Calling John Galt

This piece ran in The Independent from London:

They came in their thousands, queuing through the night to secure one of the coveted wristbands offering entry into a strange parallel universe where medical care is a free and basic right and not an expensive luxury. Some of these Americans had walked miles simply to have their blood pressure checked, some had slept in their cars in the hope of getting an eye-test or a mammogram, others had brought their children for immunisations that could end up saving their life.

In the week that Britain’s National Health Service was held aloft by Republicans as an “evil and Orwellian” example of everything that is wrong with free healthcare, these extraordinary scenes in Inglewood, California yesterday provided a sobering reminder of exactly why President Barack Obama is trying to reform the US system.

The LA Forum, the arena that once hosted sell-out Madonna concerts, has been transformed – for eight days only – into a vast field hospital. In America, the offer of free healthcare is so rare, that news of the magical medical kingdom spread rapidly and long lines of prospective patients snaked around the venue for the chance of getting everyday treatments that many British people take for granted.

So, the mere fact that people will line up for something that is free is somehow proof that it ought to be publicly paid for?

Let’s think about this for a second.

If I set up shop in the LA Forum for a week offering free automobiles, how many people would come from hours away? Would the teeming throngs constitute “proof” that we should socialize transportation?

If I set up in the LA Forum for a week offering free steaks and beer, how many people would show up? Would the numbers arriving be prima facie evidence that the government ought to pay for everyone’s lunch?

If there were a gun show in the LA Forum sometime in the near future, and vendors started offering free ammunition, I wonder what Guy Adams would write…

A government that promises free lollipops will fulfill that pledge by stealing candy from babies.

Be honest.

At some point, the GOP will regain control of Washington.

Do you really trust the GOP with your health information?

Do you trust the next G. Gordon Liddy with your data?

Do you trust the next Karl Rove not to move the medical appointments of registered Democrats to Election Day, as a means of suppressing their votes?

Think about it.

From Forbes:

According to a study released Monday by experts at the Urban Institute and the University of Virginia, a 10% excise or sales tax on fattening foods could raise $522 billion over the next 10 years. A 20% tax could raise $937 billion. Among its other uses (like paying down the deficit), that money could be used to defray the costs of health care reform or to curb the rise in obesity.

Makes me wonder, though…

Wouldn’t it be better to create a lipids market? Let people who are slightly underweight sell their credits to those who are overweight. It would be a boon to the healthy. It would ease the transition, in the same manner that we see in the proposed carbon markets.

“But wait, you’re being silly! That would encourage people to engage in anorexia, bulemia and other destructive behavior!”

Limiting one’s consumption to an artificially-mandated level also carries risks to our general health and well-being. So if markets are good for carbon, turn them loose on fat. It’s the same set of choices, but with more easily-recognized outcomes.

There are 120-million trees in a forest.

Let’s say the forest ranger comes up to you, and tells you there is a big out-of-control fire coming over the hill – and that if you follow his prescription now, you can grow or save 3-million trees.

What exactly has that person promised? Well, if he has forecast where the fire will spread before burning out, he might be able to show you how many trees the fire is likely to torch. Maybe the plan is to plant many seeds in an area protected from the flames.

A combination of those activities might well be poised to meet the demands of the promise – after all, it wasn’t a promise that we would have a net gain of 3-million trees. Just that we would grow or save 3-million trees.

So, how many trees must be standing at the end for the promise to be kept?

Answer: 3-million.

Think about it…

For decades, the US Forest Service inadvertently screwed up the nation’s forests. It wasn’t out of malice or greed, just well-intentioned idiocy.

If you’re going to manage a wildlife area, there are times you let nature take its course. Lightning strikes cause small forest fires that clear away the underbrush and create fertile ground for regrowth. If you are overzealous in preventing fires, you create conditions that allow a small fire to get way out of control.

We do controlled burns these days for that very reason, to keep a small fire from becoming everyone else’s problem. On a small scale, destruction is actually good.

Why is it the well-intentioned people in our federal government can’t leave well-enough alone with the economy? A little loss is a good thing, when it weeds out the bad or otherwise intractable. It is healthy to start over from time to time, and it’s much better for all the creatures living in that environment if only small sections get burned out at once.

Our recent economic/financial collapse has no single cause, but rather a number of contributing and enabling factors. I have a pet theory that the popularization of 401-K plans has meant a great deal of wealth for people who never would have been part of the “investing class,” but came with an Unintended Consequence: the amount of money pumped into investment circles was not matched by a proportional degree of oversight. When you own just a few shares each of 200 different companies, you’re not likely to investigate the balance sheets of any of them.

The main enabler, though, is the government. Politicians love softening the blow to the average family, and boy do we sure love to avoid discomfort. Rather than take our lumps with some bad economic news, we instead allow our representatives to patch over this ‘bubble’ with something that inevitably becomes the next bubble.

Let the bubbles break! Now we’re stuck with three or four bubbles worth of correction, and its no wonder that so many people are out of work. Yet, instead of leaving well enough alone, we’re patching yet another bubble by practicing Stimulus.

Maybe we should let the White House Economic Brain Trust intern for a summer in a National Park.

In the Freakonomics blog, Justin Wolfers tries to make the case for another round of Federal Stimulus.

Some argue that the original stimulus didn’t work, and so we shouldn’t try more.

This is silly for a variety of reasons. First, it is way too early to tell. Second, the economy may be bad, but to figure out whether the stimulus helped or hurt, you need to know the counterfactual: how would the economy have performed otherwise?

The two arguments here are stunning in their lack of logic.

1. If it is way too early to tell if the Stimulus was a failure, then it’s too soon to throw more money at the project!
2. The fact that we had a first stimulus destroys the counterfactual – just as not having a second stimulus destroys the counterfactual argument for continuing the program! How will the economy perform with more stimulus?

Finally, there’s the issue of all the unspent Stimulus. We’ve only used a fraction of the $800-billion originally allocated. Maybe Wolfers could argue we should have spent that allocation faster, and on actual activity that stimulates the economy and not special interest groups and partisan political projects?

If I buy a dozen eggs and eat two of them, it would be stupid to come back and say “Four eggs would be great! Let me buy another dozen!”

The resistance to the Stimulus is the broken eggs – the sheer amount of waste we must deal with to get to the “good spending.”  (Yes, I deny the existence of “good spending” in my opposition to Keynesian theory, but for the sake of argument if you grant them the possibility their own logic still fails.)

If it waddles like a duck,
and quacks like a duck,
and swims like a duck,
and sits on little duck eggs to hatch ducklings…

…it must be a Fee.

There’s been a phrase bubbling forth that really bothers me.

“Healthcare is too important to leave in the private sector; it is immoral to make a profit on someone else’s health.”

So, now it’s immoral to make a profit where a life is concerned? Let’s examine that statement a little further, because it’s one thing to make a case for government spending on something like national security or even efficiency. But morality?

This thinking comes as a result of a pair of faulty premises, that when taken together become very dangerous to liberty. They are “Profits are immoral” and “Zero-sum wealth.” The first is an appeal to what we think is the better side of human nature, the latter an empirical observation that is misses the entire nature of trade or pricing.

For that matter, shouldn’t it also be immoral to make a profit on food? Is it now time to initiate a takeover of farms, on the basis we should ensure there is enough food for the hungry? The proponent of government-run healthcare either has to accept this as a newly-christened potential government power, or has to supply a Constitutional rationale as to why food would be any different than healthcare. If I were boxed in such a corner, I’d likely argue for scarcity: there is no need to nationalize the farms, because there is more than enough food in America. It’s that so many Americans go without health coverage that we must address the scarcity.

This line of thinking presumes there’s no relationship between the supply of a commodity and the incentive to produce it. We must ask ourselves, why is there an abundance of produce? Might it have something to do with a free market for those goods? The prices are set by the constant flux of hundreds of millions of individual consumers, who signal what they want in relation to everything else by the act of selecting their groceries. No one individual or entity sets those prices – yet the optimum amount of what was wanted gets produced.

On the flip side, we have another profession (medicine) that comes with a significant barrier to entry in the form of up-front investment. Just like a farmer can’t throw seed on someone else’s property and start reaping, the health professional must spend time and money before earning the first real paycheck. Unlike agriculture, though, there is a large insulating barrier between the consumer and the price information.

Because of the manner in which insurance (and government-paid insurance) is administered, you will very rarely find a patient who knows as much about the cost of healthcare as he knows about the price of carrots or bananas. The “shortage” isn’t in availability of care, it is in the convenience of health coverage. Most have it. A few don’t. But even that system is broken, because the price signal is dampened beyond recognition.

The only way to have “enough” of something is to let people put a value on it for you. This is the genius of eBay, that an item is worth exactly what it is worth because the price is set in comparison to all of the identical items also being sold at that time, and against the opportunity cost of what you might have done with those dollars in another auction.

Taking health to single-payer dissolves any notion of a market. One buyer means one price set – and no data about wants and needs that might inform a course correction. Do we have enough trauma doctors in this city? In this neighborhood? How many podiatrists does this county need, and how many orthodontists? You could try to allocate them based on census data, but how well would that work? The Prophet must divine an answer from a single set of data; Profits are the continuous stream of data that tell us when there is an imbalance to be addressed.

Let’s put it another way. If you want to make something disappear, put it in a basket marked “Free.” People will always avail themselves of something they think they aren’t paying for. The danger in single-payer is that in reality you aren’t paying for your MRI – just 1/300,000,000th of it. That’s a sweet deal, until you end up paying 1/300,000,000th of my hormone replacement therapy, 1/300,000,000th of her surgery, 1/300,000,000th of the kids’ braces…

Essentially, single-payer brings to final fruition the illusion that others will pay for my healthcare. Instead, we’ve created the incentive for more people to use the system than really need to do so. With a greater demand for care and no budget increase (or signal) to allocate for it, we do indeed have shortages and rationing. The profit motive – no matter how immoral you think it might seem – is the only moral means of ensuring the proper amount of care is created.

So, would you rather trust your abundance to Prophets? or Profits.