Posted on 10/20/2004 2:52:22 PM PDT by hsmomx3
The Arizona Republic, which is a daily with the second-largest circulation in the Gannett empire next to USA Today, ran a long editorial on October 19 about the flu vaccine shortage. The title and subtitle were: "Bug in the system. Our stand: The shortage of flu vaccine reveals a yawning gap in health care."
A telephone conversation between myself and the author of the editorial, an intelligent and personable member of the editorial board, reveals the yawning gap between many in the mainstream media and people like myself on the subjects of markets, economics, government and health care. It's a gap the size of the Grand Canyon that is impossible to bridge. Given the influence of the media and the economics illiteracy of the general public, the gap will lead inevitably to the nationalization of American health care.
In the spirit of full disclosure, let me preface my remaining remarks with the fact that the Republic is gracious and open-minded enough to allow opposing op-eds on its opinion pages, including the minority views (politically speaking) of this classical liberal, or small "L" libertarian. This is particularly praiseworthy given the pro-government philosophy of the newspaper (as well as the vast majority of other big-city dailies).
As an example of that philosophy, from September 17 to October 18, the Republic ran nine editorials in favor of bigger government or higher spending, and zero editorials in opposition, a ratio that is common in the establishment media. If that rate continues, there will be over 100 pro-government editorials in the Republic over the coming year.
Drip, drip, drip.
Anyway, I telephoned the editorialist because of the following sentence in her editorial on the flu vaccine shortage: "Low prices have prompted many U.S. drug companies to bail out of producing vaccines of all types."
Upon reading that sentence, readers who are literate in economics would automatically ask the following questions: Why would prices be low if demand is high and there are few suppliers? Has something interfered with market forces to create a supply and demand imbalance?
The editorial neither raised nor answered these questions.
The answer is that the government has caused the market disruption through price controls on vaccines that it buys and distributes "free" to millions of Americans. It bought the vaccines at prices below the cost of production, thus making it uneconomic for manufacturers to stay in the business. The same thing would happen to newspapers if the government forced publishers to lower add rates and newsstand prices below the cost of producing newspapers.
The vaccine shortage was exacerbated by inflexible FDA regulations and lawsuits. The Wall Street Journal wrote about this in a recent editorial.
In the course of discussing the vaccine issue with the editorialist, she said that she is in favor of the nationalization of health care. As I do whenever anyone says that to me, I asked her if she is also in favor of nationalizing food, shelter and clothing.
She replied that I was presenting a straw man. (Perhaps she meant to say "red herring.") She then went on to say that health care should be nationalized, because a) all other industrialized nations have nationalized it; and b) health care is a public good like roads.
When it became apparent after some discussion that we weren't going to change our minds, we ended the conversation.
In the event that others have not made up their minds and have not swallowed the biases of the mainstream media about health care, let me address her points.
First, my question about nationalizing food, shelter and clothing was neither a straw man nor a red herring. It was an opportunity for the editorialist to explain her apparent intellectual inconsistency of wanting one necessity of life nationalized but not the other necessities of life. If the government should provide "free" health care, then why shouldn't it provide free food, shelter and clothing? After all, the entire population of the United States would die in about a week without food, so it's a much more important necessity of life than health care.
Sure, the demand curve is different for health care than green beans, but the same economic laws apply. Why, then, is the American market for health insurance and health care dysfunctional, and the market for green beans is not?
The answer is that the government mortally wounded a consumer market in health insurance and health care 60 years ago, through a misguided policy that resulted in employees obtaining their health insurance from their employers -- unlike green beans. Then the coup de grace was delivered with Medicare in 1965. Now, 80 percent of Americans get their health insurance from a third party, which is a prescription for runaway spending, which in turn spawns a plethora of rules and regulations in a futile attempt to slow the spending.
It is not a consumer market when people sit on the sidelines like a jug of Gatorade at a football game while employers and the government negotiate and set prices with insurance companies and health care providers. Likewise, it would not be a consumer market if your employer or the government bought green beans on your behalf and made you believe that they are free.
Contrary to what the mainstream media wants the public to believe, the market hasn't failed with respect to health care. The fact is, there isn't a true market in health care.
On the issue of other nations having nationalized health care, I ask the following questions:
- Do we want to adopt the racial homogeneity of Sweden, China, Finland, Germany and other countries? If so, what races will we deport to get a population that is 90 percent of one race?
- Do we want France's and Germany's per-capita GDP, which is only 69 percent of ours?
- Do we want France's and Germany's high unemployment?
- Do we want to kill our pharmaceutical industry, as was done in much of Europe?
- Do we want politicians and bureaucrats to ration health care, as is done in Britain and Canada? Do we want John Kerry or George Bush to decide what treatments we should get?
- Do we want to adopt Britain's form of government and no longer be a constitutional republic?
- Do we want the repression of Cuba and N. Korea?
Oh, I see. We only want their socialized medicine and not everything else that comes with it.
Last, on the issue of health care being a public good like roads, I'm almost speechless -- don't cheer -- over the editorialist's analogy.
Roads are different from health care because, other than a few toll roads, the private sector will not provide roads. It will not provide roads for two reasons: First, the private sector doesn't have the power of eminent domain and thus cannot take private property to make way for roads. Second, the private sector can't provide a good or service at a profit if the good or service is open to a large number of free riders; that is, people who don't pay for the good or service but use it anyway.
The free rider problem exists with public safety and other services. If, for example, people could decide not to pay for police services, those who decided not to pay would still benefit from the service. They would get a free ride, in other words, at the expense of those who paid.
In economics jargon, a public good is one that cannot or will not be produced for a profit, since it has large externalities. An externality exists when someone makes a decision that benefits him personally but creates a cost for someone else.
In one sense the editorialist is correct about health care being a public good. It has been turned into a public good by a government policy that crowded out a consumer market and that distorts supply and demand. Eighty percent of Americans make health care decisions that benefit them personally but are perceived as increasing the costs for someone else. Eat fatty foods all your life and someone else will pay for your by-pass surgery. Get a hip replacement at the age of 85 instead of using a cane, and someone else will pay for the replacement. Buy an expensive car and someone else will pay for your visits to the doctor. (The average household spends twice as much on cars than on health care.)
I'll close with three maxims: Cost is no object when someone else is picking up the tab. Nothing is more expensive than when it is provided free of charge by the government. And when economics illiteracy is widespread, socialized medicine is inevitable. __________
Mr. Cantoni is an author, columnist and founder of Honest Americans Against Legal Theft (www.haalt.org). He can be reached at haalt1@aol.com.
good stuff
Very good stuff. Confirms what I have been telling Mrs Yeetch about flu shots.
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