Part 6: Health Economics

Finally, time to write more about Mises University 2006!

For me, Friday heralds a bitter-sweet taste. I am going home in two days, and I can see my wife again! On the other hand, I am going home in two days, and who knows when I'll have this type of intellectual opportunity again. It seems like I'm getting less and less sleep, spending too much time writing, thinking, and talking economics and government then replenishing my energy. The adrenaline and excitement, though, make it all worth it! The caffeine helps too…

The following lecture was so important, in my opinion, that I think it deserves its own post. Health issues are perhaps the most pressing thing on people's minds, these days, and yet the only option that seems to be considered is the "nationalization of health care," which really should be read as "socialist health care plans." Bush is a health socialist. There, I said it. (Of course, so is everybody else in congress except Ron Paul.) Don't think that Bush can solve your problems on this issue (or any other issue, for that matter), he will only make it worse. This, of course, will merit more outcries from the hurting people of this nation dependent upon "government benevolence." Libertarians, you need to know everything you possibly can on this subject.

Walter Block, as I have mentioned before, is quite a character. He has an excellent lecture style that just draws you into the subject matter. This lecture was on "health economics." He started with the world-famous Nestle Breast Milk Substitute case, a classic criticism of the "dangers" of a free market. Nestle marketed this product in underdeveloped countries to help nursing mothers give proper nutrition to their children. The problem, however, was that many underdeveloped countries have poor water supplies. People used the substitute with dirty water, despite the obvious problem that no one should drink dirty water, much less newborns. So of course, critics said it was Nestle's fault. But think for a second - is this really the fault of Nestle? Is this really the fault of capitalism? This tragedy is the fault of the dirty water, not Nestle's product, and the water was supposedly the government's jurisdiction. Looks to me like the government is at fault. Another criticism of Nestle is that the people couldn’t read the warning labels saying that dirty water should not be used (never mind that it would be illogical to give anyone dirty water). But those same people would say that it is the government's responsibility to educate people - which I think would include literacy. Again, it seems to be the government's fault, not Nestle's.

The legalization of drugs is one of the most controversial parts of Libertarian thinking. First, one must realize that there is a difference between favoring the thing itself and favoring the legalization of it. I wouldn't want my children to use drugs but I wouldn't want them to get sent to jail if they did so. Furthermore, this isn't even the way the government tries to get rid of drugs. The government attacks the supply side of the drug industry, not the demand. Basic economics shows that whenever there is a demand for a product, someone will try to be the supplier - even if it is "illegal"! Why? The price is so high. Some drug dealers make hundreds of thousands of dollars a year selling drugs because their product is so sought after they can charge that much for it. Why? Because of the demand. Do not be so naïve as to think that the U.S. is actually winning the war on drugs, either. The powers at be can't even control drugs in prisons! Every "success" in the drug war breeds failure - the supply curve shifts and makes it even more lucrative to get into the drug business.

If you can't put what you want into your own body, that is a small amount of slavery. A nation should never allow the government to take away their personal, private property rights - which first and foremost is the right to self-ownership. Consider, if I can't make a decision about what to put in my body, then why shouldn't the government regulate fast food, soft drinks, coffee, or alcohol. Consider further, if the government thinks I can't make choices effectively for myself, why am I given the right to vote in the first place.

Ever heard a commercial on television encouraging you to "give" blood to a blood bank? It seems like there's an awfully high demand for blood, and yet no one is allowed to sell their blood! Richard Titmuss said it was immoral to sell blood, and we should all simply have "public spirit" about it! But when you need something important, you have to marshal more forces in order to supply the need - in this case we should pay people to donate blood. Furthermore, what about body parts? Kidneys, hearts… why can't people sell these? It could almost act like life insurance for your family: I die an accidental death, my organs are sold to help support my wife. Everyone wins - my wife receives financial support, someone receives the organs they need. How is this morally wrong?

Do you know how medical benefits became a standard part of American jobs? Medical benefits came into being after World War 2 because of maximum wage levels (that's right, MAXIMUM, not minimum). Maximum wage rates prevents employers from attracting the most talented individuals with higher pay, and hence there is a shortage of labor. Employers got around this problem by giving benefits. Eventually, it became embedded into the American job market so deeply that now people are crying for subsidized health insurance. But this is a recipe for disaster - do you really want to give the power to control medicine over to the same people who run the post office and the road systems? Here are some arguments for socialized medicine:

It's immoral to make money off of people's sickness. Well, restaurants and grocery stores make money off of people's hunger, and clothing stores make money off of people's nakedness. Since there's more of a necessity for food than medical care, should we nationalize this stuff too?

The only motivation for medicine is to make money. Why is this so bad? What do you think the motivation of food sellers is? I hope they are motivated to make money, that gives them incentives to do a good job!

40 million Americans don't have health insurance. Along the same argumentation of the first objection, should we then have food insurance? Furthermore, the

You can be more efficient by getting rid of health costs. Yeah right, just look at the Soviet Union! Did their health care system work? Was advanced medical care available for anyone other than the Soviet elite? Not often enough to say that it worked.

Okay, now for the PROBLEMS with socialized medicine…

Socialized medicine destroys the price system. As I have written about before, the price system is essential to a healthy economy. If you don't have competitive prices giving information, you have no possible rational way of knowing how to plan the economy. If you don't believe me, see Parts 1 through 5.

The bulk of medical expenses are on the last 6 months of life. This might not be the way we would choose to do it if we had to pay for it ourselves.

It ends up demeaning human rights and human life. Block described the true story of one Canadian's socialized medicine experience: a woman who raised horses saw one of her horses in pain. She brought the animal to the veterinarian, who said that the horse had gallstones and needed immediate surgery. One night was all it took, and the horse was back home the next day. A short while later, that woman's sister was diagnosed with gallstones, and was recommended for immediate surgery. But her sister had to wait 18 months for the surgery, because the waiting list was so long. The woman noted that if the horse had to wait 18 months for this procedure, she would have been brought before a judge for "animal cruelty." So cruelty to animals is bad, but cruelty to humans is ok because we have the higher goal of socialized medicine?

When something is free, you have infinite demand. If something costs you, you'll think more about it. You wouldn't go to the doctor for a cut finger if it cost you too much. Going to the Cadillac doctor with years of experience for every minor thing is not just cost inefficient, it prevents the doctor from seeing as many people with more serious illnesses who really need the help.