[ExI] Healthcare and governments thinking long range

[Dan]

--- On Sat, 6/20/09, Stathis Papaioannou <stathisp at gmail.com> wrote:
> > > Apparently the "pollyanna view" is what in fact
> happens,
> > > since most
> > > OECD countries have cheaper, universal systems
> which result
> > > in better overall outcomes.
> >
> > I'm not completely familiar with all the various
> national programs, but my understanding is quality is lower,
> cost is higher, and just what is covered by the universal
> aspect is under political control.  You might think this is
> great, but then I'd wonder about the people who, e.g., cross
> the border from Canada to get better and more timely
> healthcare here in the US.
> 
> Canadians pay substantially less for their medical care
> than Americans
> and are healthier than Americans. With certain elective
> procedures
> there may be a waiting list in the public health system. In
> that case,
> Canadians can either wait or have the procedure done
> privately, either
> in Canada or in the US. They would still get their health
> care
> cheaper, since as you pointed out they are paying less
> through their
> taxes for their universal health care system than Americans
> are paying
> for their non-universal public system.

This is not my understanding of the Canadian system, but I'll have to comment in more detail next week.
 
> > > The only real argument against this that
> > > I have
> > > heard is that the US population are an
> intrinsically
> > > unhealthy lot
> > > compared to the rest of an OECD, so they need
> higher health
> > > care spending just to keep up.
> >
> > Well, it might be the only argument you'll accept. 
> :)  I haven't studied the various systems closely enough to
> judge what's the case here.  Basic economic theory tells us
> that nationalized anything should be worse, all else being
> equal.  So, that points in the direction of explaining why
> this would be different with healthcare.  (Note: theory
> tells us how to view the data here.  Without a sound
> economic theory, we're left with torturing data to get
> whatever policy recommendations we prefer.  Also, without a
> sound economic theory, you really don't know if whatever
> statistical set you're dealing with is telling you something
> important -- like socialized healthcare works better than a
> free market system -- or is just caused by other factors, or
> even just an anomally.)
> 
> Empirical fact trumps economic theory. Forgetting this led
> to the
> downfall of the Soviet Union.

The downfall of the Soviet system was predicted by economic theory, specifically Mises's classic work _Socialism_ and his earlier essay on the impossibility of socialist economic calculation.  In fact, he and other Austrians took Lenin's adoption of the NEP as an implicit admission that Mises was right.  My point, however, is not that empirical reality and economic theory are in conflict, but, rather, correct theory must be used to interpret the empirical data.  Without such a theory, how would you know _why_ the Soviet Union failed?  After all, right up until its failure, mainstream economists, the US CIA, etc. all thought it was doing just fine.  Only certain Austrians and people like Rand were stating what we now know to be obvious: the Soviet system never really worked.

Regards,

Dan