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Regulation

March 18, 2013 3 comments

“Corporate capitalists don’t want free markets. They want dependable profits, and their surest route is to crush the competition by controlling the government.” – RFK, Jr.

It is often claimed in “progressive” and “liberal” circles that we need more regulation to curb the influence and power of big business. This belief is based largely on a misconception as to the origin, purpose and result of regulations.

During the period between the end of the American Civil War and roughly the 1890s, business in the US tried to cartelise but found it could not. In general, cartels can only control a market when force is introduced. During this period, every attempt to form a cartel and raise prices led to new competitors that realised they could undercut the cartels. In response, big business began lobbying the government to pass laws “in the public interest” (as all laws are claimed to be) that would enable them to keep competitors out. It worked. (Find a large amount of research on the subject here.)

Today, regulations and other laws protecting business include corporate personhood, accounting standards, safety standards, environmental standards and intellectual property. In addition, there are subsidies (“corporate welfare”), amounting to perhaps $98b a year, selective tax breaks and contracting. In each of these categories, government and industry have made a variety of laws enabling large firms to eliminate competition. As such, they are a kind of tax taken from consumers who would pay lower prices and entrepreneurs who would be able to make their livings doing what they want. The tax is given to business owners who would be forced to lower prices or improve services in a free market. The Small Business Administration in 2005 estimated the total cost of these regulations at $1.1 trillion.

free market government regulation

Accounting standards are widely considered necessary to prove a firm is not cooking the books. But in the absence of state regulation, concerned investors would find a way to insure against this possibility with audits. An example of the enormous and unnecessary complication of accounting standards is the Sarbanes-Oxley Act, passed in the wake of the Enron accounting scandal and failure. The Act made accounting more complicated. Implementing it costs a firm millions of dollars. Millions of dollars is pocket change for a big corporation, but prohibitively expensive for new and small businesses that could otherwise rival them. As a result, fewer businesses are created, and wealth and power are concentrated in the larger firms. We now have a complex tax code that could not be implemented by less than a team of accountants. The same is true of the legal code. The modern legal code was designed so that teams of high-priced lawyers can get away with murder and people without money see no justice.

Sarbanes-Oxley is, of course, but one law in a sea of other laws. Those who say the 2008 financial crash was caused by a lack of regulation may do well to realise there were thousands of lines of financial regulations already. They often cite the repeal of parts of the Glass-Steagal Act as the only incidence of deregulation they can think of, but this change did nothing to enable banks to make bad loans. A look at the facts indicates very clearly that regulation was the main cause of the bubble that caused the massive destruction of wealth for all but those whose ties to the state got them trillion-dollar bailouts.

Negative externalities, which seem to be the reason people beg the government to get involved in the market, are easily externalised in a statist society. The same big corporations pollute and break the law repeatedly. They are sued by the government, they pay the government, which means it gets another legal donation from an interest group, and then they are allowed to continue business as usual. The lawsuits are a bone thrown to voters and the corporations shake them off like lice. But they give the appearance that justice has been done. The corporations nonetheless retain all the benefits they get from the state in the form of legal personhood, subsidies, tax loopholes, intellectual property and regulatory barriers to competition. The state does not protect us against negative externalities.

Intellectual property enables firms to monopolise virtually anything they create. Consider the effects of IP laws in the pharmaceutical industry. Kevin Carson explains that drug patents are unnecessary to recoup expenses and develop the most effective drugs.

First of all, there has been a dramatic shift away from fundamentally new kinds of blockbuster drugs, because it’s much more cost-effective to put money into tweaking the formulas of drugs whose patents are about to expire just enough to qualify for repatenting them—so-called ‘me, too drugs.’ Second, a great deal of the basic research on which drug development is based is carried out at government expense in publicly-funded universities. Around half of the overall cost of drug R&D is taxpayer-funded. And in the United States, under the terms of legislation passed in the 1980s, the patents on drugs developed entirely at taxpayer expense are given away—free of charge—to the drug companies that produce and market them. Third, most of the actual R&D cost for developing drugs comes, not from testing the version of a drug actually marketed, but from securing patent lockdown on all the other major possible variants.

Generic drugs do not get developed, or get banned as soon as they are, because they are competition. The poor people who need them most do not get them. Intellectual property, Carson concludes, is murder.

corporatism regulation big business free market

We can divine the purpose of regulation from its results. We now have giant, multinational corporations straddling the Earth, with no government willing or able to oppose them, with the exception of a few populist, anti-imperialist holdouts. Large corporations’ alliance with the state has enabled the two to control natural resources and all manner of other markets. Consumers thus have fewer choices and higher prices than in a market freed from regulation. But freedom is always preferable to laws and regulations imposed by the state. Freedom allows economies and the arts to flourish. It means scientific advances and technological innovation. And it forces responsibility on those able to handle it while still allowing for us to help each other.

The solution to the control of markets by cartels is to free them. That would make customers the true regulators. If they decry a firm’s practices, they can stop buying from it and start buying from its competitor. If you abhor business, you are free to start and join one of the thousands of cooperatives in the world or simply produce and give to your neighbours. But demanding more regulation to prevent big-business malfeasance is akin to shooting oneself in the head to cure one’s headache.

Health

May 25, 2012 3 comments
“If you think health care is expensive now, wait until you see what it costs when it’s free.” – P.J. O’Rourke

The current debate in the Supreme Court on the constitutionality of Obamacare is, like most political discourse, distracting. Does it matter anymore if something is constitutional? Is indefinite detention without trial constitutional? The real question is, do we need a top-down health care system at all?

Are we as healthy as we could be? Do we have the best health care system in the world? What would the best health care system look like? Would it look anything like the current system? This post will consider the dangers of subjecting health care to law and regulation, why we are still sick, and health freedom. This post will also outline some of the problems inherent in government, as explained with reference to government health care.

Canadians and Europeans love their health care system. It’s so great. You get decent care at a low price. What could possibly be wrong with that?

Let’s first consider the fact that, in almost every case (certainly every one I can think of) where free markets are adopted, they successfully lower prices and increase quality of services. Surely, food is more important than health care. And yet no one is starving in the streets of the developed world, even despite the higher prices caused by subsidy of large farms. The argument that something needs to be done, therefore it needs to be done by government, does not follow. Government does everything less efficiently than business because its agents are relieved of responsibility. It subjects everything to politics, meaning the amount of resources allocated to it will depend on the strength of the groups pushing hardest to control those resources. A complex top-down system is a door wide open to abuse. An anarchist’s argument is that if something needs to be done, the people will make it happen; let the people find a non-coercive way to do it themselves.

The optimal systems, from an economy to the body of an organism, are those built from the bottom up, through trial and error. They are the sum of millions of incremental steps undertaken by millions of decentralised actors. Complex systems are strong systems when they evolve through the actions of everyone that makes them up. Trial and error enables people to fail and accept responsibility, but also to reap the rewards of success. Voluntary systems are thus healthy, robust and produce the best outcomes.

The governments that give their subjects “free” health care are drowning in debt, and health care is a major liability. Yet, it is a sacred cow of statists. We have all heard the arguments: We should take care of each other; socialised medicine is the only way to ensure equality of treatment; without universal health care, who will take care of the poor? People talk about it as if the costs were irrelevant. They are always relevant. Every dollar spent on health care (and bureaucratic “administration”) is a dollar not spent on something else. Given what we know about government inefficiency, how much of that money is getting wasted?

Waste and inefficiency need to be considered, because they mean we are losing our money for no good reason. But we knew about government inefficiency already. What is less well known is that the government promotes unhealthy eating. The US government subsidises animal-fed crops, which means it is subsidising meat. Meat is not healthy, especially factory-farmed meat. (That does not stop the government from feeding it to children) We should be eating more fruit and vegetables. But meat is cheaper, thanks to the taxpayers, so people will overconsume it. Obesity and disease rates will rise. The meat producers will lobby for greater subsidies and greater legal protection of their industry, and force out competitors as best they can. (They use the state to shut down small farmers all the time.)

Health care is getting more expensive because of several factors, including ageing populations; rising costs of technology for the best care available, which everybody wants; an enormous number of laws and regulations controlling what we purchase and ingest; and the fact that whenever the government subsidises something, it rises in price. With something as important as our health, can we really risk letting the government meddle with it?

They say fearfully, “Look at the US. It’s a free market and not everyone has health care.” Sorry, did you say it’s a free market? In the US? Where the government spends trillions of dollars every year on Medicare and Medicaid? Where the American Medical Association uses the law to limit the supply of doctors, allowing them to charge more for doctor care? Where the state decides how much doctors can charge? Where doctors have a monopoly on dispensing medicine? Where the FDA allows and disallows foods and drugs based on political concerns? Where strong intellectual property rights make it impossible for cheaper, generic drugs to make it to the market? Where government regulations enable these things called health maintenance organisations to control who gets care and how much it will cost? This is your idea of a free market? (If so, please read about what a free market is here.)

And if government health care is so good, why do we have multimillion-dollar cancer societies that are actually doing something when government claims to need trillions of dollars to take care of all our ills? Organisations like the Bill and Melinda Gates Foundation are at the forefront of medical breakthroughs and governments are there taking credit for the people’s health, as if thousands of pages of regulations have ever cured anything. The US spends more than any OECD country on healthcare. How much money, how many bureaucrats and how many laws does the government need before it starts solving problems?

It is also ominously pointed out that if we didn’t have health care for literally everyone, people who couldn’t afford it would be dying in the street. Canada, the US and Europe are very prosperous societies. This supposition implies a few things for our discussion of a free market in health care. First, since health care would probably consist of various businesses competing with one another, it is likely that some or most private health care providers or insurers would compete for the business of people on the bottom of society. They would want the business of as many customers as possible. The success of the “bottom of the pyramid” model can be found all over the world, and it works in medical services and insurance. Of course, it is also possible that doctors could live in communities and focus on treating the people of their communities, start clinics that are based on paying whatever you can pay, depending who you are, something like that. Or perhaps businesses that are large enough could have hospitals and clinics just for their employees (and admit others in desperate need). Anything is possible when there is no coercion.

The second reason people probably would not be dying in the street is the Hippocratic oath. Doctors have to give care to people who are in immediate need of it if there is no one around who is more qualified. Maybe they would be working and not in the street where someone is dying, so maybe you could take people to the hospital to see the doctor, which brings us to the third reason people would not die in the street: human sympathy.

The whole reason people believe in health care for everyone is that they believe people are valuable in and of themselves. (Well, that may be due to a sense that our compatriots should have health care; there are few proposals in Europe for paying for the health care needs of the poor in Kolkata.) People could start charities for poor people who cannot afford health insurance. We would presumably have more money to do that if we were not subsidising literally everybody, rich or poor, for their doctor’s visits. Of course, those charities already exist. There is no reason to believe that if we had more money their funding would dry up.

A system that takes care of everyone indiscriminately has lead to self-righteous discrimination. Reasonable people do not resent paying for victims of circumstance, like cancer patients who have never smoked in their lives, but question the compulsion to pay for pack-a-day people with the same ailment. As such, they tell others not to smoke, drink, eat trans fats and sit for more than a few hours. Because many statists believe in a legal approach to changing others, they have erected a nanny state that forces us to conform to the norms of what we are allowed to eat, prohibitions on driving without seatbelts, wear helmets while cycling, and so on. If healthy people were not forced to pay for the healthcare of the health-unconscious, they would have nothing to complain about. This self-righteous indignation relates to every free-rider problem. If no one were forced to pay, the free riders, from special-interest rich to state-dependent poor, would lose out. Those who produce would keep the value of what they produce and give away what they want to whom they want.

A system that treats everyone equally demands conformity. Conformity takes away individual choice and replaces it with collective choice. Like democratic elections, I am not allowed to do what I think is right, only what we think is right. I cannot opt out if a candidate I do not like was chosen; I have wasted my vote. I cannot opt out if I do not want to take other people’s money; that’s the way the system works. We are even faulted with greed or selfishness if we do not go along with the collective. Thus, we are all individual hostages to the collective will, which endorses democracy and thus legitimises everything the government does because it is in the name of “the people”, “the public” or “the greater good”. Instead, we should treat people as individuals, letting them pay their own way if they are able, and helping them out when they need a hand up.

As it stands, in Canada, Europe and the US, a patient’s health care costs are mostly borne by a third party. Rather than covering accidents, injuries that were not the fault of the patient or major operations, so-called health insurance covers everything the patient sees the doctor for. Do we not see the potential for abuse of a doctor’s time under this system? Indeed, it is abused, as patients tend to visit far more frequently than necessary, just like they eat more meat when it is subsidised.

Waiting lists in Canada and Britain are growing. Thousands are in need of various types of surgery. But why should they? Is it for lack of money? No. How would giving the same doctors more money change the fact that there are not enough of them? But wait. There are plenty of doctors in the country. Unfortunately, many of them are driving taxis (at least, so they say), and there are plenty more willing to come. Patients are not permitted to pay more for more prompt treatment, because waiting lists are based on other considerations. Physicians have no right to charge patients based on the market costs of their services and must bill the government for patient visits based on fixed-fee schedules with little regard for the depth of service provided. And since they are restricted in what they charge, they are likely to try to make money in other ways. Because they are limited in what they are offered, it is not surprising that Canadians often go to the US to escape the long waiting times. A free market would provide most or all of what people want without the government failure that characterises the current models.

If universal health care is good, why does no one talk about the Soviet model? In 1918, the Soviet Union was the first country to offer cradle-to-grave medical care for all citizens.  (Read all about it here.) Or is that ridiculous? Most people believe “we” (rather, the state) should make sure no one who cannot afford medical care should nonetheless get it. Then, they say that the only way to make that happen is by force. The conversation goes something like this (courtesy of Stefan Molyneux):

A: Medical care must be entirely privatized.

B: But it’s more expensive when the state does not run it. Look at America!

A: I don’t believe so, but what if it is? Can I tell you how much you should spend on health care? Perhaps, in a free society, people would choose to spend half their income on health care. Would you tell them they cannot?

B: But in the US, 30 million people don’t have health insurance.

A: That is the result of terrible government laws which drive the cost of insurance up, and the benefits down – but let’s say that it is purely voluntary, that many people don’t want health insurance. So what? Would you force them to take health insurance?

B: But people should have health insurance!

A: Why? What if it costs half their income, and they’re eighteen, and very healthy, and take the bus, and don’t skydive, and always cross at the light, and so on? For that person, health insurance would probably make no sense. They would be far better off getting themselves educated, or saving their money, or just taking the risk of getting sick. Health insurance is a very personal decision. I would never feel comfortable making that choice for someone else.

B: But if that eighteen year old gets sick, they have to go to a public hospital, and so they incur a social cost.

A: Yes, at present that is true, but it won’t be the case if health care is privatized.

B: So they’ll just die in the streets?

A: Would that bother you? Watching poor people die in the streets for lack of health care?

B: Of course!

A: So you would help them, right?

B: Yes, I would, but…

A: And so would just about everyone else. Everyone cares about such things. The very presence and acceptance of state-funded health care proves that people care about sick people who can’t take care of themselves. So that won’t be a problem. But even if it is – let’s say that not one person in society cares about sick poor people, and they do die in the streets. If that is so, then giving the government more power would not help them, because such apathetic citizens would never vote for politicians who would care about the poor – and the politicians themselves would not care about the poor, since no one does. So – either people care about the sick and poor, and will help them without the government, or they don’t, in which case the government won’t help them either. The entire point of privatization is that we cannot force our own preferences on other people. If you prefer for everyone to have health insurance, I think that is wonderful! You should start up an insurance company and figure out how to provide it. Or support someone else who does. Or give to charity. Or become a doctor and work two days a week for free. Or pay extra for your own insurance so that others can pay reduced rates. There are thousands of ways to help. But the government cannot morally force people to give money to the poor, or provide them with free health care, because if it’s moral to force charity, then anyone can do it. We must then grant poor people the moral right to grab guns and rob doctors and hospitals for themselves.

This conversation could replace health care with education, police, roads and so on and it would look similar.

Why would a free market for health care be worse? What are we so afraid of? A free market usually provides public goods for everyone, as services of varying price and quality are offered to different income groups, and at far lower costs than the government pays. It is possible, of course, that the quality of care the poor receive would decline, but for the considerations above. Surely, people willing to pay more money for more health care should be allowed. Well, they are not. As Pierre Lemieux puts it, “Opponents of private health care…morally oppose the idea that some individuals may use money to purchase better health care. They prefer that everybody has less, provided it is equal.” Let us look more closely at the statist system.

What are the politics of the vaunted Barack health-care bill? The bill’s history is suspicious, riddled with backroom deals with large insurance and pharmaceutical companies, and the possibility that no one who voted on it actually read it. How could they? It is 906 pages long. Instead of the efficiency that would benefit taxpayers and users, we get complexity. Though praising Barack’s attempt to give everyone health insurance, the Economist then said this.

Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis. … The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy.

The illusion is that somehow government could work without dispensing any favours to the powerful. But how? It is beholden to special interests. Everything it bestows on the powerful makes those people more powerful, making it harder for meaningful legislation to get passed. Now, nearly all Americans will have health insurance, but at what cost?

To say that no money is too much to give everyone something is reckless. Money can always be better spent on something more efficient. Efficiency, one hallmark of a free market, is much misunderstood and maligned. Efficiency saves money that could be spent on important things. For every thousand dollars in value wasted, we take away a thousand dollars of treatment to another person. It is the same reason we should be skeptical of spending trillions of dollars to fight climate change when there are cheaper ways to tackle the problems it is likely to engender.

We simply do not know what freeing the market for health would do. Under the state system, there is no free price system. A price system gives feedback as to market prices because the people are free to choose which prices are right for which services they want, and choose another provider if they like. That is why prices tend to come down when a market is freed: competing suppliers enter the market and people have cheaper options. In a statist system, however, it is common that the law is used to create monopolies and oligopolies. Health care in the US is one example. It is a tragic waste that makes a few well-connected people richer and impoverishes everyone else.

Another reason inefficiency and waste are so prevalent in government is to benefit the state. It is erroneous to believe that the state would like to save money on its programmes. In fact, the more money the state spends, the greater number of or greater the extent people depend on the state. That is why all the wonderful proposals for how to streamline or eliminate a government department fall on deaf ears. Here is one such proposal. To cut healthcare costs, suggest the authors, “Congress and the Supreme Court would be well advised to take additional action to reform healthcare by limiting the patentability of medical processes and diagnostic methods.” But what incentive do lawmakers have to limit the patentability of something that makes a few people rich? Patent laws are strong because the elite want them to remain strong. Politicians are not interested in saving other people’s money but spending as much of it as they can to please everyone they need to to achieve their goals. Of course the Barack health plan could be cheaper than it is; but then how would he dole out billions of other people’s money to corporate lobbies?

It is often said that health care is a right. The same people might say that education, a job, a house and a cushy retirement are all rights as well. While those things may be rights of a sort, an anarchist would say that it is wrong to force everyone else to pay for and provide those things, and can point to the disastrous effects this “give it to me or I won’t vote for you” entitlement mentality have had. If you have the right to free health care, is it my obligation to pay for it? The “right” to education has led to a steady devaluing of it and a massive debt bubble; the right to a house turned into the mortgage meltdown; and the right to a pension underlies the largest and most intractable long-term government liabilities all over the rich world. I have a right to good health in the same way I have a right to walk around shouting racial slurs; either way, I should pay the price myself. Senator Bernie Sanders once said that getting the best possible health care the system can provide is a right for all Americans. I wonder how many millions of dollars per person that would cost, and how much the price of health care would rise if it were not seriously deregulated first, but I do not suggest attempting it. But Bernie derives his popularity from the entitlement mentality.

Politicians are always happy to feed the people’s illusion that it can provide them with everything they want by telling them they deserve it. So politicians come up with “ideas”, usually in the form of laws and spending increases and never dare to suggest people should take responsibility for themselves.

One idea that keeps raising its head is to increase the amount of money for Medicare and Medicaid. But Medicare and Medicaid are government-run programs. Do we really trust the government to do what’s best with our money for our health? Why do we not just let the people who get sick pay for themselves? Stop taxing people half their earnings and they might have enough to cover a lifetime of illness. The government does not exactly create economies of scale. It spends more than $100m of that money on drugs people do not need. But instead, we prefer to shovel money into bottomless pits.

Medicare and other state health care funds are going bankrupt, like all Ponzi schemes do eventually. The estimated size of unfunded liabilities in the US ranges from $50 trillion to over $100 trillion. The money is simply not there, and unless we catch a leprechaun, it is not about to appear. Problems regarding unfunded liabilities of popular programmes never get touched until it is far too late, because politicians have their own agendas and taking the initiative to solve a political problem is rarely on them. If such a problem can be put off until after the next election, it is; and when the inevitable collapse comes, it will be someone else’s fault.

You know herbs, those plants that you can take to heal yourself? Health Canada has criminalised them. (I wonder if a certain pharmaceutical lobby influenced their decision.) Dr Gabor Mate knows of a treatment for drug addiction: a traditional Amazonian tea called ayahuasca. However, because the plant is officially a “drug”, Health Canada has ordered him to stop using it. Of course, it may, in fact, be quackery; but it does not follow that we should use violence to stop it. The same may go for iboga and even LSD.

Man is a natural scientist. That is how we got all these delicious fruits and vegetables we have today. From the beginning of agriculture, farmers selected the best vegetation and bred them. Through trial and error, the testing phase of the scientific method, we ended up with foods that are tastier than those growing wild. The same is true for why we have different breeds of horses and dogs. It is called artificial selection. People have been growing plants for medicine for a long time, too. Perhaps if they had had more money and the freedom to grow whatever they wanted, we would have better medicines today. As it stands, we are prohibited from growing all kinds of things—hemp, the wonder plant with a thousand uses, leaps to mind.

If we are free to try things, we might find a cure for our problems. No freedom means no cure, or an unnecessarily expensive cure. We thus see the danger of letting any government office “regulate”, which just means using violence to prevent people from deciding on their own, any substance at all. They tell the people what they can and cannot put in their bodies, which means they own and control our bodies, which means we could not possibly consider ourselves free. And the idea that government needs that power because it knows or should decide what is right for peaceful, sentient beings is ridiculous.

The FDA, or any regulatory body, as a government agency, is beholden to the whims of politicians. If politicians say, for instance, that marijuana must remain illegal, the FDA will kowtow. It has released all manner of dangerous pharmaceuticals on to the market, while continuing to lie that marijuana has no medicinal properties. It has broad scope to stop whatever it defines as a “drug”. (That said, a different law prohibits the FDA from saying anything about “dietary supplements”, also broadly defined. More laws do not make more sense.) It should thus not be surprising to anyone that the main food safety guy at the FDA, Michael Taylor, was formerly an executive of Monsanto. Clarence Thomas was an attorney for Monsanto and now is an associate justice of the Supreme Court. Linda Fisher worked for 10 years in the Environmental Protection Agency, or EPA, next headed Monsanto’s Washington lobbying efforts, then went back to the EPA. They are not the only ones taking advantage of the revolving door. (More on the FDA here.)

The FDA does not protect anyone’s health. The idea that a government is a good judge of what is right to put in your body is a joke. In spite of all its well-documented benefits, the Supreme Court has said that the US government can prosecute people who smoke marijuana, whether for medicinal purposes, whether given them by a doctor, whether the state has decriminalised the drug, or not. The FDA kept silent on arsenic fed to chickens and consumed by Americans for some time, while sending US marshalls to raid a distributor of elderberry juice because it was an “unapproved drug”. Another feature of all bureaucracies is their unceasing need to justify their existence by issuing directives that are supposed to be good for the public. If you are still not convinced, I suggest watching The World According to Monsanto to see the symbiotic relationship between the FDA and a corporation that would be considered criminal in a healthy society. The FDA is not good for the public. If it opened up food and drug certification to competition, the FDA would be irrelevant.

What else must we do and not do? Armed troops in helmets with guns drawn recently took down Rawesome, a raw food store in California, and seized the unpasteurised milk and organic coconuts they were selling. The government of California, deeply in debt, spent taxpayer dollars protecting big agribusiness by destroying its small competitors. Plenty more have been raided since Rawesome. The government has moved beyond the business of suggesting what we should eat (with its special-interest-inspired food pyramids and its classifying of pizza as a vegetable) to forcing us to shop for food where its campaign contributors demand. The businesses we must shop from pump their food full of antibiotics in factory farms.  If the government was concerned about our safety, it would shut down those farms (or at least warn the public about the dangers). Instead, it takes away your freedom and health because it is controlled by someone who cares about your money, not your health.

Do we need to tax 100% of the people to take care of the 5 or 10% who have no one to take care of them and who cannot take care of themselves? I have friends who make $40,000 a year who say that they need socialised medicine or else how could they afford it if something went wrong. Why don’t they save up money to take care of themselves or buy insurance? You would save up and buy insurance to take care of your car. And what is the role of private charity? We humans have shown we can take care of each other—even people we will never meet—by giving or volunteering to help the less fortunate. Government  not only does not solve social problems, it tends to prolong them. Let us see how the free market would handle and handles health.

Free-market health care

It is appropriate to consider not only what is wrong with the present system, but how we could be healthier in a stateless society. I have been asked “so how would you organise health care?” The first answer that leaps to mind is that, I would not. For the same reason top-down, hierarchically-imposed solutions tend to work very poorly, it does not matter how good my own ideas are; the people can decide these things for themselves. Free markets and free people have a way of sorting things out that makes sense, which is why we do not have triangular ATM cards and DVDs, even though the government did not tell us what shape to make them. Second, if people think health care is a good idea, they will find a way to make it happen. Take away the force, give people their freedom and see what happens.

The answer is not so much a system of health care as empowering people to make their own health decisions. It is likely that, as in all relatively free markets, the market for health would develop tiers of care. The lowest tier would be for common illnesses. How will the poor get healthy? You mean aside from diet and exercise, right? Perhaps they could pay for insurance. Or is that unreasonable? Insurance is only for the rich? Perhaps low-cost healthcare will arise. Wait. It already has.

Walmart offers walk in health services by leasing store space to private clinics. It costs a flat $45 per visit, meaning there is price transparency. This competition ends the monopoly doctors once had, and they will need to lower their prices.

The (relatively) free market is helping improve our health every day. Look at what intrepid entrepreneurs are doing. They provide venture capital for healthcare startups; help people save money on doctors and dentists; provide online platforms for doctors to communicate and for people to fundraise for individual patients who need it.

A stateless society might still want something that protects the people from bad drugs and food. We should not trust a government monopoly that banks low-cost drugs and foods just because they compete with powerful corporations. We already have other people testing these things—let them publish reliable findings or damage their reputations as scientists.

It is quite possible they will want to continue to subsidise each other (after all, such health care systems are popular), though why they might choose to do it on a national level is beyond me. I would never say we have to become atoms, or isolated communities. I see little benefit in such a scheme. If you do not like business, fine. The free market is not about business but free people’s solutions. We could arrange mutual aid through health cooperatives.

Forcing others to pay for something you believe in, whether you call something a right or not, is not virtuous. Compassion is virtuous and better for your health than pills. All I think is that we should have the choice.

Roads

November 13, 2011 5 comments

“What about the roads??” they ask desperately. Statists seem to think that, because the government has always built the roads, at least most of the time in recent memory, that only the government could ever build roads. I find the assumption behind this question quite ironic. The roads are a striking example of a utility that should logically be privatised. What roads should the government pay to build and maintain? The roads to a residential neighbourhood? Why should people from the entire city or country pay for these roads? Let the residents pay. How about the road to an office, shopping district or mall? Let the business owners pay, perhaps through a local business association. Getting the government to do it means forcing everyone to subsidise the businesses who benefit.

So the problem is unresolvable? Think about it. How could we get roads built without the state? I bet you can come up with some ideas. There are all kinds of ways to make roads profitable, from electronic or cash tolls, GPS charges, roads maintained by the businesses they lead to, communal organisations that own the roads, and so on. “And if none of those work?” asks Stefan Molyneux. “Why, then personal flying machines will hit the market!”

Besides, it is already happening. Private contractors who build roads do so far more efficiently than governments (believe it or not). A private road in Paris saves commuters time and the company that built it clears the road quickly when there is an obstruction. A company added two lanes to a highway in California, making them toll roads, thus giving people the option to go faster for a fee. Companies have implemented electronic tolls, obviating the slow and inefficient toll booth. But surely, citizens could never be expected to just build and maintain their own roads, could they? Oh wait, that’s already happening too.

Economist Walter Block has written extensively on the privatisation of roads. To those who believe a competitive road system makes no sense, think again. There is nothing about roads that requires a monopoly. After all, the first roads in the US were private; and no, the government did not take them over because the public demanded it or they knew they could do so more efficiently. In fact, like many libertarians, Block has some very good ideas for how to make competition in formerly public services work. Governments rarely innovate, except in methods of killing. But private-sector solutions, such as airbags and snow chains, have saved lives. If there were competition among roads, people would be able to choose which one they drove on. They might have the choice to drive on the road with the heater underneath it to melt the ice, making it safer; the highway with the rubber dividers that are safer in a crash; and the routes with the lower death rate. We do not know what great life-saving innovations could come from people with an incentive to think of them. Release something into the private sphere and see what happens.

Is the logic of privatising all roads and highways becoming clearer? Zachary Slayback has more to say.

Privatization would ensure that the project would be finished in a timely manner, would remove the moral hazard of building a possibly unnecessary highway with public funds, and would not force every individual to fund the project, whether they wish to use it or not….

Should a company decide that any highway is a viable venture for their ownership and stockholders, then it would be on that company to build a product that consumers would wish to use. If several companies wished to build a highway, then whichever company offered the best product (i.e., the best-maintained, cheapest, fastest highway) would be chosen by consumers to deliver that product via the price system.…

In a free-market system, the signals sent via the price mechanism allow the market to adjust to any changes much more quickly and efficiently than the current centrally planned model under which we operate.

Knowledge is not something that can be aggregated and centrally planned by a Department of Transportation. Knowledge is something that must be acquired in small bits throughout the market. Risks must be taken to acquire knowledge; and no one man, nor any group of men for that matter, can possess the knowledge necessary to perfectly plan any specific endeavor.

So why leave this, what Friedrich Hayek, the Austrian economist and Nobel laureate, called the ‘knowledge problem’, to a group of individuals who are insulated from the signs and information of price signals? Major investments — especially those that require a large amount of information to properly operate, such as highways — should be left to the system that best responds to market signals and the price mechanism: the free market.

Moreover, there is a major moral issue at play when building any public-works project, but especially highways: Who pays for the highway and with what money? Under the current system, public-works projects are paid for by ‘the public.’ But what gives central planners the moral authority to determine that all taxpayers in a given population should be forced to pay for the planners’ project?…

[O]ne thing is for sure: the free market would not force consumers who do not wish to use the product to pay for it.

Roads could be owned by the people who live or work around them. Perhaps electronic tolls (which already exist) could charge people on roads one-tenth of a penny to pass by each person’s house or business (Walter Block’s idea again) without slowing them down. Highways can be profitable for their owners through tolls, billboards and other things clever businesspeople can think of that I have not. Free market highways would reflect the true costs of building them. Their being built by government tends to result in millions of dollars in waste. Roads could be owned by one man who charges you for driving on them, and you could build your own roads or go round if you did not want to pay. People always find alternatives when there is an incentive to do so. It is fatuous to say it is wrong that we should have to pay for roads when we already do through taxation. And it is unfair to argue that it could not work just because you have not thought of an alternative.

Why do we believe that, if there must be a monopoly (and that is probably never the case), it must be a government monopoly? Do we not know better than to trust the government with anything as important as a monopoly? Milton Friedman called a situation which seems like it needs to be a monopoly, such as of plumbing or power lines, a technical monopoly. There are three ways to deal with a monopoly: private monopoly, government monopoly and government regulation. Friedman argued that, in a world of rapid technological change, a private monopoly was preferable. If government has a monopoly, there is no chance for competition and its benefits (lower prices, greater efficiency, wealth creation, innovation). If one business has a monopoly, there may be some way around it, and another firm might be able to find a solution. Contrary to popular myth, free markets abhor monopolies.

But what if someone built a road around your property and said you could not get out unless you paid him a million dollars? Well, my initial impulse might be to shoot him, but there is almost always a peaceful, preventive solution. Perhaps when buying the house, along with fire insurance, one could also purchase access insurance, to insure against such possibilities. Or perhaps one would buy the stretch of road outside one’s own house. One would probably let other people in the neighbourhood through free of charge, in the name of maintaining friendly relations; otherwise, their property values would drop and the shaming and ostracism that could result would be devastating. The sovereign community will need no government roads when it saves money with better ones.

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