Irresponsible and Culpable

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I can’t turn a news channel on lately without seeing yet another legislator getting angry at his constituents because they understand too much and won’t simply acquiesce to their illustrious leader’s socialized healthcare debacle.

This is a perfect example of the federal government’s attitude towards its citizenship: how dare you question the all-powerful Oz? They act as if somehow they’re not our representatives but rather our lords. That somehow by being in Washington they’ve been blessed with some sort of insight that the rest of us don’t posses. That they have been empowered with the ability to understand these complex issues when we can not and so therefore they will deal with them for us and we are to be thankful for it.

Although I and many, many others have written and continue to write about the economic effects of socialized healthcare — and any government intervention really — I think they deserve repeating.

The necessary economic education to be able to understand this issue can be learned in a first-year business class at any university. Or even in a high school civics class for that matter. The details of any healthcare bill are irrelevant because the economics of its implementation are the same regardless. President Obama’s lack of this knowledge, or worse, his conscience decision to ignore it, is irresponsible on his and his administration’s part.

Mr. Rothbard’s point is so correct: "it’s not a crime to be ignorant of economics…but it is irresponsible to have a loud and vociferous opinion on economic issues while remaining in that state of ignorance."

The main points are:

  • The 47 million number of supposed uninsured Americans come from a census and is grossly overstated.
  • There is no constitutional nor moral authority for the government to tax Peter to pay for healthcare for Paul. If it does then Paul may be better off but Peter is worse off and social welfare declines.
  • The government does not have the incentive to work efficiently since it does not compete with anyone. Therefore the quality of any good or service that that government provides will be far less than its complement in the private sector.
  • The government is a bureaucratic behemoth. Everybody along the bureaucrat trail has to be fed. Therefore, any good or service that the government provides will cost significantly more than if provided in the private sector.
  • The government will try and control healthcare costs causing a severe excess of demand and consequently a shortage of healthcare services. Healthcare will then be rationed.

President Obama and his lackeys continue to irresponsibly throw around the information that there are 47 million Americans who can’t afford healthcare. That’s simply not true. That number comes from census data. On the census they didn’t ask if people couldn’t afford healthcare but rather if they had healthcare. And if not then for what period of time haven’t they had healthcare etc… For purposes of trying to convince people that a grave situation exists in our country that simply doesn’t, the president is omitting information from those numbers (also known as lying to us dumb country folk).

Many of those people have incomes that are more than sufficient to afford healthcare but simply choose not to buy it. Many of those are young people who feel that their need for catastrophic healthcare coverage doesn’t warrant the cost. It includes illegal aliens as well as many who are in job transition and will have healthcare again within a few months. Many are people who are already covered by existing private and government indigent healthcare programs like Medicare, Medicaid, Social Security and others.

The actual numbers might be closer to half of Obama’s 47 million or even less.

Secondly, I challenge anyone to find the clause in the constitution that even comes close to giving the president or our legislature the legal authority to tax us and pay for healthcare. For those irresponsible enough to try and abusively interpret Article I, Section 8, clause 1 to mean that the legislation has the authority to tax us and spend it on ANYTHING it wants to "provide for the common welfare" I offer the following simple economic analysis:

One dollar taken from Peter and passed through the government machine comes out much less than a dollar for Paul. Therefore, in order to pay for one dollar’s worth of healthcare for Paul the government machine must also tax Mary and David and many others. So Paul is better off because he now receives one dollar’s worth of healthcare but Peter and Mary and David and the others are worse off because they are now poorer than they were before and must go without something that they were planning on spending that dollar on. Therefore the net change in social welfare is always negative and in direct violation in fact of the "Tax and Spend clause." The only way for the government to provide for the general welfare is to get out of the way, enforce contracts and let people do what they want with their money.

Anyone who as ever worked for the state or federal government knows first-hand the inefficiencies and higher costs associated with government work. Since the government does not have to worry about being solvent, if they need more money they simply tax us more, borrow more and have the fed print more of it, they don’t operate under the same economic incentives as a private firm.

Government salaries are not determined by the supply and demand of labor but rather they are legislated. There are folks with high school educations making $80,000?—$100,000/yr simply because they’ve been working there for 30 years and a salary increase has always been included in their agency’s annual budget request bill. These people’s true market value would most likely be minimum wage or slightly better if they had to work for a living.

Finally, since the true market value of the healthcare services that the government will try to provide will be much higher than the artificially low levels that the government will mandate and since people will perceive their healthcare as being "free" and will therefore go to the doctor now for every little insignificant thing, there will be a huge shortage of healthcare services available. Doctor’s offices and hospital waiting rooms will be overcrowded.

This is where Obama’s true ignorance and inexperience shines. Having lived and worked for years in no less than three other countries which have socialized healthcare: (UK, Germany, and Romania) I can verify without a doubt that socialized healthcare is rationed. If you need a prescription for an antibiotic or shots for your kids then you will probably be okay. But that’s not why we have healthcare insurance. We have it to cover the catastrophic healthcare issues such as broken bones, acute and chronic health conditions and for these things you will wait in line.

While living in Germany I needed an operation on my left hand. The condition was such that I had to quit any and all activities that put excessive strain on my left hand. I had to wait from August until December for the operation. During that time the condition worsened and to this day I still have numbness in it.

In Romania, a member of the EU, all one needs to know is that when it comes to socialized healthcare, you get what you pay for. So one can imagine what kind of healthcare you get when it’s "free." True story: my brother-in-law almost died of appendicitis due to a mis-diagnosis. When people work for the government and their wages are controlled they simply have no more incentive to take pride in their work. They no longer innovate nor invent. The industry will stagnate.

While the politicians will squabble about the details of their plans, they are irrelevant. The above economic effects are immutable. They are not theory but rather fact. There exists a vast body of economic history to bear them out. They are in practice today all around us in the form of current federal economic programs. To ignore them is irresponsible and culpable. To be ignorant of them and remain decidedly in that ignorance is impeachable.

Don Cooper [send him mail] is a Florida native, Navy veteran and economist living and working in the Midwest.

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