Breakfast of Champions

oh yeah...the bob loblaw law blog

Saturday, April 05, 2008

My philosophy of government

Since I'm now actually asking for your money (which i'm going to get a bit more active and therefore annoying with in coming months), I figure that I owe it those of you who are forced to listen to my drivel to explain where i'm coming from and why I think it is so important. Some of you will find these arguments familiar, meaning that you were one of those lucky souls I used to hone my methods. We begin by answering the question, Are governments necessary?

In recent years, we have heard a lot about the value of "market based solutions", which when taken to its extreme is probably best described as an incredibly unholy marriage of Adam Smith and Ayn Rand. All of our problems, they say, can be solved by allowing individuals to essentially do as they choose. Supply and demand will ensure that any product or service will be provided if it has utility. Self interest will ensure that people act honorably and provide quality; if a business didn't, people would learn about this and said business would not survive long. If the super-strong theory of market based solutions were true (or even just consistent), then governments would be nearly unnecessary. However, if we can prove that "market based solutions" are not sufficient to solve the problems of our society on their own, we will have shown that there is a need for governments. The logic that we use will also give us some hints as to how we can determine what goods and services are best provided by governments. We will work with the example of healthcare.

I ask you all to start with the assumption that in the year 2008, in a modern economy such as the United States, all people should be entitled to reasonably good healthcare, at the minimum (let's not debate what "reasonably good" is). I truly hope this is something we all agree with. Let's now imagine a society which has entirely "free market healthcare". In this society, doctors, hospitals, and pharmaceutical companies charge you on a by-use basis for their services, the pricing of which is based purely on supply and demand. Insurance companies pop up; people have a choice of paying a single annual fee to such a company, in exchange for which they get certain health services for free or a reduced cost. Sounds great right? Competition ensures costs stay low, and people can either have a guaranteed cost for their annual healthcare (which is slightly higher than their expected cost to allow for the insurance company to make some profit) or roll the dice if they think they will be healthy for the period in question. However, we can immediately find two issues that destroy the "free market healthcare utopia".

First, what happens to the people who roll the dice and lose? We are not talking about poor people in this category per se - but they won't necessarily be rich people either. They will still have heart attacks, strokes, get cancer; they are not insured to pay for these expensive treatments and can't afford them. Do we really think that these people should die (i'm not exaggerating - these illnesses will kill you if not treated) because they made a decision which, although probably poor, went horribly against them? Doing so would go against our prime assumption, that all people are entitled to such healthcare. Hence there needs to be some type of institution that provides emergency crisis health care services, and there is no way such an institution can be "free market". QED.

Even more troublesome are those who can not afford insurance at all. These people will always exist in any free market society. At the very least it will include those who are disabled and unable to earn a living in our "free market" paradise. Are they not entitled to any healthcare? We have had societies in the past where the poor were not entitled to modern healthcare - this is how plagues begin, it is in nobody's best interest. Hence there needs to be some type of institution that provides all health services to those who have no means of purchasing any, and there is no way such an institution can be "free market". QED.

By this simple logical argument we have shown that in order to fulfill the modern requirement that all people receive healthcare, we need to have a government. Exactly what this government health care (note i do not use the term "government health insurance", which is a dishonest frame) will do is a subject for another post, but it is clear that we need something.

Another great government service to use this argument with is defense. The next time somebody mentions the benefits of a "free market society", you can respond "I don't feel that I get any benefit from the Iraq War; I would choose not to pay for it in your 'free market' society" Once I actually got the response that if everybody said this then there is no way the Iraq War could go on. So I guess I'm not entirely against free markets.

Next up I think will be a bit on fiscal policy...

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