About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Friday, July 6, 2012

If Republicans Had Guts, And Democrats Had Brains...

As I pointed out here, Mitt Romney's vaunted plan to "repeal and replace" ObamaCare is only half sensible. His plan to replace ObamaCare with a hodgepodge of mealymouthed "reforms" is nothing more than the Patient Protection and Affordable Care Act warmed over.

Romney's statist approach to solving the health care "problem" will NOT solve anything; it will merely make our dissatisfaction with the health care industry fester and grow.

Politically, Romney's approach to health care will be as damaging to the free market and the conservative cause as George Bush's absurd and unprincipled intervention into the financial markets. Bush's blundering is what made the ignorant electorate hunger for the "hope and change" of Barack Obama in 2008. Romney's interventionist policies in health care will likely destroy and discredit conservatism for evermore.

The "solution" to the health care "problem" is as obvious as it is simple: allow individuals the freedom to decide for themselves what is in their own best interests. If Romney (or even Gary Johnson for that matter) were really interested in "fixing" the health care industry in this country, he would not only advocate the repeal of ObamaCare and Bush's pathetic Medicare Prescription Drug, Improvement, and Modernization Act, he would endorse the following measures:

First and foremost, abolish the FDA. Not only is the Food and Drug Administration a bloated and expensive federal bureaucracy, it is also responsible for the restricted supply of drugs in this country. The result is high prices and chronic shortages. Abolishing the FDA would end the incestuous relationship between the federal regulators and the large drug companies. It would allow small, innovative manufacturers to enter the marketplace and freely compete. Moreover, the large drug companies would have to truly compete with each other. No more sweetheart deals and government protected territories. They would have to sink or swim in the market. The supply of demanded drugs would increase. Prices would fall. And, as difficult as it may be for statists to believe, the quality of medical drugs would improve, as the quality of all goods and services improves when markets are opened to real competition.

Second, eliminate state and federal licensing mandates for doctors, nurses, pharmacists and all other health care providers. Licensing of health care practitioners is merely a backhanded way of protecting the interests and incomes of established and connected health care providers. Individuals and their chosen health care provider are capable of deciding what level of care and what brand of pharmaceuticals are in their best interests. They should be free to purchase their preferred drugs and care from whomever they deem appropriate. No more government regulated prescriptions. No more mandates specifying physician care. The resulting downward pressure on the price of health care and drugs would be immediate and lasting. And, again, the overall quality and effectiveness of pharmaceuticals would improve.

Third, eliminate federal and state tax credits and deductions for the purchase of health insurance, this includes the tax advantage employees realize when health insurance is purchased through their employer. The current system of employer provided insurance results in third party bill paying. Consequently, waste, fraud and carelessness abound, as the direct relationship between individual buyer and individual vendor is interrupted. Individuals purchase life insurance, auto insurance, fire insurance, wind insurance and all variety of other insurances directly from insurance vendors in the free marketplace. They buy this insurance from huge insurance companies that operate all across America. Why should the purchase of health insurance at a tax advantage be limited to employers? Moreover, why should the purchase of health insurance -- or of any insurance for that matter -- be restricted to vendors operating within the purchaser's state boundaries? Putting the decision-making authority back into the hands of individual buyers and sellers will result in lower prices and increased quality and satisfaction.

Fourth, eliminate state and federal health insurance mandates. The idea that politicians know better than their constituents what is in their own best interest with regard to the terms of their health insurance contract is absurd. Mandates and restrictions imposed by government (e.g., pregnancy, abortion and psychiatric care) destroy practical and needed health insurance options for largely political reasons. Young people ought to be able to purchase a no frills, high deductible, catastrophic health insurance policy on the open market. All individuals ought to be able to purchase a health insurance policy tailored to their specific needs rather than to the politically correct needs of a state or federal politician. When state and federal mandates are eliminated, the supply of health insurance options will increase, prices will fall and consumer satisfaction will increase immeasurably across the board.

Fifth, abolish Medicaid and Medicare completely. In other words, take state and federal governments and bureaucrats out of the health care and health insurance equation. If the American voter deems it necessary and proper to subsidize the cost of health care and health insurance for indigents, government should simply write a check to the indigents in some politically-decided amount. The indigents could then purchase health care and health insurance on the free market with the rest of us. The instant a government bureaucrat steps between an individual and a health care or health insurance provider, the seeds are sown for corruption, waste and cronyism. The system which best serves the many is destroyed in favor of a convoluted and bureaucratic system designed to serve the needs of the favored few.

Of course, the real reforms I've outlined above will be vehemently opposed by those with an ideological axe to grind or by those who are ignorant of economics. I can hear the wailing and gnashing of teeth now from both liberals and conservatives, Democrats and Republicans. Such reform measures, they will say, are unrealistic, cruel and heartless. Critics will recite a thousand and one reasons why these free market solutions will not work. They will back up their arguments not with economic logic but with a thousand and one anecdotes describing the most helpless and pitiful health care nightmares imaginable.

This is exactly the reason our country is now between a rock and a hard place. The progressive philosophy has so infected the minds of Democrats and Republicans alike that rationality is shut out in favor of emotionalism. Instead of designing a solution for these exceptional and pathetic examples of healthcare hardship, the progressive mind begins to design a solution around them. As a result, a system that efficiently and satisfactorily serves the vast majority of individuals is scrapped in favor of a bureaucratic monstrosity designed to cater to the needs of the exceptional few.

Imagine for a moment that our topic of discussion wasn't the nation's health care system, but its system of food production and distribution. Imagine for a moment that our food industry is in a shambles because almost a century ago, in the interest of fairness and feeding the poor and indigent, the government decided that food was a "human right."

To fulfill this human right, imagine the government decided that citizens must purchase food by means of employer-provided food insurance, which the government also decided was a "human right."

Imagine the government many years ago established a new bureaucracy which regulated food production and food insurance, and mandated that certain foods must be provided and equally available to all.

Imagine this bureaucracy today decides which foods are nutritional and which are unhealthy, which foods are reimbursable through food insurance and which are not, which farmers are preferred food manufacturers, which grocers are in-network food providers.

Imagine that, when hungry employees pick up their food from an in-network grocer, they are charged only a small co-pay for the food they bring home. Then, the grocer submits the balance of the food bill to the food insurance company which approves the bill and pays only the allowable balance. And every month the food insurance company charges the employer a food insurance premium which may or may not be partially paid by the employee and which, supposedly, finances the entire system.

As you can well imagine, no one would be satisfied with this food insurance system. Employees cannot buy the food they really want. Employers are constantly shopping for inferior food insurance companies that charge cheaper monthly premiums because monthly premiums are constantly skyrocketing. Grocers are squeezed by ever-tightening bureaucratic rules and regulations imposed by both the food insurance companies and the government. Farmers and grocers alike are threatening to go out of business.

Imagine, moreover, that the government seeks to "reform" this system because it has discovered that a good many individuals in America are malnourished. Why? Because they are either not employed or because their employer does not offer food insurance. The only means by which these indigent and hungry individuals can nourish themselves is to eat at emergency soup kitchens which the government mandates the food producers and distributors provide.

Now imagine the solution the government proposes to this mess is to regulate the entire food production and food insurance industry by a huge new bureaucracy headed up by the Secretary of Health and Human Services.

Who in their right mind would recommend such a solution?

Isn't it obvious that the solution to our imagined food nightmare is the highly efficient, free market, capitalistic system of producing and distributing food which we enjoy today? A system wherein farmers produce food demanded by grocers? A system wherein the grocer distributes food most demanded by the food consumers?

 But what about the indigent and hungry? Today the federal government deals with these individuals by issuing them food stamps. The indigent, in turn, use these stamps to buy food on the same free and capitalistic market that serves the rest of us so efficiently.

In the case of the food industry today, the federal government has decreed that food is best produced and most efficiently distributed according to the dictates of economics instead of politics.

Why shouldn't the government issue today the same decree with regard to health care production and distribution? Our political system will decide whether or not it is the responsibility of some individuals to be taxed in order to provide for the health care and health insurance needs of a few, favored individuals, such as the indigent.

However, once our political system makes this decision, shouldn't we allow sound economics to dictate the most appropriate means of distributing health care and health insurance to these favored few?

Economics demonstrates irrefutably that the system of capitalism and free markets provides for the largest quantity of goods and services to be distributed in the most satisfactory way at the lowest possible price to the widest range of demanding consumers. It makes no economic sense at all to scrap such a system based on the needs of a favored few.

On the contrary, it makes perfect economic sense to allow these favored few to satisfy their needs by utilizing the same capitalistic, free market system the satisfies the rest of us.

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