TGIF: Social Cooperation Versus Violence

The chilling photo of a hooded man cold-bloodedly executing a health-insurance CEO on a busy New York City street should make any decent person pause and reflect. Anyone who even glimpses the role of social cooperation in making life better and longer felt sickened, or should have. Nothing can justify what the perpetrator did. That so many people see him as a vengeful hero acting in defense of the downtrodden is appalling. One can only hope they will soon come to their senses.

At the risk of taking our eye off the crime, it's worth pointing out that all departures from the market economy—laissez-faire capitalism—are steps toward social disintegration. That infamous, unsurpassingly ugly photo is the perfect image of anti-cooperation, anti-capitalism, and anti-human welfare.

The choice we face is between social cooperation and social disintegration. No person of goodwill harbors doubt about the right choice. The question is how to achieve social cooperation: the state, that is, aggressive force, or the market. The theoretical and historical evidence is unmistakable: the market economy is unequivocally the only way to achieve maximum social cooperation. The state destroys social cooperation.

The widely held belief that social cooperation through the market will not work with health care is balderdash for which no one has adduced evidence. Where markets are left significantly unmolested by politicians and bureaucrats, it achieves reasonable prices and supplies and—this is important—virtually universal coverage. Even those we call poor in this society have refrigerators, HVACs, automobiles, microwave ovens, mobile phones, flat-screen TVs, and so on. Why not affordable universal health services, including insurance?

The reason is that variously motivated politicians and bureaucrats—urged on by "Baptists and bootleggers"—have for over a hundred years tried to combine insurance and welfare in one system, despite their incompatibilities. When that happens, socially harmful results follow; perverse incentives proliferate. Government measures have suppressed supply and boosted demand, a volatile combination. Falsely proclaiming that health care is a right matter not a whit. That the resulting Rube Goldberg "system" of partly spontaneous disorder works as well as it does is a tribute to what's left of the entrepreneurial market and the profit motive. A little market goes a long way. (As they used to say about the Timex watch: 'It takes a licking and keeps on ticking.")

However, the distortions caused by interference with the practice of medicine and the provision of medical insurance have eroded social cooperation, imposed hardship, and created animosity. For that reason alone we need free markets for those services and products

Ludwig von Mises, the premier advocate of full classical liberalism in the 20th century, spent his life demonstrating the indispensability of private property and free trade—capitalism—to social cooperation. He almost titled his economics treatise, Human Action (1949), "Social Cooperation."

The social cooperation of the market economy is often used interchangeably with the term individualism. Isn't that a paradox? Mises resolved the paradox:

Individual man is born into a socially organized environment. In this sense alone we may accept the saying that society is--logically or historically--antecedent to the individual. In every other sense this dictum is either empty or nonsensical. The individual lives and acts within society. But society is nothing but the combination of individuals for cooperative effort. It exists nowhere else than in the actions of individual men. It is a delusion to search for it outside the actions of individuals. To speak of a society’s autonomous and independent existence, of its life, its soul, and its actions is a metaphor which can easily lead to crass errors.

The questions whether society or the individual is to be considered as the ultimate end, and whether the interests of society should be subordinated to those of the individuals or the interests of the individuals to those of society are fruitless. Action is always action of individual men....

The postliberals of "left" and "right"—the illiberals—who fret that in the market all relationships are reduced to cash get it wrong:

Within the frame of social cooperation there can emerge between members of society feelings of sympathy and friendship and a sense of belonging together. These feelings are the source of man’s most delightful and most sublime experiences. They are the most precious adornment of life; they lift the animal species man to the heights of a really human existence. However, they are not, as some have asserted, the agents that have brought about social relationships. They are fruits of social cooperation, they thrive only within its frame; they did not precede the establishment of social relations and are not the seed from which they spring.

Then what are the agents of social relationships?

The fundamental facts that brought about cooperation, society, and civilization and transformed the animal man into a human being are the facts that work performed under the division of labor is more productive than isolated work and that man’s reason is capable of recognizing this truth. But for these facts men would have forever remained deadly foes of one another, irreconcilable rivals in their endeavors to secure a portion of the scarce supply of means of sustenance provided by nature. Each man would have been forced to view all other men as his enemies; his craving for the satisfaction of his own appetites would have brought him into an implacable conflict with all his neighbors. No sympathy could possibly develop under such a state of affairs.

So we have the division of labor, increased productivity, and trade to thank for civilization. The postliberals are wrong. Very wrong. We should yearn for neither the Rousseauian state of nature nor the Hobbesian Leviathan. Mises:

Man appeared on the scene of earthly events as a social being. The isolated asocial man is a fictitious construction....

The idea that anybody would have fared better under an asocial state of mankind and is wronged by the very existence of society is absurd. Thanks to the higher productivity of social cooperation the human species has multiplied far beyond the margin of subsistence offered by the conditions prevailing in ages with a rudimentary degree of the division of labor. Each man enjoys a standard of living much higher than that of his savage ancestors. The natural condition of man is extreme poverty and insecurity. It is romantic nonsense to lament the passing of the happy days of primitive barbarism.

Mises laid out more clearly than anyone how the market process creates general prosperity. He wrote:

The market economy is the social system of the division of labor under private ownership of the means of production. Everybody acts on his own behalf; but everybody’s actions aim at the satisfaction of other people’s needs as well as at the satisfaction of his own. Everybody in acting serves his fellow citizens. Everybody, on the other hand, is served by his fellow citizens. Everybody is both a means and an end in himself, an ultimate end for himself and a means to other people in their endeavors to attain their own ends.

This system is steered by the market. The market directs the individual’s activities into those channels in which he best serves the wants of his fellow men. There is in the operation of the market no compulsion and coercion....

The market process is the adjustment of the individual actions of the various members of the market society to the requirements of mutual cooperation.

The dislocations and distortions we rightly criticize in the medical sector are produced by government interference with this market process rooted in social cooperation. But people widely attribute those distortions to the market itself. How could they make such a fundamental mistake? Part of the reason is that private property in the profit-and-loss environment has not been completely eradicated. Rather, it has been denatured; the shell has been maintained, but its essence has been changed almost beyond recognition. The politicians' and bureaucrats' fingerprints are over it.

Mises noted:

In searching for remedies against poverty, inequality, and insecurity, [the present-day welfare propagandists] come step by step to endorse all the fallacies of the older schools of socialism and interventionism. They become more and more entangled in contradictions and absurdities. Finally they cannot help catching at the straw at which all earlier “unorthodox” reformers tried to grasp—the superior wisdom of perfect rulers. Their last word is always state, government, society, or other cleverly designed synonyms for the superhuman dictator.

The welfare school ... [has] published many thousands of volumes stuffed with punctiliously documented information about unsatisfactory conditions. In their opinion the collected materials clearly illustrate the shortcomings of capitalism. In truth they merely illustrate the fact that human wants are practically unlimited and that there is an immense field open for further improvements. They certainly do not prove any of the statements of the welfare doctrine.

In Mises's day the socialialists and interventionists promised that their alternatives to the market would outperform a social system based on private property. However, that promise changed when the anti-market forces could no longer evade statism's obvious inferiority in delivering the goods. Undeterred, they discovered the "age of limits" and criticized "consumerism." Now statism's superiority lies in its lack of productivity. But as I say, Mises had to contend with the opposite claims.

There is no need to tell us that an ampler supply of various commodities would be welcome to all people. The question is whether there is any means of achieving a greater supply other than by increasing the productivity of human effort by the investment of additional capital. All the babble of the welfare propagandists aims only at one end, namely, obscuring this point, the point that alone matters.,,, Thus they are the harbingers of economic retrogression, preaching a philosophy of decay and social disintegration. A society arranged according to their precepts may appear to some people as fair from the point of view of an arbitrary standard of social justice. But it will certainly be a society of progressing poverty for all its members....

The truth is that capitalism has not only multiplied population figures but at the same time improved the people’s standard of living in an unprecedented way. Neither economic thinking nor historical experience suggest that any other social system could be as beneficial to the masses as capitalism. The results speak for themselves. The market economy needs no apologists and propagandists. It can apply to itself the words of Sir Christopher Wren’s epitaph in St. Paul’s: Si monumentum requiris, circumspice. [If you seek his monument, look around.]

Our very lives depend on reviving the public's understanding of what the free market has bestowed in so short a time.

TGIF: What Free Market in Health Care?

Federal Health-Care Industry Lobbying Leads the Pack

Contrary to a popular article of faith, America has no free market in health care—far from it. Consider this: the largest lobby in Washington, D.C., is—wait for it—the health care and health insurance industries. Last year, they spent 5.8 times the amount the "defense" contractors spent on lobbying: $800 million versus less than $200 million.

This may have many explanations, but the fact remains: a free market in health care would not see massive lobbying. Based on what Congress and regulatory agencies do, we can be sure that the health care and insurance industries are not by and large lobbying for less government. If so, they are doing a rotten job.

Michael F. Cannon, the Cato Institute's director of health policy studies, wrote a book last year showing just how much of a free market in health America does not have. To call our system a free market is a bad joke, not to mention cruelly dishonest. The details—in addition to the lobbying data—are eye-opening. It's like calling Sweden a socialist country. Wrong again, Bernie Sanders.

Cannon writes (PDF here):

In the United States ... countless state and federal laws block innovations that would improve health care access and quality. Without exception, lawmakers enact these laws in the hope of reducing costs and improving quality. Without exception, they do extraordinary and irreversible harm to patients.

This book explains how state governments prevent medical professionals and entrepreneurs from offering higher-quality, lower-cost care. It explains how Congress denies consumers both control of trillions of dollars of their own earnings and the right to make their own medical decisions. It explains how Congress makes health care increasingly less affordable, jeopardizes patient health by promoting low-quality care, and makes health insurance work against the sick.

Cannon’s work is more than a diagnosis of the sickly U.S. health care system. It's a regimen for moving America toward a "healthy" free market. The sooner we get started the better. For ages health care has been strangled by politicians, bureaucrats, regulators, and private-sector rent-seekers. They all need to be sent packing. We badly need entrepreneurship; free, flexible, private enterprise; and the profit motive—yes, the profit motive, the despised thing that has bestowed incredible wealth on so many people worldwide.

"In corners of the U.S. health sector where market forces have had room to breathe," Cannon writes, the American system has achieved astounding innovations in diagnostics, service delivery, drugs, treatments, devices, and even insurance. But it fails on many counts thanks to government preemption of private market-based efforts. A good part of the reason Americans pay more for health care than anyone else in the world is government intervention. No surprise there if you understand how governments and markets work.

Cannon writes:

Among advanced nations, the United States ranks near the top in terms of government control of health spending. The Organisation for Economic Cooperation and Development (OECD) collects data on 38 economically advanced nations. The OECD reports that in the average member country, 76 percent of health spending is compulsory. That is, rather than allow consumer preferences to allocate those funds, government requires residents to allocate those funds according to the government's preferences or face penalties. In the United States, government controls a significantly larger share of health spending than the OECD average: 85 percent of U.S. health spending is compulsory.

The OECD country with the highest percentage of compulsory spending, the Czech Republic, beats the United States by only three points.

Government controls a larger share of health spending in the United States than in 30 other advanced nations, including Canada (75 percent) and the United Kingdom (83 percent), which have explicitly socialized health systems.

Some free market! Government dictates how 85 cents of every health care dollar is spent.

"Control over health spending and government-imposed barriers to accessing medication," he goes on, "are just two ways government blocks the market forces of individual choice, innovation, and competition that would otherwise make health care better, more affordable, and more secure."

Not all action is at the national level, of course. State governments heavily regulate health care and insurance. All these regulations, including licensing and the tax exclusion for employer-sponsored medical insurance, must go if Americans are to have a world-class free market in health care. Patients must be placed at the center so they can exercise what Ludwig von Mises called "consumer sovereignty."

"Day after day," Cannon concludes, "U.S. patients suffer the consequences of a century of mounting government failures. American health care is worse, more dangerous, more expensive, and less secure than what a market system would deliver." People have to rethink their moral and aesthetic biases against profit-motivated, mutually beneficial market relations. It really is a matter of life and death.

TGIF: The Mythical Right to Medical Care

This clever video juxtaposes footage of Bernie Sanders and the late Milton Friedman to create a debate over whether the central government should take over medical care in America. Sanders condemns as a "national disgrace" the lack of a medical care guarantee for all -- rich, poor, and in between. Medical care, he insists, should be "a right of citizenship." Then, echoing someone in the audience, he changes that to "health care is absolutely a human right."

The remarks by Friedman from the '60s and '70s chosen for the video address the efficiency problems with government-run medical services, including the inevitable restrictions on consumer choice. Politicians and activists may feel good when they passionately declare that the government should guarantee all people medical care. Unfortunately, such declarations neither create nor deliver quality care justly or efficiently. Friedman was a long-time advocate of the separation of medicine and state. In his 1962 book, Capitalism and Freedom, he called for, among other things, the end of medical licensing, and he defended that view in these recorded remarks before a group of presumably uncomfortable doctors at the Mayo Clinic.

Since Friedman spoke as an economist, not a political philosopher, in his remarks, I thought I'd say something about the rights issue that Sanders raises. To pick a nit: Sanders needs to make up his mind. Is medical care a right of American citizenship or a human right? I don't see how it can be both. The term human right suggests universality, while a right of American citizenship does not.

But let's leave that and look at this purported right. The first thing that occurred to me is that this "right" doesn't match its billing. Medical care is not like air or water; it doesn't appear naturally. On the contrary, the many services and products that constitute medical care must be created through human effort.

This ought to pose a problem for the right-to-medical-care set. A declared right to medical care would camouflage something even more ominous: a right to the labor of doctors, nurses, technicians, developers of medicines, inventors and producers of medical devices, and so on.

That raises a question: do those people have a say in the matter? If the answer is yes, then there goes the purported right; they would be free to decline to go along. But if the answer is no, they are no longer free people, but slaves. Don't we all agree that slavery is bad? (Well, almost everyone. Slavery still exists today, including in Libya, thanks to the U.S.-led regime change in 2011, and many other places. The number of slaves today is larger than in previous times, but it gets nowhere the attention still given to American slavery, which was abolished 158 years ago.) Abraham Lincoln correctly said that "if slavery is not wrong, nothing is wrong." It follows that if self-ownership -- the opposite of slavery -- isn't right, nothing is right.

Is Sanders calling for slavery?

No, no, he and his allies will protest. No one is talking about slavery. No one wants anyone compelled to produce medical services and products. (I'm not entirely sure about that. Would they not endorse conscription for doctors if enough of them opted out of Medicare and Medicaid because of the bureaucratic intrusions?)

If they don't favor slavery, what do they mean? They mean that the government should guarantee payment for medical services for all. (As if the government would pay for something without dictating terms.) But how can the government guarantee payment? Society's medical bill is huge (partly because of government intrusion on both the supply and demand sides), and politicians and bureaucrats certainly don't personally have that sort of money. So they'd have to get it from somewhere else, and we know where that is: the pockets of the people living in America. All that politicians and bureaucrats can do is rearrange existing wealth according to their own preferences. (Actually, it's worse than that; by intervening, they impede the creation of new wealth and innovation in the medical field.)

One way or another, the government would have to transfer wealth from the people who create it to bureaucrats. If the chosen method is taxation (and if it didn't create a tax revolt), the transfer would be straightforward. The dollars the government takes and spends are dollars surrendered under duress by the individuals who earned them. Okay, taxation is not slavery, but it is extortion.

On the other hand, if the government borrows the money, the Federal Reserve would monetize the debt by inflating the money supply, driving up prices (and distorting the structure of production). Depreciation of the money would constitute a transfer of purchasing power from consumers to bureaucrats. That's just a hard-to-see form of taxation. (By the way, without the power to tax, the government would be unable to borrow.)

Sure, everyone theoretically would eventually get some kind of medical attention (if they lived long enough; you know how government monopolies are), but would the system be worth it in terms of lost liberty and utility? It's not as though free people wouldn't arrange for decent medical services, insurance, mutual-aid associations, and philanthropy if liberated from government domination. (Bulletin: we don't have a free medical system.) 

Sanders and the Medicare-for-all brigade endorse an untenable situation in which two or more sets of people are in a conflict over the same money: those who earned it and those whom the legislators and bureaucrats claim to be serving. We ought to be able to agree that they can't both have a valid claim to the same money. (How could the earners, who include entrepreneurs, business owners, managers, and employees, not be entitled to their earnings?)

For a rights theory to do its job -- which is to define the moral-political zone in which each individual can act and flourish in peace -- rights must be mutually consistent, or compossible, as the political philosopher Hillel Steiner puts it. That means the test of any rights theory is this: could all people exercise their rights simultaneously without conflict? Under classical-liberal natural-rights theory, they could. Under the progressive theory, they could not. Thus the progressive theory fails.

Sanders's view would eviscerate the Lockean principle that each person is an end in himself and not merely a means to other people's ends. Sanders & Co. effectively repudiates self-ownership and the rights to life, liberty, and the pursuit of happiness, which is really a single right: the right to be free from aggression.

No right to medical care exists. Everyone has a right to engage in peaceful and consensual cooperative activities aimed at obtaining medical care. But a right to medical care per se? No way, not if we value liberty -- and quality medical care.

Mutual-Aid Societies: The Lost Solution

Market-Based Medical Care for All

My latest article for the American Institute for Economic Research is "Market-Based Medical Care for All."

My Latest

My latest articles for the American Institute for Economic Research are:
"Competition: Just What the Doctored Ordered"
"Why Obama's Overtime Rule Will Backfire"

One More Flaw in Conservative Health Care Reform

Conservatives oppose federally mandated health insurance benefits (maternity, etc.), but they favor states having the power to mandate such benefits, which they already have. But conservatives (e.g., the Heritage Foundation) say they also favor a nationwide insurance market, that is, competition across state lines, which is not the case today.

The problem is that you cannot have free competition nationwide and state-mandated benefits. Would someone who lives in a state with lots of mandates be free to buy a basic catastrophic policy from a company in a no-mandate state? If not, then there is no nationwide market. If so, then the mandates aren't really mandates.

TGIF: Things to Keep in Mind During the Health Care Debate

As the debate proceeds over what should succeed the Affordable Care Act (Obamacare), here are a few basic ideas to keep in mind.

Read TGIF at The Libertarian Institute.

TGIF (The Goal Is Freedom) appears on Fridays. Sheldon Richman, author of America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is executive editor of The Libertarian Institute. He is also a senior fellow and chair of the trustees of the Center for a Stateless Society and a contributing editor at Antiwar.com. Become a Free Association patron today!

TGIF: The Economic Way of Thinking about Health Care

I realize Mike Lupica is a sports columnist — and that Howard Cosell called sports “the toy department of life” — but maybe that’s what makes Lupica’s recent declaration about Obamacare all the more representative a reaction. Appearing on a morning cable news program, Lupica declared that “health insurance for all is a noble idea.” He repeated this a few times, apparently to make sure we all heard it. 

What’s curious is that it was all he felt he needed to say. It’s a noble idea. Period. If you can’t say something nice about it, say nothing at all. 

Apparently it’s of no interest to him what the term health insurance actually represents today. Of even less interest is how this noble idea is to be achieved under the Affordable Care Act, namely, through the exercise of force, specifically the government’s taxing power.

Read it here.

Government-Industry Revolving Door

Not that we thought it would be any different, but revolving door between government and industry spins just as fast in Obama's Washington. Read about it in my latest article at the Project to Restore America.

Incoherent Romney

Mitt Romney says he wouldn't repeal all of Obamacare. He'll keep the rule forbidding exclusion for preexisting conditions, i.e., he'll maintain guaranteed issue. But he is going to find that he can't do just that. If all that's mandated is guaranteed issue, what's to stop insurers from charging premiums to already-sick clients that amount simply to prepayment for the medical expenses they are certain to incur (plus administrative overhead)? At that point the coverage is no longer insurance. Also, that won't fly politically, which is why guaranteed issue is always coupled with community rating--the requirement that insurers charge people in the same area the same premiums regardless of their health. That requirement raises premiums for younger healthy people so they will cross-subsidize older and sicker people.

But that leads to a new problem. (See Mises's Critique of Interventionism.) Younger and healthier people will leave the insurance market: Why pay inflated premiums when you can put off buying coverage until you are sick?

There's only one solution to this problem if the other interventions are to be maintained: an individual insurance mandate, the centerpiece of Obamacare, which Republicans and conservatives say they hate. Except that they don't really. Romney enacted a mandate in Massachusetts, and the conservative Heritage Foundation proposed one in the 1990s after the Clintons proposed their health care overhaul.

Is this Romney capitulation to Obamacare enough to keep the GOP base home and assure Obama the election?

Come and See the Danger Inherent in the System

I remain puzzled at the refusal of civil libertarians to see the dangers inherent in government control of medical care.

Question

What's there to say about a person who can't tell the difference between contraception and conscience?

Well, Mr. Moore?

See update below.

Cuba banned Michael Moore's 2007 documentary, Sicko, because it painted such a "mythically" favourable picture of Cuba's healthcare system that the authorities feared it could lead to a "popular backlash", according to US diplomats in Havana.

The revelation, contained in a confidential US embassy cable released by WikiLeaks , is surprising, given that the film attempted to discredit the US healthcare system by highlighting what it claimed was the excellence of the Cuban system.

But the memo reveals that when the film was shown to a group of Cuban doctors, some became so "disturbed at the blatant misrepresentation of healthcare in Cuba that they left the room".

Castro's government apparently went on to ban the film because, the leaked cable claims, it "knows the film is a myth and does not want to risk a popular backlash by showing to Cubans facilities that are clearly not available to the vast majority of them."

The rest of the Guardian's story is here.

UPDATE: Moore replies:

Sounds convincing, eh?! There's only one problem -- the entire nation of Cuba was shown the film on national television on April 25, 2008! The Cubans embraced the film so much so it became one of those rare American movies that received a theatrical distribution in Cuba. I personally ensured that a 35mm print got to the Film Institute in Havana. Screenings of 'Sicko' were set up in towns all across the country. In Havana, 'Sicko' screened at the famed Yara Theater.

The lesson? Be skeptical of anything originating within the U.S. government. It's also fair to ask why the Guardian did not check the veracity of the cable.

One Last Time: Markets Don't Ration!

The Wall Street Journal takes Donald Berwick, likely the next Medicare chief, to task for saying, “The decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open. And right now, we are doing it blindly.”

Fine. But then the editorial writer adds, “In fact, the real choice with medical care, as with any good or service, is between rationing via politics and bureaucratic lines or via a competitive market and prices.”

Wrong. Markets don’t ration, for the reasons I explain here.

The Freeman, March 2010

The March Freeman is now online. In this issues: Jim Powell discusses Progressive Republican Theodore Roosevelt's big-government record, Gene Callahan pleads for maturity in public-policy discussions, Gerald O'Driscoll looks at the Fed's recent conduct, Steven Horwitz explains the idea of unintended consequences, Kevin Carson gazes deep into the health care system, and Joseph Stromberg takes another look at John Locke.

Rigging the Debate

Calling something"reform" biases the discussion from the start. It's question-begging. Whether the proposed changes actually amount to reform -- that is, improvement -- is precisely what is in dispute.

TGIF: Medical Misunderstanding

Economic illiteracy will be hazardous to your health.

The rest of TGIF is here.