"It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expence, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expence, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will." ~ Adam Smith
Exclusive to STR
August 27, 2007
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Within Living Memory: When Things Worked
As children in the mid-1950s, my siblings and I were exposed to the typical childhood diseases of the time: measles, chicken pox, mumps, and of course colds and flu.
When we were sick, our parents called the doctor, who came out to our home near Chicago. The doctor would arrive carrying a black leather bag filled with strange-looking instruments and various medicines. He would examine the patient, diagnose the problem, prescribe a course of treatment, and often leave medicine so that treatment could begin immediately.
We weren't poor, but we certainly weren't wealthy. My father grew up in the Great Depression and was careful with money, but I never heard anything to suggest that medical costs were bothersome to him.
As I learned later, there were options during the 1950s for those who could not afford the going rates for medical care, including free clinics, charity hospitals, and sliding-scale fees or pro bono work performed by many doctors. The government did little to discourage doctors and nurses from providing free or low-cost care if they wished to do so, and many did.
America was far less wealthy in the 1950s than it is today, and there was more emotional damage (and thus less compassion) than any sane person would wish, yet the market in health care worked remarkably well. American health care was the envy of the world. Today, delivery of health care in America should be even better: ongoing improvements in efficiency, combined with advances in medical practice, technology, and pharmaceuticals, should have created a market with low consumer costs, excellent service, and convenient access for all through a combination of methods with a wide range of prices, including "free" for those unable to pay.
Instead, we have a mess that almost no one is happy with. What happened? How did things go so wrong?
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"Improving" the Situation with Coercion
Over the past several decades, both the cost and inconvenience associated with medical care in the United States have grown to absurd levels.
The inconvenience and outright tyranny involved are not often discussed, but anyone who has watched the health care industry -- it really isn't a unified "system" -- evolve over the past few decades knows the story: seeing a doctor has gone from a typical market interaction -- walk in, get your product or service, pay, and leave without hassle -- to an interaction more akin to dealing with a government bureaucracy; worse, a government bureaucracy shaped by the endless War on Terror. Imagine your local barber or home-electronics store being run by Homeland Security or FEMA, with intrusive, insulting, costly, and time-wasting procedures nearly crowding out the actual provision of service. This is, to me, even more of a problem than the explosion in health-care cost.
Yet the cost increases are substantial. In 1950, medical costs were only 5% of consumer expenditures, and Medicare, along with most of the rest of today's government and employer involvement in medical matters, was yet to be. That changed rapidly starting in the 1960s. By the mid-1980s, more than half of medical care dollars were being spent by Medicare, Medicaid, and government-encouraged employer-paid health insurance. One immediately notes the decoupling of medical spending from consumer actions and pocketbooks -- a well-known and easily-understood economic recipe for skyrocketing costs. Add the massive new bureaucracies involved, the mountain of time-consuming and costly new regulations, and the constant lobbying by those feeding at the government-medical trough, and it is no wonder that costs are out of control.
In 2005, health care consumed 16% of GDP -- the highest number ever. The cost of health care has been rising at more than the rate of general inflation for years, and is projected to reach 20% of GDP less than a decade from now.
The situation will get even worse -- much worse. Dr. Ron Paul, the stealth libertarian candidate for president (running as a Republican), pointed out at his congressional website recently that "The National Taxpayers Union reports that Medicare will consume nearly 40% of the nation's GDP after several decades because of the new drug benefit. That's not 40% of federal revenues, or 40% of federal spending, but rather 40% of the nation's entire private sector output!" [Emphasis added]
Further note: that isn't for health care generally, but only for one government health care program. There are others, and some (Veterans Affairs health benefits, for instance) are huge. Then there are non-government health care expenditures. Adding it up, we appear headed for health-care costs of 100% of GDP (or more!) in the not-too-distant future. Clearly, something has to change.
Health care is literally bankrupting America. Our government's decision to "help" people with their health care has made things dramatically worse.
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The Illusion of Choice: When Every Option is Corrupt and Coercive
Our health care problems, like those of Cuba, Canada, England, Sweden, and almost every other nation on Earth, have been caused by government action. More government will make things worse, not better.
There are many ways to arrange economic life, but the two forms currently fighting for dominance in the West are corporatism and coercive-socialism. (Their proponents use different names, but I find these more accurate and descriptive). Both corporatism and coercive-socialism posit the need for a State with sole authority to initiate coercion against peaceful individuals. Democratic elections, combined with relentless propaganda during the school years and from the media, are the primary tools for making the system appear fair and legitimate in either form.
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By "corporatist," I mean a system that superficially appears democratic and market-based, but in which corporations have gained ever-more control over the workings of government. In a corporatocracy, business increasingly directs the coercive power of the State, using it to the benefit of corporations and the private-sector power elite. At the same time, the "public" sector grows as the corporatocracy expands the size and power of its captive proxy, the State.
Lobbying is the most visible tool for applying corporate power to the actions of government. The United States was founded as a limited-government republic in an attempt to prevent the hijacking and inflating of government power by special interests of any type, in or out of the government itself. The U.S. Constitution preserves specific rights for the people as individuals; the Bill of Rights, which the people insisted on adding, greatly strengthens this protection. Yet this system of creating-yet-restraining coercive government power has clearly failed, and this failure has turned a democratic republic into a corporatocracy. Our current system might also be termed an oligarchy, or more descriptively a fascist oligarchy.
The symbiotic arrangement of corporatism benefits both the State and the corporations, in the sense that both grow in size and power. Yet in the long run, the system is toxic and destructive -- even to the State and the corporations. Are today's higher medical costs benefiting Ford or GM? Does the military-industrial complex draining our treasury help Apple or other non-M-I-C corporations? Has any of this really made our government more sound?
Even more fundamentally, using government coercion to benefit a corporation unfairly is good for the corporate bottom line only in the short term. Open and honest competition in the marketplace is the Darwinian force keeping businesses fit, and weeding out those which are not fit. "Helping" an industry by shielding it from competition, paying its fees from the public treasury, or otherwise providing unfair advantage can only make the industry less competitive in the long run. This means higher prices and inferior products or services; neither makes an industry stronger, not to mention how such things affect consumers. The medical and pharmaceutical industries in this country are prime examples.
America 's corporatist government has had many decades to grow into the monster we have now. President Eisenhower warned Americans about the dangers of corporatism, especially in the form of the military-industrial complex and the broad-based research industry, in his farewell address of 1960. Ike also foretold our nation's current financial disaster and the plundering of resources belonging to future generations. Here are excerpts from that address:
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But threats, new in kind or degree, constantly arise.
Of these, I mention two only.
. . . Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea .
Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. . . . We annually spend on military security more than the net income of all United States corporations.
This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every Statehouse, every office of the Federal government.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.
In this revolution, research has become central, it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.
. . .
Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers. The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present -- and is gravely to be regarded.
Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.
. . .
As we peer into society's future, we -- you and I, and our government -- must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.
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While not a gifted orator (you can listen to the speech here), Eisenhower crafted and delivered his address in a manner to appear concerned yet calm and impassive. But Ike was an educated man and he knew where such problems must lead; there is too much history available for a man like Eisenhower not to have known the dangers and to have worried that a tipping point had already been passed. I have come to see in Eisenhower's farewell address a man heartbroken and shaken by what his government had already become. I believe he was profoundly concerned, perhaps even afraid, for the future.
The "disastrous rise of misplaced power" has come to pass in America and has proven as dangerous to our liberties as Ike feared. And clearly, we live today in "the insolvent phantom of tomorrow" that Ike warned us about. The destruction of freedom and prosperity by the growth of corporatism (and related factors) has unfolded just as Eisenhower described, and the destruction is nearly complete.
Today's health care crisis is only one symptom of this disaster. Far worse is coming unless we begin rapid and dramatic change.
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I use the term "coercive-socialist" because true socialism involves no coercion, yet government is based upon nothing else. Every benefit supplied by government, no matter the system of government, is paid for by money taken from people by force, whether they like it or not. This is armed robbery, not compassion. Coercive funding of anything is completely at odds with compassion and with the concept of customer satisfaction.
In a coercive-socialist setting, can it be surprising when corruption creeps in? Or when corruption and inefficiency blossom into full-blown disaster? Can it be surprising when the problems which beset coercive-socialist governments prove similar to those of modern "capitalist" nations: too much centralized control, too much corporatism, too much graft and corruption, along with bureaucratic and police-state growth spiraling out of control? In health care, the rationing, the sometimes deadly waiting for treatment and other problems typical of coercive-socialist nations (see links above in section 3) are precisely what one expects from a government-run service.
Imagine Microsoft, Apple, or the nation's farms run by the government: does that sound like an improvement to you?
Still, given a choice between having government put taxpayer money into war or into health care and health-related regulation, I would choose health care and regulation; war is aimed specifically at killing people, while government-run health care and regulation only kill people by side effect. Yet, in terms of numbers of deaths, government control of medical care and health-related regulation, especially if we include the pharmaceutical industry, can be as deadly as any war. Medical mistakes in America kill up to 100,000 people annually, (or perhaps 225,000, depending on how one classifies the data). Furthermore, as I have pointed out before, the FDA may be "the number one cause of death in the United States." William Falloon of the Life Extension Foundation makes that accusation and backs it up with a crushing stack of data.
The Life Extension Foundation has also undertaken a study of government-regulated supplements in Europe versus the largely free-market situation for supplements in the United States. The European situation -- where coercive-socialist medical care is the norm -- is a disaster for consumers, causing much higher prices and thus reducing consumption of life-saving nutrients. Considering the thousands of studies over the years (starting in the 1930s if not earlier) that have shown health benefits from vitamin and other supplements (most recently and spectacularly that "high doses of vitamin D can reduce the risk of developing some common cancers by as much as 50%" and, from a Johns Hopkins study in 2004, that vitamins C and E together can reduce the risk of Alzheimer's by a stunning 78%), the restrictive European regulations (and other efforts to reduce usage of supplements, including efforts to reduce public understanding of their benefits and safety) would seem to represent a form of mass murder, conducted for the corporate profit of the medical and pharmaceutical industries. That may sound extreme, but I am not the only person to suggest such a thing (Dr. Mathias Roth is another, for one example), and the evidence certainly seems to support a finding of "probable cause" at the very least.
In the U.S., the FDA has worked for years to "protect" Americans from over-the-counter supplements, even as it has approved drugs that kill scores of thousands every year (Tambocor, Vioxx, Avandia, etc.). If the FDA and the medical/pharmaceutical cartels get their way, European-style regulation of supplements will come to the United States , ASAP. For that matter, see "FDA Seeks to Regulate Your Pantry" for an indication of just how absurd and oppressive the FDA is willing to get.
Nor is it only the FDA which seems intent on using its regulatory power to endanger people: for one horrifying example, the USDA has been preventing cattle producers from testing their own cattle for Mad Cow Disease.
Such problems are as vexing in coercive-socialist nations as they are in America . The biggest advantage other nations have over the U.S. in regards to health care is that other nations are not spending half or more of their budgets on past, present, and future wars. Despite that, however, most other nations are having financial crises of their own: high levels of public and private debt, fiat currencies eroding in value, and difficulty paying for whatever "basic services" are offered, among others.
When health care systems famous for long waits and for sometimes-deadly rationing are held up as models to aspire to, it should be clear that we are missing something important. The choices we are being given for delivery of health care are limited to forms that are already known to be failures. Why then are the media and our politicians pushing these forms? Because corporatism and coercive-socialism are big successes -- for the power elite. Both systems bring larger budgets, bigger bureaucratic empires, more opportunities for personal enrichment, and increased power to those who think it their right to run our lives.
With either corporatism or coercive-socialism, the power elite win -- and the rest of us lose.
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A Real Choice: Love and Freedom in Place of Coercive Control
America was far less free in the 1950s than it had been at the turn of the century, when (for example) anyone, of any age, could walk into a pharmacy and purchase whatever they needed without getting a note from their doctor. As I pointed out near the start of this column, America was also far less wealthy in the 1950s than it would become.
Still, health care in America was affordable, convenient, and widely hailed as the best in the world. Americans didn't have to listen to constant political squawking about how the government should do this or that to fix the health care system, because the system wasn't broken.
We broke the system by letting our politicians get involved, and now the system is at a crisis point. Fixing the problem requires undoing the damage.
How would that work, exactly? Why not listen to someone with decades of experience as both a doctor and a congressman -- Dr. Ron Paul, for example. Paul is an OB-GYN and was a flight surgeon during the Vietnam War. You can listen to a detailed, highly-informed interview with Dr. Paul on the topic of health care by the Kaiser Family Foundation by clicking here; the page includes the option of podcast, transcript, or a terrific high-definition video (16 min 39 sec).
One thing I can promise you: all the other health care commentary you'll hear from candidates this campaign season will sound even more clueless and offensive after listening to Dr. Paul simply talk sensibly and speak the truth.