To put it more bluntly, on a widening range of issues, Obama’s critics to the right say he’s engineering a government takeover of the private sector, while his critics to the left accuse him of promoting a corporate takeover of the public sector. They can’t both be right, of course, and these critics would take the country in completely different directions if given a chance. But the tactical convergence is there if they choose to pursue it.
To the contrary, both are right. Or half-right, at least. When you harness government with a large, entrenched private interest, both are corrupted by the combination. This is why seperation of church and state is so important — when there is a strong established religion, the government is corrupted by its association with the church, and the church is corrupted by its association with the government. It’s the same with big business, or with big labor for that matter, or even with academia (as we saw with Climategate).
Focusing specifically on the problem at hand, we have the federal government attempting to harness an entire industry in order to provide universal health coverage. Our elected representatives aim to change the way the health insurance industry does business, with the intent of making it act like an agency of the government. To fit the industry for this harness, the government must freeze the industry’s business model so it can be controlled, then bend the business model into a form that fits the government’s goals.
But you can’t squeeze blood from a stone. There’s only so much profit the industry makes, and every mandate you put on the industry pulls it further away from a profit-optimal orientation. If you go too far, you’ll kill the industry and be left with nothing to replace it, which defeats the whole purpose of the policy. Beyond which, everyone whose livelihood touches the industry will fight tooth-and-nail against anything they fear would harm it.
So you need to reassure those whose livelihood is linked to the industry that you won’t be ruining them, and you need to actually give the industry something to keep it healthy enough to do your bidding. In the case of the Reid and Pelosi health care bills, we’re protecting health insurance companies from competition by building a wall seperating approved health insurance exchange plans from the rest, we’re enforcing a pricing cartel by instituting community ratings, we’re handing the insurance companies massive subsidies, and we’re delegating the power to tax to insurance companies with the individual health insurance mandates.
This is neither capitalism nor socialism, but rather a different form of economic organization which good captialists and socialists alike rightly despise. Mercantilism combines government and business into a two-headed monster which combines the worst aspects of both by ruining the good parts of each.
The best things about private businesses are that they’re free to innovate in how they do business on their own initiative, and that nobody forces you to deal with them at all if you don’t like how they do business. The former is destroyed by the regulatory framework, and the latter is destroyed by the mandates.
The best things about socialized goverment programs are that they’re directly democratically accountable to our elected representatives, and every dollar we put in (if corruption is controlled) comes out in the form of benefits to the public or the direct cost of providing those benefits. Not so here, as the insurance companies add a very thick layer of insulation between the decisions and our elected representatives, and they take a profit out of the money we will be forced to pay them by the coersive power of the state. And because our elected represenatives need the industry in order to achieve their goals, they are forced to privilege the industry’s interests over the public’s.
The health care reform package currently under consideration can fairly be criticized from both the left and the right in largely the same terms, because it’s bad policy from both perspectives for largely the same reasons. This is the proverbial compromise that would cut the baby in half, the worst possible outcome to anyone who cares about the baby’s wellbeing.
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Benjamin Franklin:
“There are two passions which have a powerful influence in the affairs of men. These are ambition and avarice—the love of power and the love of money. Separately, each of these has great force in prompting men to action; but, when united in view of the same object, they have, in many minds, the most violent effects.”
Government micromanagement of the economy has, of course, precisely the effect of uniting these passions in exactly the manner Franklin feared.
More here.
I’d say this is is a good description of the sort of platonic ideals of socialism and of capitalism:
The best things about private businesses are that they’re free to innovate in how they do business on their own initiative, and that nobody forces you to deal with them at all if you don’t like how they do business. The former is destroyed by the regulatory framework, and the latter is destroyed by the mandates.
The best things about socialized goverment programs are that they’re directly democratically accountable to our elected representatives, and every dollar we put in (if corruption is controlled) comes out in the form of benefits to the public or the direct cost of providing those benefits.
The flip side of each is that in private businesses you ARE frequently forced to deal with them whether you want to or not, and of course the flip side of socialized programs is almost exactly the same.
The truth though is all of this is muddied by publicly held corporations, which are in fact fictions created and sustained by the state which frequently destroy real, natural private business. From my perspective it’s rarely easy to say what’s optimal when dealing with them; both act in opposition to the individual far too often.
I do have to object to this though:
In the case of the Reid and Pelosi health care bills…we’re enforcing a pricing cartel by instituting community ratings…”
The bill doesn’t institute community ratings; almost the entire health insurance industry is based on community ratings already, and has been for generations. That’s how most health insurance (which is really arguably a service contract scheme, not an insurance scheme) were set up in the first place and how they’ve always operated.
We already have a heavily regulated industry here, and “heavily regulated” is how most people want it whether they admit it or not. Indeed, most health care practitioners currently in the system want it to stay that way. Quite a few people in the medical profession, indeed, very much want the whole thing on a non-profit model because they don’t want to be slaves to the almighty dollar when it comes to who they can medically help and who they can’t.
The flip side of each is that in private businesses you ARE frequently forced to deal with them whether you want to or not
What private business are you forced to deal with? Just about every private business I deal with has plenty of competitors and substitutes. Comcast and PG&E are the only exceptions I can think of in my own life, and they’re both heavily regulated and government-supported mercantile entitites. And I could do without the former’s services completely if they got too obnoxious, and even the latter I could sever ties with by paying to install solar panels and fuel cells and having natural gas trucked in.
I do have to object to this though:
We’ve been over this before. I’ll summarize my arguments from last time here for your convenience:
1. While employer-provided group insurance shares many features of community ratings, there’s still a big difference between it and a federally-mandated nationwide system of community ratings. You can see confirmation of this by looking at the way prices have spiraled upwards in the states which have statewide community mandated community ratings systems.
2. Employer-provided group insurance is a bug, not a feature. Two of the biggest problems with our current health insurance system are the wedge EPGI drives between power and responsibility by hiding costs from patients and doctors alike, and the way EPGI shackles people to their employers.
3. Of course doctors want to be able to give their patients whatever they want without regard for costs, providing the doctors still get paid. That’s true for almost any profession, but that doesn’t make it a bad idea.
What I usually find is that when people think we aren’t forced to deal with corporations, they are people who (A) have never found themselves in a position where they may lose their homes or their health insurance or something very precious to them if they don’t continue to work with/deal with certain corporations, and (B) have never had the experience, or been close to anyone who had the experience, of having their own individual business or family business destroyed by a corporate behemoth.
I suppose the word here comes down to “choice.” If “lose your home, your livelihood, and everything important to you or work for/with this corporation” is a choice, then I guess no one is
“forced” to work for or with these gigantic bureaucratic collectivist entities created by the state (i.e. publicly held corporations).
Nevertheless, “gigantic bureaucratic collectivist entities created by the state” is exactly what publicly trade corporations like GM, IBM, Microsoft, Walmart, etc. all are. As well as most medical insurance providers.
As for community ratings: what the heck is the difference between “community ratings” and group insurance pools as they’re structured now? They already serve the same function, AND, the way they’re structured is mandated and heavily regulated by a wide array of Federal AND EVEN MORE by each and every state. We too often seem to act as if the government didn’t already set this stuff up, but they’ve been integrally involved for generations.
As for taking profit out of basic medical care, a question naturally comes up: does it really make sense to make profit the primary driving factor in something like this? Costs are not irrelevant and neither patients nor providers should be shielded from it, but… profit? Really? That should be the #1 driving force?
The real choice in both A and B is structuring your life in such a way that your financial situation is utterly dependent on certain specific individuals and/or corporations continue to do business with you on similar terms as they have done business with you in the past. How you structure your affairs is a very real choice. Some people do get backed into corners despite making every reasonable effort not to, but but much more often it’s the result of assuming the status quo and not making the necessary short-term sacrifices to keep a cushion. In a pinch, I could scale back my lifestyle a bit, tap my retirement savings, and keep paying all of my bills and keep my house for well over a year without a dime of income. I can do this because I live on a fraction of my income; my living expenses were below the poverty level when I was in college, and after I graduated I increased my lifestyle much more gradually than my income increased. I am blessed with talents that give me higher earnings potential than most people, which has let me build up savings faster than most people could have, but building up substantial savings is quite possible for anyone willing to work hard and live within their means.
For B in particular, I would like to quote the judge in the Heinlein short story “Life-line”:
Individual and family businesses are fine things, but they have no special right to have members of the public do business with them. If a big business can provide a better service at lower prices, should customers be coerced into patronizing the inferior or overpriced small business?
The difference between community ratings and group insurance pools is that nobody forces you to join a group insurance pool. There is an enormous moral and practical difference between jumping and being pushed, not least of which is if you’re jumping you have a chance to look at what’s below before you make your choice.
Does it really make sense for profit not to be the primary driving force in something like this? In a competitive market, profit does a fine job of motivating providers to provide good service at agreeable prices. Even in a market as uncompetitive as the heavily regulated US health care industry, for-profit hospitals have generally been outcompeting nonprofits. If profit were really so evil, wouldn’t it be the other way around?
I want to know why “profit” has become such a bad thing in recent years.
I work in the health care industry, and I guarantee you that *everybody – from the CEO’s down through the surgeons and other doctors, to the guy sweeping the floor – is in it for one thing – the money they earn. If you stop paying them – they will go home and begin seeking a job elsewhere. And Dean, so would you if your employer stopped paying you.
(* The only exception to this, might be all those sweet little old ladies known as hospital volunteers. But they are a special case.)
And then there’s this:
“…most health insurance (which is really arguably a service contract scheme, not an insurance scheme) ”
Thank you for finally agreeing with me. I have been arguing that point with you for quite awhile now, and it’s satisfying to see you have finally changed your mind. A little credit would have been nice, but I will take it however I can get it.
Please read this carefully before deciding if you disagree or not. My thinking is even more bas-ackwards than usual.
The truth though is all of this is muddied by publicly held corporations, which are in fact fictions created and sustained by the state which frequently destroy real, natural private business.
Publicly held corporations emerged from business practices and contract law before they were sanctioned by government.
Your statement would be equally true if you substituted “marriage” for “publicly held corporations” and “families” for “private business”.
That which The State touches it corrupts.
Actually, according to the book I’m reading right now (“Empire of Liberty”, a history of the evolutions of our political institutions between the adoption of the Constitution and the War of 1812), it was the other way around. In the 18th century, corporations really were creatures of the state — a mix of private and public funding, a mix of private and public control, and a charter specifying the specific public duties the corporation was to perform and the specific special powers and privileges the government was granting it. In America at least, this model was gradually replaced in the decades following the Revolution, as the states started granting corporate charters more freely while giving corporations less direction and fewer powers. As it was noticed that competition and profit motive were doing a better job of promoting good behavior than close legislative supervision, the practice expanded. By the early 19th century, the law started recognizing a distinction between “public corporations” which were organized on the old 18th century corporate model and which were granted quasi-governmental power for public purposes, and “private corporations” which were simply a different form of organization for private businesses, parallel to partnerships and sole proprietorships.
Over the course of the late 19th and much of the 20th century (this part being my own observation, not Empire of Liberty), there was a push to return to the 18th century Public Corporation model, as new regulatory agencies increasingly dictated the business practices of regulated industries and many industries started requiring specific approval from a government department or even the legislatures before a new company could enter the market — this started out as a reaction to the excesses of the Gilded Era, where corrupt politicians would frequently grant favorable treatment to specific private interests in return for personal kickbacks. The deregulation era of the late 70s through the mid 90s was a move back towards the private corporation model, which the Obama/Reid/Pelosi government is currently attempting to reverse.
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