[ExI] The Circle of Coercion

Dan dan_ust at yahoo.com
Mon May 11 16:59:25 UTC 2009

--- On Mon, 5/11/09, Stathis Papaioannou <stathisp at gmail.com> wrote:
> 2009/5/11 Lee Corbin <lcorbin at rawbw.com>:
>> Who could even have (on this list) imagined
>> fifteen years ago that Voltaire's principle
>> would be questioned? Who sixty or seventy
>> years ago in America could have guessed that
>> government would come to absorb about fifty
>> percent of everyone's pay, and would soon
>> be trying to impose communist health care?

I disagree with Lee's rhetoric here.  I don't think it's communist healthcare; but it's definitely not free market and healthcare in the US has not been predominantly free market for many decades now.
> You keep going on about health care, but it is one of the
> things that
> clearly works better when there is government involvement.

I disagree, but what's your evidence for this?  From my readings, it seems to me that government involvement has made healthcare much more costly -- especially since 1960 in the US -- and slowed down the pace of innovation.  Of course, the latter is based on counterfactuals partly -- what might've happened had healthcare reform been in the direction of a free market (as in, in the US, abolishing the FDA, getting rid of the AMA's monopoly powers, and removing government completely from provisioning and mandating healthcare).

> You
> speculate that if the mostly private health system in the
> US were
> completely deregulated, health care would become both
> cheaper and better.

I think this is evidence.  In the US, the costs of healthcare, for the most part, have been only loosely linked to actual service, so there's a tendency for overpricing -- as actual customers are not cost-sensitive.  For example, as was pointed out many years ago, in one area of the country (I think it was in Houston, Texas), a simple blood test of the same quality (I forget what for) ranged in price from, IIRC, $20 to $100.  But people getting the blood test were almost always paying via their employer's mandated health insurance.  I.e., if they got the cheaper test, they didn't save any money for themselves, but merely for the health insurers.  That removes one incentive to compete on price.  (It also led insurance companies to lobby for cost controls.  The market reform would've been to remove mandated health insurance.*)

> But there is no evidence for this, anywhere in the
> world. Your
> position reminds me of apologists for the Soviet Union
> arguing that it
> failed because it wasn't communist *enough*.

What's meant by "communist" here?  If it's the defining economic feature of the Soviet system -- central economic planning -- then those apologists are completely, unequivocally wrong.  Central economic planning failed (and continues to fail; in the US, e.g., the central bank is central economic planning for the money system and the recent bust is merely its latest flop) as can be seen by how poorly it compared with the output and dynamism of even the highly regulated economies of the West.**  (Also, another features of the Soviet system made it hard to spot this: the lack of an open society where the success or failure of the system could be openly considered and debated.)



*  Speaking of which, as one of the uninsured for many years, had I thought I needed health insurance at the time and we were under a free market, I'd probably opt for a very high deductible, those lower my premium.  I wouldn't want health insurance to pay for routine visits, but for catastrophic/unlikely events like me getting serious illness or suffering massive trauma.  Think if car insurance covered oil changes and tire rotation.  (In the US, car insurance is mandated anyhow, so it's already got a monopoly price baked in.)  My guess is the cost of car insurance would rise by orders of magnitude and then people would call for nationalizing car insurance.

**  Not to mention, Mises showed theoretically why this was so and predicted its failure early on.  He even took Lenin's New Economic Policy as evidence for his view being correct -- and others have seen it as an open admission that central economic planning can't work.


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