More and more, I
have come to believe that state regulation of anything not only
destroys liberty but also is essentially irrational for those on the
receiving end, which is frequently most of us and very often many of us.
Somebody always stands to gain, but the costs they impose on others are much
not easy to define, but if a group of people or a society consistently choose
ways to accomplish goals that do not accomplish the purposes efficiently or
effectively, and if they continually spurn available methods that would, they
are acting irrationally.
If a method is
available and has been used in the past that works, I do not believe that we
can attribute failure to use it and instead using a grossly ineffective
method, to stupidity or ignorance. I believe that the explanation lies
elsewhere – within a societal arrangement, within the system that has
been set up. An organization is leading to the poor outcomes and
irrationality. The group or society has closed off, at least temporarily, the
use of peaceful and reasonable methods and replaced them by the use of force.
The group has built unreasonable methods of force into its structure. It has
raised barriers to the use of anything but these methods of force. Having
done that, it has tied its own hands. It cannot escape the consequences,
which will appear to be irrational and chaotic, of establishing an
essentially irrational means of reaching its goals.
Why then do
people adopt these methods of force and build up barriers against their
removal so that they cannot easily return to rational means of dealing with
their problems? Why do they create barriers to rationality and support for
I have in mind,
of course, the state vs. the free market. The state is the organization
people turn to that uses force to solve problems and, I believe, necessarily
results in irrational outcomes. I could qualify this to – by and large
creates irrational outcomes – but why quibble? It is hard to think of
anything that the state does that is not irrational, so let us, for the sake
of simplicity and clarity, simply say that everything it does is done by an
irrational means (force), thereby producing outcomes that are irrational.
View it as an hypothesis, if you will. But in my mind it is actually an
incontrovertible truth. The use of force (compulsion) to solve most problems
that the state is supposedly solving is, I believe, fundamentally irrational.
One might use force to handle invasions of one’s rightful liberty, or
to handle crime and war. It is rational not to allow someone else to injure
you, and force might be the best method to stop them; but these standard uses
of force are not what I have in mind. I have in mind such matters as health
care, where there is no case for using force at all and where instead the
society chooses to use it to attain some end or ends rather than choosing that
people solve their own problems in liberty, without force, which is to say in
a free market.
And so the root
question, which I have raised is this: Why do people adopt government by
force, that is, a state, when the results are irrational and do not conduce
to their welfare? While there are many answers, the real problem with such a
choice is that people who do not want a state are roped into the irrational
arrangement and forced to comply with it and live by it. State-mandated and
regulated health care would be no burden on those of us who think it’s
irrational if we could go our merry ways without it, while all those who
wanted it could have it to their heart’s content. The odds are that
when the latter saw how dysfunctional their system was as compared with our
free market system, they would abandon their loyalty to force and come over
to our method. I cannot help suspecting that those who build up a state
system are anxious to corral everyone into it and quash the free market for
this very reason, that if the free market remains as a living case study of
liberty vs. compulsion, the victory will go to liberty and compulsion will go
down for the count. If this is the case, then I reach the conclusion that
"people," meaning all people, do not adopt government-by-force (a
state) if they know what they are doing. Some people manage to get going this
form of government-by-force by hook or by crook, by all sorts of means that
history shows us, or as such writers as Oppenheimer and Nock show us, have
been used at one time or another; and once that force is in place, once there
is the beginning of prison walls, the state itself can build up those walls
helps the case for liberty to understand how certain people who love the use
of force and love the state go about their business of making liberty
disappear. It also helps the case for liberty to understand that the basic
outcome, which is state control by compulsion over peaceful and innocent
activities such as providing health care, is irrational. Would it be rational
to have a state control the production and distribution of pizza or shoes or
computers or pets or movies or music by the use of compulsion and regulation?
Would we observe pizza stores located where they now are located, open at the
hours they are open, providing the variety they provide, at the prices they
now charge? Would our pizza desires be satisfied via government-mandated
pizzas? If our desires for pizza waned and were replaced by desires for
submarine sandwiches, would the state respond quickly and effectively?
Evidently not, for the state is not a business. It does not respond to the
Health care, like
it or not, is a business. It takes resources to produce it. It takes toil and
sacrifice. We cannot deny Adam Smith’s wisdom. A doctor is not
doctoring us out of the goodness of his heart and generosity, even if he does
possess the milk of human kindness. He is responding to an economic problem
wherein he, as much as the pizza baker, has to use limited resources to
achieve his ends. No better system – no more rational system –
has ever been found for producing health care than a system of liberty in
which the choices are left up to the patients who are the buyers and the
doctors (or other health care providers) who are the sellers. Profit signals
are good. State-controlled health care lacks these. It is far
inferior. Bureaucrats and legislators are not doctors and not
profit-oriented. If they respond at all to what people want, it is in the
most obtuse, roundabout, and counterproductive ways. They seek to augment
their own positions or those who pay them off. They produce nothing. Once
power and force are used to reach ends, resources are wasted jockeying for a
slice of the regulated and/or taxed pie.
These remarks are
prompted both by the pending health care legislation in Congress and a few
articles appearing this morning about health care in Massachusetts, but
especially the latter because several years ago I wrote three
articles heavily critical of the changes in the
Massachusetts system brought about under Mitt Romney. Of course I am critical
of the entire system. It is all irrational. It is pure madness for a society
to have the state construct a health care system that it controls by
regulation. This view is not widely appreciated. But even to the extent that
it is appreciated, many of those who view such state control with misgivings
or even alarm do not understand that any state regulation and control
in health care is bound to produce irrational outcomes. There is no
conceivable combination of regulations or changes that can "fix"
the system. As long as force is introduced as a method of handling the goal
of creating and distributing health care, and a state necessarily uses force,
the results are going to be irrational.
Three years after
Massachusetts instituted its new health care system, the system is not
working. Costs are rising "by more
than 8 percent annually." Year in and year out since Medicare was
adopted in 1965, I have regularly heard that medical costs were rising at 8
percent annually. The needle seems to be stuck. When I haven’t heard
that, I have read instead that medical costs are rising at twice the rate of
inflation. You would think that after 45 years, the people would wake up.
Just the opposite. The state will never wake up. It, as I have said, can only
act irrationally in providing services and reaching health care ends that
satisfy consumers, and the inflation in medical care costs is evidence in
support of that proposition. But evidently the state is very effective in
manipulating thought so that consumers continue to prefer its irrationality
over a rational method of health care provision, which is liberty and a free
an incredibly Byzantine system of commissions and boards to control health
care in the state. What made news is that one of these commissions is
recommending a change in the way that doctors and hospitals are paid.
Previous compulsory mandates have produced excess demand and rising prices.
The article speaks of "heavy use of hospitals." The state is now
looking for ways to ration health care. This is it: price controls and
rationing. That is often the end-result of getting rid of free markets,
wholly or partially. None of this is really news. We have seen it all before.
It is all predictable. That is why we have to conclude that the system of
state-compelled health care and regulation is fundamentally irrational.
Society is choosing means to achieve its ends that are not achieving those
ends. Society is getting the opposite – worse medical care and more problems
than ever. And I believe that this irrationality is a constant and necessary
outcome whenever the state gets into the act of controlling and regulating
goods that can be produced in liberty.
proposes that payments will no longer be made one at a time for each service
that is provided. Instead doctors and hospitals would be given a fixed or
budgeted amount and they would have to work within that budget during a
year’s time. The economic result of this is that they would be forced
into rationing health care services to patients. There would no longer be
negotiated fees between insurers and doctors. The market, such as it is which
is already defaced, would be entirely obliterated. In this system, the
individual demands of health care buyers no longer have any say. Health care
becomes entirely collective. Taxes are collected by the state and insurers,
and then they dole out the money to providers. The person who obtains the
service is left out in the cold, at the mercy of this system. This is fascism
with a vengeance. Like all state-controlled methods of providing goods and
services, fascism is fundamentally irrational.
So that you will
know who your immediate enemies are, they include the insurers. I quote the
is an historic moment, an extraordinary moment in healthcare in
Massachusetts,’ Andrew Dreyfus, senior vice president of Blue Cross and
Blue Shield of Massachusetts and a commission member, said after the
panel’s vote. ‘I urge the Legislature and the administration to
take this up quickly.’"
In an earlier
article, I referred to the health care system as "Aetnacare."
fundamentally, we ourselves are our own worst enemy. Our society and our
system are committed to government-by-force – to compulsion. Our
society and our system not only allow fascism but want it. If we want
irrationality, we shall have it. And we are getting it.
Michael S. Rozeff is a retired Professor of Finance
living in East Amherst, New York. He publishes regularly his ideas and
analysis on www.LewRockwell.com .
Copyright © 2009 by LewRockwell.com. Permission
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