This article first appeared in the St. Louis Beacon, March 9, 2010 - This column will start with a gigantic nail (the kind a carpenter hits with a hammer) and end with the government getting out of the health care business altogether.
During the good old days of the communist run Soviet Union, the days when dictators, thugs and bureaucrats controlled the Russian economy and dissidents went to the gulag, there was a cartoon showing one month's output of a nail factory. The cartoon showed a gigantic, 20-foot-tall nail. Everyone in Russia got the joke.
It was funny because everyone knew that the factory had to operate under a government generated "plan" outlining how many nails were needed, and in what sizes and with what strength, but that the "plan" had no connection with the actual need of the people for nails. So the guys running the nail factory ended up fulfilling the "plan" by creating one giant useless nail.
If you ask the average American citizen whether the government should tell a farmer whether to plant spinach or peas, the average citizen will instinctively say no. The citizens understand that farmers, food brokers, grocers and ultimately consumers just sort of figure it out. The price system is the guide.
During the glory years of subliminal spinach advertising, that is, during the days when Popeye the Sailor Man was a TV cartoon hit and a mother could rely on Popeye to eat lots of spinach every Saturday morning, and so give her street cred with her kid when she would say: "Eat your spinach so you grow up to be big and strong like Popeye," demand for spinach shot up. As demand for spinach rose so did the price of spinach.
Some farmers who were deciding in early spring whether to plant spinach or peas, and who saw their own kids watching Popeye, licked their chops at the prospect of higher prices and went with spinach. Others, perhaps the counterintuitive bunch, thought that because so many farmers were planting spinach there might be a shortage of peas and so planted peas.
As vegetables arrived at grocery stores the produce department price setters wanted to get the most money possible for both spinach and peas before it all rotted and had to be pitched. If a big load of spinach came in the veggie manager would reduce the price of spinach and maybe increase the price of peas. Consumers choosing between peas and spinach would thus lean spinach. The consumer, of course, had ultimate control and could either pick one or the other or forget the whole debate and go with cauliflower.
The failure of the centrally planned nail factory and the success of the unplanned vegetable market are examples of failure in a planned economy and success in a free market economy.
The benefits of the free-market system are, of course, replicated throughout America, including, for example, natural gas vs. electricity for power, brick vs. wood for home building, beer vs. hard liquor for adult recreational beverages, etc. The price mechanism tells everyone in the game whether to make more or less of this or that, and the economy produces the "right amount" of these things. Substitution occurs both within sectors and across sectors. The collective unorganized wisdom of the people produces order and prosperity for the vast majority.
Eighteenth century economist Adam Smith's called the price system "the invisible hand." Mid-20th century Austrian economist Freidrich Hayek's added the insight that no bureaucrat ever has enough information to make wise decisions about the allocation of resources.
Why don't our politicians consider using the invisible hand in the health-care debate? Why do they think they have enough information to set up the health-care system? Why do they think that can answer such important questions as: How much health care is the "right amount"? When should we spend a $1 million on a chance to prolong a life? When should a person take antibiotics? How many hospitals should there be?
Here are some reasons politicians think all their "plans" will make things better.
First, our society seems to have an almost religious regard for people in the health-care field, and somehow believes they are all altruistic heros who act selflessly on behalf of their patients. Ask some doctors if they would keep doing their work if they made 25 percent of what they are making now. Ask some pre-med college kids if they will continue to study 14 hours a day if the financial rewards are taken away. No, people in the medical care field, while no doubt mostly a good bunch, find the big money a meaningful incentive. When politicians miscalculate the self interest of health-care workers they make a mistake.
Second, the politicians seem to have concluded that health care is so important that everyone ought to get as much health care as they want so they can continue to lead productive lives.
I suppose anyone could say that about anything. What about computers? Is it so necessary to have a computer that the government should give one to everybody? That seems instinctively wrong. If an American wants a computer he or she should save money, shop around among countless choices and buy one that he believes provides value for the dollar. I don't understand why health care should be different.
The amount of resources devoted to health care should be based on people's choices. Some will want the gold-plated plans, some will want experimental treatments and others will want to stick with prayer. I suggest that health care is like any other consumer good and should be treated as such. Only through the invisible hand, that is, through the not-centrally-planned actions of individual people will society as a whole know how much health care is "the right amount," and what choices should be made among alternatives.
Third, and this is the cynical view, the politicians know that a huge percentage of voters work in the health-care field, and those politicians worry that sending health-care workers a message that the government portion of their pie will be cut down will not be good for electoral prospects.
Fourth, people in power have the mistaken belief that just because they have achieved power they are wise. They see their power as platform to impose their ideas on everyone else. They think they are smarter than the poor dummies who happen to be the people. This is routine hubris, but it is wrong every time.
Fifth, and last, they want to reward friends and family with jobs and power.
But let us imagine a world in which the government simply repeals all the laws, rules and regulations related to health care and completely ignores the subject. (Yes, this does involve repealing Medicare).
The first thing that would happen is that people involved in health care would stop preening for government dollars, and would start preening for consumer dollars. That would make them more responsive to patient needs.
The next thing that would happen is that those involved would figure out a way to simplify the paperwork. Surely doctors, insurance companies, hospitals, etc., don't like devoting huge portions of their time to paperwork. They would work things out to simplify the process.
Next, rich people would have more money and so even more of them than today would make charitable donations to provide health care for the poor, so the poor would have somewhere to get care. The existence of the Shriners, the Siteman Cancer Center and countless other examples contradicts those who say that if the government does not provide health care the poor the poor will do without.
If we continue the current course we will end up with cartoons about health care that are the equivalent the Russian giant nail cartoon.
As always, this correspondent endorses a three word political philosophy: "Trust the People."
Bevis Schock is an attorney in private practice in Clayton.