Sunday, November 3, 2013

The dead end of interventionism

“Government Exits Health Care Market” says a headline we’ll never see.  Nancy “Are you serious?”/“pass the bill” Pelosi and her allies could tell us why.  Their statements about the poor and uninsurable notwithstanding, the whole point of the law was not to solve a problem, but to get a bill passed in the name of that problem.  Laws rarely if ever achieve the stated aims of the lawmakers, but once a law is on the books it becomes another foot in the door of the economy.  Even if it produces spectacular havoc and failure, the intervention itself will not be surrendered.  Why?  The people who championed ObamaCare are people for whom government is their raison d’etre.  To surrender the intervention would be to surrender power, and that kind of thinking has not produced the massive state we live under.

Besides, if the people who support government-mandated health care were serious about solving a problem they would not turn it over to the world’s number one problem-creator.  

ObamaCare is already showcasing the inevitable effects of bureaucracy and interventionism.  If its level of incompetence is anything like FEMA’s Americans will fear routine health checkups more than they do Cat 5 storms.  You’ll recall it was Hurricane Katrina that launched FEMA from the pages of Catch-22 as we read about rescue personnel diverted to Atlanta for two days so they could be given classes in sexual harassment and FEMA history while people were dying in New Orleans and the U.S. president was telling FEMA head Michael Brown he was doing “a heck of a job.”  To satirize government one need only report on it, as we saw last year when first-responder FEMA made a first response to a nor’easter by closing its offices.

ObamaCare of course is government’s answer to government failure.  As an intervention, ObamaCare is the suppression of certain voluntary acts and the compulsion of other acts.  It’s one more area where other people, not you, are in control of your life.

The key to the advancement of interventionism is how each stage is publicly perceived.  When interventions bring on a crisis, it’s critical for interventionists that the free market take the blame.  Blame speculators, blame greed, blame Original Sin, blame the other party, but don’t blame the government unless you’re reprimanding regulators while calling for more or better regulation.  The reasoning behind this is straight-forward: If the free market is allowed to breathe, what would it do to the careers of people like Nancy Pelosi, Hillary Clinton, and Kathleen Sebelius - for that matter, any politician or bureaucrat?

Thomas DiLorenzo cites a 1992 study by Milton Friedman in which Friedman concluded that the problems in the American health care system are entirely due to government intervention.  DiLorenzo writes:
Friedman documented how, at the beginning of the 20th century, about 90% of all American hospitals were private, for-profit enterprises. State and local governments then began taking over the hospital industry. So, by the early 1990s only about 10% of all American hospitals were private, for-profit enterprises. Socialism characterizes at least 90% of all hospitals. Many other hospitals have received government subsidies, and with the subsidies come reams of regulation, making them fascist by definition. 
The effect of this vast government takeover of the hospital industry, Friedman documented, is what any student of the economics of bureaucracy should expect: the more that is spent on hospital care, the worse the quality and quantity of care become, thanks to the effects of governmental bureaucratization. According to Friedman, as governments took over an ever-larger share of the hospital industry (being exempt from antitrust laws), hospital personnel per occupied hospital bed quintupled, as cost per bed rose tenfold. 
Friedman concluded that "Gammon's Law," named after British physician Max Gammon, "has been in full operation for U.S. hospitals since the end of World War II." Gammon's Law states that "In a bureaucratic system, increases in expenditure will be matched by a fall in production.… Such systems will act rather like 'black holes' in the economic universe, simultaneously sucking in resources, and shrinking in terms of … production." Dr. Gammon surely knew what he was talking about, having spent his career in the British National Health Service.
Orthodox historians have always treated the Progressive period (roughly 1900–1916) as a time when free-market capitalism was becoming increasingly “monopolistic”; in reaction to this reign of monopoly and big business, so the story runs, altruistic intellectuals and far-seeing politicians turned to intervention by the government to reform and to regulate these evils. [Gabriel] Kolko’s great work [The Triumph of Conservatism] demonstrates that the reality was almost precisely the opposite of this myth. Despite the wave of mergers and trusts formed around the turn of the century, Kolko reveals, the forces of competition on the free market rapidly vitiated and dissolved these attempts at stabilizing and perpetuating the economic power of big business interests. It was precisely in reaction to their impending defeat at the hands of the competitive storms of the market that big business turned, increasingly after the 1900s, to the federal government for aid and protection. [p. 38; emphasis added]      
With this understanding it’s hardly surprising to find that health care industry lobbyists influenced and wrote the health care law. 

What blessings does intervention bestow?  It keeps headline writers busy.  Today it’s ObamaCare’s website and the cronyism behind its creation (health care intervention), yesterday and today it was and is NSA spying (privacy intervention), before that it was Putin trumping Obama over Syria (foreign intervention), sometime earlier it was IRS targeting of liberty nonprofits (economic intervention), then we have the pseudo-austerity of budget sequestration, the czars, Fast and Furious, Benghazi, the ongoing wars, student debt - youth unemployment, etc. ad infinitum throughout American history.  Government meddling also produces government debt, both official and unofficial, which according to economist Laurence Kotlikoff reached $222 trillion in 2011, an increase of $11 trillion from 2010.  But the headline writers don’t talk about this.

Since 1913, a large part of the funding for an expanding government has been brought to us by the monopoly money producer of the U.S., the Federal Reserve, along with its partner in coerced wealth extraction, the Internal Revenue Service.  Since their creations both agencies have fine-tuned their craft, with the IRS benefiting from a war to get permanent tax withholding, and the Fed benefiting from a depression it inaugurated when FDR made it a felony for American citizens to own gold money.

Taxes, inflation, and debt do not profit most taxpayers.  For now the pain is tolerable for most.  But there will be a time when it isn’t, and they will need an understanding of free markets if they are not to be conned into a new system of economic enslavement to replace the one that goes belly up.

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