But the special function of certain Newspeak words, of which oldthink was one, was not so much to express meanings as to destroy them. These words, necessarily few in number, had had their meanings extended until they contained within themselves whole batteries of words which, as they were sufficiently covered by a single comprehensive term, could now be scrapped and forgotten. The greatest difficulty facing the compilers of the Newspeak Dictionary was not to invent new words, but, having invented them, to make sure what they meant: to make sure, that is to say, what ranges of words they cancelled by their existence.

George Orwell 1984

Today an email landed in my inbox sent by the Peter Schiff campaign. Breathlessly and self-importantly, it declared:

One week ago today, our new website was repeatedly attacked by cyber terrorists bent on slowing the progress of our campaign.

Cyber-terrorists?!?

What the hell? Saboteurs, perhaps, but terrorists?

Are people who launch denial of service attacks on a politician they disapprove of to be lumped in with people who massacre innocents in order to paralyze a population with fear?

One of the greatest dangers to liberty is that the ideas of freedom will die out and be forgotten. The 19th century had a rich tradition of freedom, including a powerful vocabulary of ideas, a vocabulary that contained numerous words for similar or related concepts, with different words used to express nuance with specificity.

Let’s for example consider people who use violent means for political action. Consider the words we have to choose from:

• Activist,
• Agitator,
• Demonstrator,
• Dissenter,
• Dissident,
• Insurgent,
• Insurrectionist,
• Malcontent,
• Mutineer,
• Objector
• Protester,
• Rebel,
• Resister,
• Revolutionary,
• Saboteur,
• Striker,
• Terrorist,
• Traitor,
• Vandal,
• Wrecker

These words all are related to each other. Yet they describe a wide range of people engaged in political action. Some terms describe people engaged in reprehensible acts, other describe people whom we view as being honorable.

In choosing to use the word ‘terrorist’ to describe the people launching DOS attacks on his website, Peter Schiff is falling for the linguistic Newspeak-like trap laid by the United States Government, which describes its enemies as terrorists so that an honest farmer trying to protect his opium crop is lumped in with pacifists holding prayer meetings an with men who make “snuff porn” movies by sawing the heads of living people in front of a camera.

We must defend our language as seriously and consciously as we defend our homes. For our civilization is dependent on language, and when different concepts are all subsumed together under a single word, we thinking with clarity and precision becomes more difficult, and communication becomes far more difficult.

For shame Mr Schiff… For shame.

[The] soldier pays the biggest part of the bill.

And even now the families of the wounded men and of the mentally broken and those who never were able to readjust themselves are still suffering and still paying.

To the Members of the California State Assembly:

I am returning Assembly Bill 1176 without my signature.

For some time now I have lamented the fact that major issues are overlooked while many
unnecessary bills come to me for consideration. Water reform, prison reform, and health
care are major issues my Administration has brought to the table, but the Legislature just
kicks the can down the alley.

Yet another legislative year has come and gone without the major reforms Californians
overwhelmingly deserve. In light of this, and after careful consideration, I believe it is
unnecessary to sign this measure at this time.

Sincerely,

Arnold Schwarzenegger

Now that you’ve read the whole letter, read the first column of letters.

H/T The widely read libertarian culture site Urkobold.

Much of the problems with government supplied health care can be traced to this truth concerning incentives.  A hospital is not paid more if they treat people well.  They don’t lose money if they do a poor job.  They face no liability; any judgment the government permits to be levied against them is made up by taxes looted from the productive classes.

And, the goal of a medical care provider is to please his pay-masters rather than the patients he treats; and all to frequently when the interests of patients and the government clash, the patients will lose out.

This phenomenon is quite evident in the sad case of British Corporal Matthew Millington of the Queen’s Royal Lancers who died at the age of 31 from lung cancer, after receiving – in a transplant – the cancerous lungs of a smoker who averaged 30 – 50 cigarettes a day.

Why would a hospital implant the lungs of a person who smokes so many cigarettes a day into a patient?  Was it the result of an inexperienced surgical team making a ghastly mistake?  No.  The surgery was performed by Papworth Hospital in England,  which is the main transplant hospital in the United Kingdom, whose spokesmen claim that in fact everything was done properly!

A spokeswoman for Papworth, the UK’s leading cardiothoracic hospital, said that it was not unusual to use smokers’ lungs, adding that all organs are “screened rigorously” before a transplant. “We have a strong record of high quality outcomes and this is an extremely rare case.”

In the past year there were 146 lung transplants in the UK, and 84 people died while waiting on the transplant list, she added. “If we had a policy saying we did not use the lungs of those who smoked, then the number of lung transplants would have been significantly lower.”

Let us ignore the fact that the supply of organs is kept low by the superstitiously premised laws outlawing people from selling their own organs. Let us pass over the laughably implausible claim that transplanting smokers’ lungs results in acceptably good outcomes.

Let us, instead, focus on the question of how the hospital handled the case of Corporal Millington of the Queen’s Lancers and compare it to how a hospital that saw him as a customer would have treated him.

Often the detractors of free markets accuse it of being a dehumanizing system of cut-throat competition.  What they do not realize is that when two people engage in trade, they are cooperating.  The competition is between actors striving to be the best cooperators with prospective trading partners.  In a free market, the providers of health care services would be competing to see which one of them could better care for a prospective customer.

Thus, in a free market, Corporal Millington would have contracted with the hospital that sought to cooperate with him most effectively.  He would have chosen a hospital that committed to satisfy his need for undiseased, functional lungs at an affordable price.   In a free market, the availability of disease-free lungs would have been much higher; people would be far more likely to sign up to supply  their organs for transplant if their heirs or estate would be paid a fair market price for them, and the hospital would not have to worry about waiting lists.

However, had the new lungs developed cancer (and let’s not forget occasionally non-smokers get lung-cancer too), the hospital would have had a strong incentive to make it right, either out of a sense of obligation or out of fear of retribution; In a free market, there are two incentives to keep unscrupulous people treating their customers well.  The first is, of course, the fear of lawsuits.  the second, though, is their greed for future profits and their fear of losing these future profits should they ever develop a bad reputation.  The latter can particularly devastating.  The McDonald-Douglas Aircraft Company, for example, was nearly driven into bankruptcy by the perception that the DC-10 was an unsafe aircraft.  To this day, the Massengill corporation has never returned to the drug-making business after the debacle of 1938.  The yellow press would love nothing better to go after a hospital for transplanting diseased organs into a patient; the readership and viewership of such pieces would bring in a tidy sum in advertising dollars.

Thus the hospital, if nothing else to avoid the collapse of their business after a widespread accusation of incompetence/malpractice, would face a huge opportunity cost if they forewent transplanting in a new, second set of lungs.

But, unfortunately for Corporal Millington, he wasn’t the customer of Papworth.  Rather, some officials of the NHS were. The desire of the actual customers (NHS) were to keep costs down by a) cutting corners on the type of lungs transplanted into patients, b) concerning themselves with patient outcomes in the aggregate, and reducing seemingly unnecessary, redundant duplication of services by centralizing transplants as much as possible.

Thus they faced no economic loss for allowing him to die of cancer.  There was no profit to saving him; in fact, saving him would have been an expense.  They didn’t have to cooperate with Corporal Millington and so they didn’t.

The prize for Chemistry was awarded to some scientists who worked on questions regarding how ribosomes interact with DNA. Worthy work, yes, but was not the work of the American scientist not guided by our dear leader, his work funded by the Federal Government? How can they ignore the work on many fields that is being inspired by the magnificent all-encompassing vision of our dear leader as he directs the human race towards ever greater heights of prosperity and scientific achievements?

Similarly the prize in Physics honors people for a improving the use of semiconductors in fiber-optic design. Yet were not grants from the U.S. Federal Government used to fund this research? Did not the enlightened guiding hand of the father of the people not show them the way, not just in this area but in all the areas pf research into physics? Thousands of lifetimes’ worth of research is conducted by people following the guidance of the great Helmsman, yet he receives no credit? Do we award the plank of wood for the actions it carries out when directed by a man at the rudder?

The prize for medicine ignores the millions who will have their lives saved when our Great Helmsman reveals his plan to reform our medical industry to ensure maximum care for all with great justice.

How many millions more will owe their lives to our president than to the work of these few doctors?

Our leader deserves all the prizes; the economics prize for keeping unemployment below 8.4%; the mathematics prize for improving accounting theory to minimize budget deficits; the peace prize for his efforts to make the world a more peaceful place by increasing the vigor with which Afghanistan, Iraq and Pakistan are pacified, and his offers to pacify Iran as well.

It is time that the Nobel Prize Committee recognized that our Dear Leader is guiding our great nation to produce numerous scientific, technical and social innovations that improve the lives of not just the happy people living in America but throughout the world.  Anything less is an insult to the tireless efforts of our leader that benefit humanity.

Update:  As this was going to press, the Nobel Prize Committee announced that the peace prize had been given to our dear leader.  While I praise them for finally coming to their senses on this one matter, I warn them that it is not sufficient.  Again, if one looks at all the fields covered by the various prizes,our leader’s contributions are far in advance of those made by anyone else.  Only the transfer of the other prizes to our dear leader from the people they mistakenly gave them to will appropriately and justly remediate the situation.

Here’s what Obama had to say:

Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outside-the-box thinking that has helped put the brakes on our economic freefall

I thought it might be useful to take a look at some highlights of this Solon, this central – planner whom George Bush put in charge of the money supply:

Of course, as usual, Obama is dead wrong: the Federal Reserve’s actions have actually prolonged the downturn, made it worse, and have laid the foundations for an even bigger crash down the road.

In the days before the election, I told many of my fellow Massachusetts residents that Obama was not so much a break from George Bush as a continuation of his worst policies. I am sorry to say that he has been proving me right since. And this is yet another nail in the coffin of an administration that is showing itself to be even more incompetent than the Bush presidency.

For decades the cost of medical care has risen relative to prices in general and relative to people’s incomes. Today [1994] a semi-private hospital room typically costs $1,000 to $1,500 per day, exclusive of all medical procedures, such as X-rays, surgery, or even a visit by one’s physician. Basic room charges of $500 per day or more are routinely tripled just by the inclusion of normal hospital pharmacy and supplies charges (the cost of a Tylenol tablet can be as much as $20). And typically the cost of the various medical procedures is commensurate. In such conditions, people who are not exceptionally wealthy, who lack extensive medical insurance, or who fear losing the insurance they do have if they become unemployed, must dread the financial consequences of any serious illness almost as much as the illness itself. At the same time, no end to the rise in medical costs is in sight. Thus it is no wonder that a great clamor has arisen in favor of reform – radical reform – that will put an end to a situation that bears the earmarks of financial lunacy.

Thus begins an essay that noted Objectivist economist George Reissman penned during Clinton’s efforts to ‘reform’ health care.

Given the current debate, it’s a good essay to reread, and the folks at the Mises Institute have obliged by posting it on their fine website.

Reisman argues against many of propositions that are assumed to be true by proponents of govenrment medicine, economic ideas that are based on primitive emotions and have no basis in actual economics:

For over a century, virtually all proposals for economic or social reform have been based on the thoroughly mistaken philosophical and theoretical foundations of Marxism, and have aimed at the ultimate achievement of a socialist society, in the belief that socialism represented the most rational and moral system of mankind’s social organization. On the basis of this conviction, individual freedom was progressively restricted and the power of the state progressively enlarged. Individual freedom – laissez faire capitalism – was assumed to be a system of chaos and of the exploitation of the masses by the capitalists. The onslaught of the socialists (who in this country call themselves “liberals”) – the step-by-step achievement of their political agenda – encountered virtually no philosophical resistance. Not surprisingly, again and again, the “liberals” defeated their ill-equipped conservative adversaries, who at most could only delay their advance. The victories of the “liberals” were inevitable because it was a battle of men with the seeming vision of a better world that could be achieved by means of intelligent human effort based on a body of ideas (however mistaken those ideas were), against men who, while they valued the relatively free world they saw around them, had no significant philosophical or theoretical knowledge of how to defend it.

In the last few years, some of the most profound and fundamental changes in the political and intellectual history of mankind have taken place. The philosophy of socialism and the economic theory of Marxism have been recognized as a blatant failure almost everywhere, and have been abandoned by tens of millions of former supporters. All over the world, the cry is heard “no more socialism!” One socialist regime after another has recognized the chaos and tyranny of socialism and has become dedicated to the achievement of a capitalist society. Thus, the intellectual base and the driving force of American “liberalism” has largely disintegrated.

Considered against this backdrop, the Clinton administration’s proposal for the government’s takeover of medical care in the United States appears as a ludicrous anachronism. It reads like the work of twentieth-century Rip Van Winkles who have been sleeping since the 1930s and who have not had a chance to read the newspapers. In effect, America’s politicians and intellectuals who support the proposal are still riding a train that more intelligent people the world over have recognized can take them nowhere but to hell and have therefore jumped off.

Now I know many skeptical readers will argue that while that may have seemed true then, that the current economic crisis is a sign of the failures of deregulation and laissez faire capitalism. Au contraire! One need look no further than Lew Rockwell’s 2005 essay on George Bush’s hybridizations of socialist and mercantilist economics, Bush’s 10 Economic Errors.

Then Reisman turns to the question of a right to medical care:

… no one has the right to such a thing as a house as such. What one has is the right to buy a house, or to buy the things necessary to build it. One’s right to a house is violated not when one cannot afford to buy or build a house, but when one could afford to buy or build a house if one were not forcibly prevented from doing so. … In exactly the same way, the right to medical care does not mean a right to medical care as such, but to the medical care one can buy from willing providers. One’s right to medical care is violated not when there is medical care that one cannot afford to buy, but when there is medical care that one could afford to buy if one were not prevented from doing so by the initiation of physical force. It is violated by medical licensing legislation and by every other form of legislation and regulation that artificially raises the cost of medical care and thereby prevents people from obtaining the medical care they otherwise could have obtained from willing providers. The precise nature of such legislation and regulation we shall see in detail, in due course.

I have said that the causes of the present crisis in medical care can all be subsumed under the heading of the government’s violation and/or perversion of the individual’s right to medical care. By this last, I mean its use of the alleged need-based right to medical care rather than the actual, rational right to medical care as the basis of various policies it has adopted over the years. Seen in this light, the origins of the present medical crisis go back all the way to the government’s establishment of various forms of medical licensing as early as the nineteenth century, and the subsequent increase in licensing requirements it has imposed in the course of this century.

…

Ironically, the main driving force behind medical licensing has always come from within the medical profession itself, many of whose members have sought the monopoly privileges that licensing bestows and thereby the artificial rise in their own incomes that it makes possible. There is nothing that should be surprising in this. It simply means that physicians have often acted in the same mean spirit as carpenters or plumbers who form coercive labor unions, farmers who seek government subsidies, or businessmen who seek protective tariffs. It is an expression of the mentality that underlies most government intervention into the economic system, namely, the mistaken belief that it is possible to serve one’s self-interest by means of the initiation of physical force against others, coupled with a willingness to serve it by such means. Such a policy is irrational and ultimately self-destructive. Indeed, its self-destructiveness is illustrated precisely by the plight of today’s physicians. For what is ironic in the fact that physicians have been the driving force behind medical licensing legislation is that, in effect, they first sent around to others precisely what has more recently been coming around to them, namely, the violation of individual rights in the field of medicine. The effects of medical licensing have played a major role in encouraging demands for socialized medicine and the threat to the rights of physicians that socialized medicine represents.

Medical licensing has played into the hands of the advocates of socialized medicine precisely by making medical care scarcer and more expensive, thereby reducing the amount of medical care obtained, particularly by the poor. Because the effect of medical licensing was greatly to increase the difficulties of poor people in obtaining medical care, socialized medicine was perceived as all the more necessary. It was a classic case of what von Mises describes as prior government intervention serving as the cause of problems used to justify later government intervention, this time against the beneficiaries of the prior intervention.

The essential goal of socialized medicine is that the individual should be relieved of financial responsibility for his and his family’s medical care. Medical care should be provided to him without charge by the government, paid for out of taxes. To this extent, allegedly, his life will be worry free, because the government will take care of him. Medical care will simply come to him according to his need, paid for by others, presumably according to their ability. It should be obvious that such an arrangement entails the utter perversion of the right to medical care. The right to medical care ceases to be the individual’s right to take the actions required to secure his medical care – namely, to buy it from willing providers. Instead it becomes an alleged right to the fruits of others’ labor and ability, with or without their consent, for that it is the only way it can be obtained if the individual himself is not to pay for it and yet is to have a right to it merely because he needs it. As I have shown, its existence is in direct contradiction of all actual rights, which center precisely on the individual’s freedom from involuntary servitude.

I will skip over the thorough description of how various government interventions have produced the broken system we have today (although everyone should read it). But I will share the following summary:

True, this system exists for the most part in an environment of privately owned business firms and is financed for the most part by those business firms. But when one recalls how the system was started and how it was spread, namely, by price-control officials and by coercive labor unions, and that throughout the years it has been deliberately supported by a discriminatory tax policy in its favor, one must characterize the system as imposed and maintained by the government, and not as a product of the competitive processes of a free market. Furthermore, as will become apparent later on, additional forms of government coercion serve to maintain the system by making it financially prohibitive for most people to step outside of it. Thus, the system is socialistic in the further essential respect that it is the product of government coercion, not of voluntary choice.

Now this collectivistic system of governmentally imposed “private” medical insurance is the leading cause of the continuous rise in medical costs that we have experienced. To help my students understand this point, I ask them to imagine that after class they all go out together for a meal somewhere, on the understanding that the check will be divided evenly, irrespective of what anyone orders. I explain how this will greatly affect what they order.

I point out, for example, that someone who might be thinking of choosing between, say, a $3 hamburger and a $15 steak, will now be much more inclined to order the steak. This is because instead of the additional cost to him being the full difference of $12, which it would be if each student had to pay his own check, the additional cost to him will now be perhaps just 50¢, that is, it will be the additional $12 divided by 24 (which happens to be the usual number of students in my class). I point out that to the extent that the students behave this way, the size of the total check must increase. Obviously, if what all 24 students ordered were affected in this way, the size of the check that each of them would have to pay would end up being $15 instead of $3, because each of them would experience the effect of 23 other students shifting 50¢ of their additional costs to him. In other words, it would be a situation of mutual plunder, in which all would lose.

He points out that the attempts by well meaning people to provide medical care as a matter of right have certain inevitable consequenses:

1. The potential for a limitless rise in the price of medical services

Insofar as medical services or facilities are limited in supply, the notion of the need-based right to medical care and the collectivization of medical costs to finance it create the potential for a limitless rise in the price of medical services. To understand this, imagine an auction. There are a large number of units of some good for sale. But there are not enough units for sale to satisfy all the bidders for all of their requirements. Thus some bidders must go away empty handed, or at least with fewer units than they would like. (As I indicated before, there could have been a larger number of units for sale, but the government does not let them on to the floor of the auction. It keeps them out by means of licensing legislation.) To the extent that the equivalent of the perverted notion of the need-based right to medical care prevails at this auction and the individual is relieved of financial responsibility by virtue of being able to charge his bids to a collective, there is simply nothing present to stop the rise in the bidding. No matter how high prices go, people still assert their alleged right to the item and go on meeting or exceeding ever higher bids, in the knowledge that their bid will be paid for by their collective. If this is an auction market for medical services, they go on bidding in the knowledge that their bids will be paid for by their insurance company or by the government. The only people who are eliminated from the bidding are those who lack medical insurance or the medical coverage of some government program. The rise in prices only stops if there are enough uninsured bidders who can be made to drop out of the bidding so that, for the moment at least, the insured ones can be satisfied. … Understanding these facts, incidentally, should make clear why the Clinton administration’s current proposal to force employers to provide medical insurance for the 37 million Americans who remain uninsured, leaves absolutely no alternative but price controls and rationing as the means of controlling costs. This is because if virtually everyone is now to have the need-based right to medical care and have his bills sent to the collective for payment, there will be absolutely no limit to the bidding and the rise in prices unless the government restricts the medical care he is allowed to have and determines the price that is to be paid for it. Try to imagine, for example, a situation in which there are 100 units of a supply available and 137 bidders, each of whom would like to have one unit of that supply and is in a position to send the bill for his bid to the government. The rise in cost to the government can only be controlled if the government imposes some kind of limitation on the amount anyone is allowed to bid for in this manner, such as 100/137 of a unit of the supply, and refuses to allow anyone to attempt to buy more by raising his bid even with his own money, because that too would increase the cost to the government.

2. The potential for a practically limitless increase in the quantity of medical care demanded

The notion of the need-based right to medical care and the collectivization of medical costs to finance it create the potential for a practically limitless increase in the quantity of medical care demanded. When visits to doctor’s offices are made free or almost free, the frequency of such visits increases. More importantly, physicians quickly come to realize that there is little or no financial cost to the patient as the result of the course of treatment they prescribe. The result is an enormous increase in the volume of medical tests, hospitalizations and the length of hospital stays, and of surgeries and other medical procedures. Usually, there is some genuine value to be gained from these things. They represent additional precautions or are objectively desirable in some other way. It is just that there is no longer any consideration of the costs involved. The situation is comparable to individuals who need to buy some kind of automobile, say, being relieved of the responsibility of having to pay for it, and so being placed in a position in which the automobile they choose is a very expensive top-of-the-line model. In such conditions, the patient does gain something additional, and so do the medical providers, who are placed, in effect, in the happy position of automobile salesmen dealing with customers for whom the sky is the limit. In such circumstances, the potential for medical cost increases is truly stupendous. It has no fixed limit. For example, there are some 2,000 different possible tests of a patient’s blood that can be performed without harm to the patient and from which useful information can be derived. If each of these tests had a cost of just $1, the total cost, if all 2,000 tests were applied to everyone in the United States, would be more than $250 billion per year. Under the system that has prevailed since World War II, it is only a question of time before such cost increases actually take place, unless they are deliberately prevented by outside action. There is nothing in the system itself to stop them, and everything to encourage them.

4. Perverting technological progress into a source of higher costs rather than lower costs

The notion of the need-based right to medical care and the collectivization of medical costs to finance it are responsible for the perverse effects caused by new technology in the field of medicine. In virtually every other field – automobiles, computers, farming, whatever – improvements in technology represent a combination of higher quality and lower real cost. Thanks to improvements in technology, we now obtain far better goods than we used to and have to devote much less of our working time to being able to earn the money to buy any of them. Today, for example, thanks to improvements in technology, the average worker works perhaps forty hours a week and is able to buy with the wages he earns the array of goods that quantitatively and qualitatively constitutes today’s average standard of living. A few generations ago, the average worker worked sixty hours a week and received much less in terms of the goods he could buy with the money he earned. Thus, calculated in terms of the amount of labor that must be expended to earn a unit of goods, the effect of improvements in technology has been progressively to reduce the price of everything. That is, because of improvements in technology, people have been able to obtain virtually everything for the expenditure of progressively fewer and fewer hours and minutes of their labor than in the past.

Medical care, in the last few decades, is the exception.

The only reason it is the exception is the existence of the notion of the need-based right to medical care and the collectivization of medical costs to finance it. If there were a notion of a need-based right to computers, say, and the collectivization of the costs individuals incurred to buy computers, then improvements in computer technology would have the same perverse effect. Then the development of every improved computer chip, hard drive, monitor or whatever would immediately be accompanied by an immense demand. Everyone who could benefit from such things would want them, in the knowledge that he could have them at little or no cost to himself, because the collective would pay.

Improvements in technology do not have such effects in the case of computers or any other good besides medical care for the simple reason that people must buy these goods with their own money. Thus they weigh the benefits against the costs. To the extent that new technologies are expensive, the initial buyers are confined to those who value them above their high price. In the case of consumers’ goods, this means both people with a relatively great, intense need or desire for the item rather than people with a relatively modest need or desire for the item, and richer people rather than poorer people. The buyers are those who have the greatest combination of need and desire and wealth and income. In the case of capital goods, the initial buyers are confined to those in a position to derive a monetary gain from the improvement that is substantial enough to justify paying its high cost.

As the item develops a market, and experience is gained in producing it, its cost of production tends to fall and its quality to improve. Competition, even the mere possibility of competition, also operates very powerfully to reduce costs and prices and improve quality. In this way, on the basis of falling prices accompanied by improving quality, the new technologies become more and more affordable and thus reach wider and wider markets. They enrich the growing number of individuals who can afford to buy them and thus “society as a whole,” which is comprised of nothing but its individual members. They certainly do not impoverish “society,” as people ignorant of economic principles frequently allege to be the case with regard to improvements in medical technology.

8. Bureaucratic interference with medicine and the rise in administrative costs

As we have seen repeatedly, the effect of the alleged need-based right to medical care and the collectivization of costs to finance it, is to make the cost of medical care rise beyond all bounds. But as the last two points of discussion indicate, sooner or later the continuous rise in medical costs encounters resistance – not from the great majority of individual citizens to whom everything still appears to be free, but from the officials of the collectives that must meet the ever rising charges. Thus, in an effort to limit the rise in costs, more and more bureaucratic controls are introduced by all the various collectives that must pay the costs. Under the controls, the insurance companies and the government agencies administering the Medicare and Medicaid programs must be kept advised of every step of the treatment of each of the patients insured or covered by them. A mountain of paperwork develops. The filing of all the various bureaucratic forms is inevitably accompanied by frequent haggling back and forth on a case by case basis between physicians and hospitals, on the one side, and the insurance companies and federal and state governments, on the other. The inevitable further result is another major source of higher medical costs, namely, a sharp rise in administrative costs. While the rise in administrative costs is less than the altogether boundless rise in costs that would otherwise take place, it is nonetheless very substantial in its own right, and represents a further loss to the general public that must be charged to the perverted notion of the need-based right to medical care. (A rather seamy, related aspect of the collectives’ attempt to control costs is the apparent practice of some private insurance companies of “losing” many of the insurance claims submitted to them or of suddenly finding the need for additional, often irrelevant information. These are ruses designed to postpone payment and thus reduce the pressure of cost increases outstripping rate increases. This, of course, adds further to administrative costs by making the physicians, hospitals, and clinics who are claimants, go to the trouble of repeatedly refiling or amending their claims.)

In addition to everything that can be traced specifically to the perversion of the right to medical care, there is the impact on the cost of medical care of government regulation in general. Alleged safety regulations, environmental regulations, labor regulations, and so on all add more or less substantially to the cost of medical care, just as to the cost of everything else. Probably, they have added more to the cost of medical care than to the cost of most other things, because of the lack of buyer resistance that the perverted notion of the need-based right to medical care engenders in the field. For example, the resistance to the employment of unnecessary workers in connection with union featherbedding practices is certain to be less in hospitals to the extent that the hospitals know they can pass the extra cost on to the insurance companies or to the government.
Thus, in all of these ways, the perverted notion of the need-based right to medical care, that is, an alleged right to medical care with or without the consent of those who are to pay for it or provide it – that is, an alleged right to medical care as entailing a right to steal and enslave – has progressively raised the cost of medical care. It and it alone is responsible for the crisis of the ever rising cost of medical care. At the same time, as the corollary of its destructiveness, this perverted notion of the right to medical care has systematically undermined the actual, rational right to medical care. This cannot be stressed too strongly. In each and every instance in which it has raised the cost of medical care, as explained under the eight points I have listed, it has represented a case in which individuals who could have afforded to buy medical care from willing providers have been prevented from doing so by the initiation of physical force. In other words, therefore, it is the government’s violation of the actual, rational right to medical care that is equally responsible for the crisis in medical care.

In view of all this, it is difficult to decide which is the more astonishing: the utter ignorance of all of the above facts Mrs. Clinton revealed in her declaration that “On psychological as well as economic grounds, some form of discipline [i.e., price controls] in a marketplace that, frankly, has had none, seems to us a feature that needs to be there as a backup,” or the fact that Mrs. Clinton has somehow managed to acquire the reputation of being an expert on the subject she has been spending so much time speaking about lately. It should be obvious to anyone who can understand even the barest essentials of economic theory, that the cause of the crisis in medical costs is precisely the philosophy of collectivism and government interference Mrs. Clinton advocates and now wants to extend further. (Mrs. Clinton’s statement appeared in the Orange County Register, Oct. 10, 1993, p. 2.)

He also proposes solutions:

The actual solution to the problem of runaway medical costs lies in the precise opposite of the direction chosen by the Clinton plan. It is not the final destruction of the individual’s rational right to medical care, which is what the Clinton plan would achieve, but the restoration and full implementation of that right – that is, the removal of all government interference that stands between buyers and sellers of medical care or in any way causes medical care to be more expensive than it otherwise would be.
In economic terms, the solution is the establishment of a market in medical care that is open to all comers and is dominated by buyers and sellers operating with their own money when acting in their individual self-interest. On the one hand, in such a market – provided that it is free from government interference – the cost of medical care is as low as the prevailing supply of human talent and state of capital accumulation, technology, and competition make it possible to be, and is headed still lower by virtue of further capital accumulation, technological progress, and competition. On the other hand, however, medical care always still has a cost, and the need to take into account costs that come out of one’s own pocket automatically eliminates wasteful, uneconomic medical care.

Thus, insofar as the market is free, individuals prepare themselves for and enter those particular occupations and industries in which, other things being equal, they can earn the most. In this way, the supply of human talent flows to where the buyers need and want it the most, as demonstrated by their willingness to pay for it the most. If all branches of the market are legally open to all comers, no field in which wages or profits are higher is deprived of talent by virtue of the necessary talent being confined to other fields where wages or profits are lower. Thus, in the case of medical care, everyone tends to enter the field if his talents are more valued in the provision of medical care than in the provision of other services he is capable of rendering. In other words, medical care attracts all the talent it is capable of attracting short of the point of asking individuals to give up more remunerative uses for their abilities in other occupations. This is true both of medical care in general and each of its specific occupations, from nurse’s aide to brain surgeon.

As a further matter of economic principle, the same freedom of occupation that enables each individual to maximize his income, simultaneously serves to minimize the price of all services requiring relatively scarce talents. This is precisely because of the presence in such occupations of the largest possible number of those capable of performing them consistent with their own self-interest. Thus, under the freedom of occupation, the prices of the relatively scarce special talents that are necessary to provide medical care would be as low as they could reasonably be rendered. For example, individuals who are presently compelled to remain as pharmacists but who have the ability to be physicians, would be attracted by the higher income of physicians and become physicians. The effect of the larger supply of physicians would be to reduce the fees of physicians.
As I have indicated, all this is in sharpest contrast to the conditions that exist under medical licensing. Under those conditions, a more or less considerable portion of the relatively scarce talents required to provide medical care is forcibly denied entry into the field and made to work at lower incomes in other lines. By the same token, the prices of medical services and the incomes derived from their rendition are kept artificially high. For example, the pharmacist with the ability to be a physician is forced to remain as a lower-paid pharmacist, with the result that the fees and incomes of physicians are kept artificially high.

I highly recommend it, especially for people who are struggling to understand why libertarians are opposing government provisioning of health. We’re not meanies. We’re not blinded by ideology.

We’ve seen this before and know it’s not going to end well.

I find it pretty depressing. There was a time when we condescendingly used the term “your papers, please” to distinguish ourselves from Eastern Block countries and other authoritarian states. Post-Hiibel, America has become a place where a harmless, 68-year-old man out on a stroll can be stopped, interrogated, detained, and forced to produce proof of identification to state authorities, despite having committed no crime.

Maybe what makes it comical rather than a tragedy is that it happened to a famous guy rather than some ordinary person.

Dear Olivia Jane:

You and many readers of Daily Kos are furious that Whole Foods CEO John Mackey expressed – in the pages of the Wall Street Journal – his opposition to greater government involvement in health care.

Exercising your rights and abilities as consumers, you are therefore boycotting Whole Foods.  You’re using your freedom to avoid paying for products offered by someone whose attitude toward government you disapprove of.
Isn’t freedom wonderful?!

But I must ask: do you endorse my freedom to boycott paying for products offered by those whose attitude toward government I disapprove of?  Like you, I have very strong opinions about the proper role of government, and also as in your case, a famous chief executive is now endorsing government policies that I find reprehensible.

Will you champion my freedom to stop supporting, with my money, President Barack Obama’s services?  Will you come to my defense if I stop paying taxes to support those policies of Mr. Obama with which I disagree – policies such as the economic ’stimulus,’ more vigorous antitrust regulation, and cap and trade?  Indeed, will you defend me if I boycott – if I choose not to pay taxes to support – Obamacare?

If you will support me in my boycott, then I applaud your principle and, although I disagree with you about Mr. Mackey’s political views, fully support your freedom to boycott Whole Foods.  But if you will not support me in my boycott, then can you tell me on what principle you would stand to defend your right to boycott supermarkets if someone (say, Mr. Mackey) managed to secure legislation that obliges you to shop at Whole Foods?

I await your reply.

Donald J. Boudreaux

I couldn’t put it better myself. One quibble, even if Olivia Jane was not willing to extend us the same courtesy and support our desire to boycott Obamacare, we should applaud her principle. Just because she has reprehensible political views does not mean we should ignore the opportunity to teach her the value of a right to exit/disassociate.

Here he is pointing out that while Fedex is required by law to charge higher prices than the Post Office for equivalent services, it is the Post Office which struggles and requires constant taxpayer bailout.

Like Amtrak, USPS, Fannie Mae and Freddie Mac, any publicly funded insurance company will struggle to contain costs as it encourages overconsumption.

I’ve long argued that the real reason that medical care is so expensive is that the government limits supply and subsidizes demand.

The Obama administration, in choosing to ignore the limits on supply placed by government, is embarking on a program that is doomed to fail to meet any of the publicly stated goals.

It’s too bad that Mr Obama is unwilling to follow the evidence to its inevitable, logical conclusion.

Enrollment in U.S. higher education, by institution type: 1967–97

Until 1960 or so, the percentage of people getting college degrees was relatively low. There was plenty of work for people who had ‘merely’ graduated from high school, and a high school graduate could support a family.

Then came the Vietnam War, where the United States government would happily enslave high-school graduates, but not students in college. The number of students entering college zoomed upward, and the number of colleges proliferated.

But the war ended in the early 1970’s, and the U.S. government stopped enslaving young men, although it does reserve the capability to start doing so at any time.

Yet, despite this pressure, the number of people entering college continued to increase. Why? Quite simply because it started to become difficult for a high school graduate to find a job. An increasing number of companies started demanding a college degree for jobs that clearly don’t require anything more than the education that could be acquired at a half-way decent high school.

Why would employers do this? What could prompt such a strange change? As usual, dig down into the matter, and the answer becomes clear.  In a paper posted at the John William Pope Canter for Higher Education, Bryan O’Keefe and Richard Vedder argue that the reduced employment opportunities for high-school graduates and the resulting rise of the higher education bubble is an unintended consequence of the 1964 Civil Right Act, namely this part of Section VII:

It shall be an unlawful employment practice for an employer –

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or

(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.

At the time this law was passed employers routinely classified prospective employees via pre-employment testing.  This testing was used to determine things like knowledge, technical aptitude, personality compatibility and, yes, the race of applicants.  At the time the law was being debated, its opponents raised the objection that this law could outlaw non-racist testing alongside racist testing.  To which the proponents of the bill replied:

There is no requirement in Title VII that employers abandon bona fide qualification tests where, because of differences in background and educations, members of some groups are able to perform better on these tests than members of other groups.  An employer may set his qualification as high as he likes, he may test to determine which applicants have these qualifications, and he may hire, assign, and promote on the basis of test performance.

Of course, like Madison’s claims that the Federal Government would obviously be limited to the powers described in Section 8 of Article I of the U.S. Constitution, these legislators claims did not survive actual contact with the courts.  In the case Griggs v. Duke Power, the U.S. Supreme Court described what criteria can be used for pre-employment testing:

• A test where members of one race performed more poorly than members of another race – demonstrating a “disparate” performance – was assumed to be discriminatory with respect to race, even if that was not the intention of the test.
• Tests with disparate results are illegal unless the test has a direct business necessity.

Since, most businesses weren’t interested in wasting money on tests that were not necessary to screening out unfit employees or identifying the most fit employees, they were stunned.  The Supreme Court had a very complicated definition of what constituted “Direct Business Necessity”, one that was difficult to meet and gave considerable deference to the employee of the Equal Opportunity Commission who was deciding whether or not to accuse a company of illegal discrimination.  Only the simplest tests, such as requiring a prospective driver to pass a driving test could reasonably pass muster.  Other tests, which businessmen clearly felt were useful to reducing the risk of hiring the wrong person for the job,  now could get them sued.

Companies began casting about for a way to screen out the-incompetent or unfit in a way that would not result in them being sued.  The simplest solution is to demand a college degree.  Any racial discrimination demonstrated in the pool of degreed people would be the colleges’ liability, and the business could get on with the business of hiring new employees without being worried about lawsuits.

It has taken thirty years for this unfortunate unintended consequence to play out;

• People entering the workforce have been kept idle for four years unnecessarily.
• People entering the workforce are saddled with debts that are difficult to pay off.
• Colleges have gotten away with lowering educational standards because their graduates are in such high demand.

When summed across the millions of people who have entered the workforce in the last two decades, the economic costs imposed by this well-intended but horrendously misguided effort are staggering.  They include

• Almost 100 million man-years’ lost productivity.
• An additional 10 million man-years spent paying off college loans
• Increased pressure on children to engage in organized activities designed to win the child a scholarship at the expense of their personal development.

Had the proponents of the Civil Rights Act limited their aim at racial discrimination by the government, they would have been crafting a very socially beneficial law.  But by seeking to use the law to force people not to racially discriminate, they wreaked massive damage on the economy.  Ironically, this damage disproportionately affects minorities who are far more likely to be at the mercy of awful government schools than other ethnic/racial groups.

His case is an important one; the state of Arizona charged him with murder for defending himself with too powerful a weapon; while hiking in the backwoods, Mr Fish was charged by a group of aggressive dogs (who were, quite reasonably, unleashed) . Fish had a 10mm Kimber Pistol with hollow point ammunition. He fired a warning shot into the ground to scare them off as they closed to within a few feet of him. At this point, he was attacked by the dog owner who screamed that he was going to kill Mr Fish and charged swinging his fists. Mr Fish fired three rounds at the last moment before the man got within punching distance and mortally wounded his attacker. he then spent agonizing minutes trying to get medical help for the man.

The police investigating the case thought it a clear case of self defense. The lawyers working for the state of Arizona disagreed, claiming that the size and type of rounds he was carrying indicated that Mr Fisher had set out on his hike with murder on his mind.

Through this argument, and by convincing the judge to keep exculpatory evidence out of the trial, the attorneys were able to successfully convict Mr Fish of murder, although within 24 hours at least one horrified juror contacted the defense attorney claiming that the excluded evidence would have resulted in a different verdict.

This case is important in that people have a right to defend themselves. Certainly, the courts have long held that police have not obligation to defend us. The act of walking outside the patrol area of the police does not mean that we have agreed to allow people to murder or assault us.

Luckily, the appelate court agreed that Mr Fish had been convicted unfairly, and thanks to recent changes in Arizona law clarifying the rules governing self defense, there is little chance that his retrial will result in a conviction.

Harold Fish lost three years of his life to prison. He is nearly $500,000 in debt at a time of his life where he has little prospect of paying it off (Donate here to his defense fund). All because a stranger attacked him, he defended himself, and a prosecutor didn’t like the size of his gun.

In a just world, the prosecutor would have to make Mr Fish whoole for all the money and time he lost on this frivolous prosecution. Unfortunately, we do not live in a just world.

At least Mr. Fish gets to have dinner with his wife again…

Hat Tip: Massad Ayoub of Backwoods Home Magazine.

Holman Jenkins asks “Does Obama Want to Own the Airlines?” (Business World, July 8). I am sure he does not. Rather than own them, the president and his congressional allies want to control the airlines — a crucial difference as ownership implies taking responsibility.

As Mr. Jenkins notes, the Justice Department’s belated intervention against Continental’s efforts to join the Star Alliance appears aimed at extorting concessions for the Democrats’ union allies. That is not the action of an owner of airline assets but of someone determined to redistribute wealth from airline passengers and shareholders to favored special interests.

One of the many benefits of free markets is that the people who own something are the ones who experience the benefits or losses accruing from their use of it. When considering how some property is going to be used, an owner and non-owner may have very strong opinions. The non-owner, who has less to lose, will be less careful and prudent in their decisionmaking. Moreover, often the non-owner will gain more from the misuse of the item than from its prudent use.

One does not have to look to hard to see this phenomenon in action. The attempt by GM to close dealerships, and thus reduce its losses was overridden by Congressmen interested in using GM’s wealth to buy votes by keeping the dealerships open. And that is one example of literally millions of instances that take place every year from all levels of government.

Obama, leading democrats and some very influential economists have repeatedly expressed the idea that increased government control of the medical industry would reduce costs without sacrificing quality. In their vision selfless government officials will ensure that people receive high quality treatment regardless of the cost, while the market power of government as a customer will ensure that costs will stay low. Against this charming vision stands a great body of evidence from public choice theory; government officials – or their private counterparts in the private-public partnerships in vogue today – will be able to exert control without any consequences. Just as medicare and medicaid administrators proved willing to authorize higher and higher treatment prices – to the point where it threatens the budget of the federal and nearly every state government – the administrators of any new government program will behave in similar uneconomic ways.

Control without responsibility is a very bad idea.

THIS BOOK IS BASED on a single idea: You should be allowed to do whatever you want with your own person and property, as long as you don’t physically harm the person or property of a nonconsenting other.

Thus begins a book that everyone interested in politics should read; Ain’t Nobody’s Business If You Do: The Absurdity of Consensual Crimes in a Free Country by Peter McWilliams.  Published in 1998, it is a damning survey of how the United States had become a state composed of “clergymen with billy-clubs”.  It analyzes the consequences of punishing so-called victimless crimes from numerous viewpoints, demonstrating that regardless of what you think is the most important organizing principle or purpose of society the investigation, prosecution and punishment of these non-crimes is harmful to society.

This remarkable book is now posted online, and if one can bear to wade through the awful website design, one will find lots of thought-provoking worthwhile commentary, analysis, theory and history.

His final chapter, on how to change the system, while consisting mainly of pie-in-the-sky, ineffective suggestions of working within the system, starts of with an extremely good bit of advice that I urge all our readers to try:

The single most effective form of change is one-on-one interaction with the people you come into contact with day-by-day. The next time someone condemns a consensual activity in your presence, you can ask the simple question, “Well, isn’t that their own business?” Asking this, of course, may be like hitting a beehive with a baseball bat, and it may seem—after the commotion (and emotion) has died down—that attitudes have not changed. If, however, a beehive is hit often enough, the bees move somewhere else. Of course, you don’t have to hit the same hive every time. If all the people who agree that the laws against consensual crimes should be repealed post haste would go around whacking (or at least firmly tapping) every beehive that presented itself, the bees would buzz less often.

I highly recommend this book.  Even though I have some pretty fundamental disagreements with some of his proposals, I think that this book is a fine addition to the bookshelf of any advocate of freedom and civilization.

Hat Tip: J.D. Tuccille of Disloyal Opposition.

The word society comes to us from the Latin societas, which meant a group of people bound by friendship or a common interest.  The societies we participate in are the manifold groups that people join in order to accomplish various goals, for protection, for commerce, for companionship.  When compared to a life of autarky, of isolated independence, the benefits of societies become clear.  The defining characteristic of society is that membership in a society is voluntary. Whenever a person feels that a society no longer meets their needs, they can exit it – choosing another one to replace it or even going without.

Of course, one of the primary functions of the societies we join are to fulfill those needs we have that we cannot fulfill ourselves.  We depend on our families, friends, fraternal organizations, etc to care for us when we are sick, to provide for us when we cannot provide for ourselves.  These acts of charity, when provided to us by people who do it voluntarily using the means that they have acquired through peaceful means, are a necessary component of civilization.  Remove charitable interactions from society and we cease to live in a state of civilization and return to a state of barbarism.

The state, on the other hand, is an organization that is distinguished by violent action.  It acquires resources not through peaceful economic interaction but through threats of violence.  When it threatens wrong-doers – such as thieves, rapists or murderers – it can be useful; scaring other would be thieves, rapists and murderers from committing similar crimes. But all too often, such as when it orders the destruction of livestock in order to raise the market price of meat, it is a social bad that leaves everyone worse off.

The state is powerful.  It can commandeer vast resources.  It does not have to make anything; it does not need to trade for anything;  it merely takes what it wants.  However, the state is not all powerful; tomorrow the people could rise up and hang all the officers of the state from the lamp-posts.  Its officers must ensure that their plunder or violence does not rise to such a level as to incite too much active resistance.   These men and women therefore promote the fiction that the state is not a predator but engaged in trade with the people, exchanging protection and other services for “contributions” as they term the taxes they extort from the populace.

Over the last 100 years, the state has systematically weakened or coopted the institutions of society.  It has, via the welfare system, taken over much of the provisioning of charity.  It controls commerce via regulation.  It dicates what insurance companies can and cannot do.  It tightly controls medical care.  Most dangerously, it has taken over the education of the young. And everything it has taken over has taken on the characteristics that typically accompany violence and extortion; shoddy service, excessive prices or compelled payments, and draconian punishments.

And far too many people, never having experienced society where these institutions or social needs were provisioned voluntarily rather than by the state, are left ignorant of any idea that that is even possible.  And so, when they are warned that Medicare and Social Security threaten economic ruin, they think that the speaker is contemplating casting the old and sick out on the street to die.  When they hear a call for the abolition of govenrment schooling, they imagine the speaker must want the broad mass of children to be left uneducated.  When they hear the call for the end of medical licensing or pharmaceutical regulations, they imagine that people will be subjected to all sorts of quackery. When they hear a call for an end of standing armies and the purchase of expensive weapons systems, they imagine that the speaker must naively want to invite a tyrant to waltz in and take over.

Too many people, no doubt from their experiences in schools where the classrooms are presided over mostly benevolent dictators called teachers, assume that society must be arranged in a similar vein, with leaders who make and enforce the rules, where there is no right of refusal or exit.

In the end, though, while it can commandeer impressive resources, and thus accomplish mighty things, the state invariably consumes more and produces less than organizations that it replaces.  It replaces the civilization of people voluntarily bonding together with the barbarism of compelled relationships, compelled production and compelled trade.

Today, the various governments that rule over Americans, taken together, commandeer or consume some 40% of production.  The more production the government seizes, the worse off we will be.  The greater the control government exercises over society, the worse off we all are.

One way to put things in perspective is, when considering how some need is to be supplied, to ask if you would be comfortable with the Mafia providing it.  After all, the mafia is really a proto-government, using extortion and violence to commandeer resources. Both are protection rackets, although the Mafia takes far less than the government.  While most people wouldn’t be too upset with the idea of the mafia punishing a rapist, most would laugh derisively at the idea of the mafia running a school, or operating a hospital.  This recognition arises from the fact that no-one conflates the Mafia with society.  If only they were so wise about the state!