I entertain all constructive solutions that may have a chance to improve the efficiency of the system at hand. To ignore this great reality, and draw lines between "liberals" and "Conservatives" does nothing to advance the discussion.

Doug Reich said...


Thanks for your comment.

A "contract" is a voluntary agreement between two parties. A case where one party says "do this, or I will imprison you" is NOT a contract - it is a crime.

I do not recognize the "social contract" to which you refer. Why would one party have the ability to take from another by force based on some vague concept of "need"? In other words, you are arguing that if one party "needs" something (by your definition?) then that entitles them to the property of another (who doesn't "need" their property?). How do you justify such a claim?

In fact, contracts rest upon the principle of individual rights, namely property rights. One of the major purposes of government is to enforce voluntary contracts.

Now, if someone wants to voluntarily help a dying child then so be it. As you say, Americans are among the most benevolent and charitable people in the world and won't even "let a deer drown". That is because true benevolence and charity follows from a society governed by the rule of law in which each person's rights are respected. The consequent wealth and prosperity that follows in a free society makes charity possible and more importantly, creates wealth, prosperity, and advances in technology that benefit the ENTIRE society and mostly the poor as they can benefit disproportionately from the work and wealth of others!

To see evidence of this, compare the poor in even a mixed economy like America to the average person in a socialist slave society such as Cuba, North Korea, or the old Soviet Union.

Despite this, in this particular case, Obama's policy is not some welfare program to subsidize the destitute or to help dying children in front of a hospital. Obama's program is a full nationalization of the health care industry which will affect everyone including threatening fines and imprisonment for those who do not purchase insurance. This program represents a gross violation of the rights of taxpayers, doctors, hospitals, insurance companies, and patients and will result in a massive decrease in quality and quantity of care.

end part 1

Doug Reich said...

To Brian

Part II (cont.)

You said that to "draw lines between liberals and conservatives does nothing to advance the discussion." I disagree. Highlighting the philosophical or ideological context is essential to advance the discussion.

For example, you said that you "entertain" solutions to "improve efficiency". Notice that you are making a pragamatic argument. In other words, you are implicitly starting with the view that the goal is to "help the poor" or something like that and then simply assessing the "most efficient" way to get there. This is why you say that you "advocate free market in most enterprises...", i.e., but not in in principle.

Why is this your philosophy or your starting point?

My starting point is not the poor. Each individual has a right to his own life and property. Only in this context can anyone prosper or survive properly and happily. The recognition of this right by the government results in a free market system. Such a system is moral because it rests upon a foundation of rights and is also practical since it is consistent with man's nature and what he needs for survival - the ability to think and produce without coercion.

My view is neither "liberal" nor "conservative". However, I noted that liberals tend to dismiss free markets so you are definitely a minority in even considering it. One consequence of this is that liberals seem to find it amazing that the free market actually "works" better than government intervention. It took Goldhill years of study to determine this. Of course, if they bothered to study non-liberal authors they would find that we knew this a long time ago!

It is not an accident that the free market works. A system of private property and individual rights is consistent with man's nature and so will always be the practical solution. The real issue is that liberals define morality improperly. Like you, they start with an altruisitic premise instead of the moral premise that the purpose of life is happiness.

If you start with altruism, you will be led to sacrifice and government coercion which is Obama's approach. If you start with reality, and the observation that man must think and produce to survive and be happy, you will be led to rights and free markets.

This is always the case.