California Anarchoblogs

Like food, health care can be a matter of life or death, but while food is available in abundance and with easy access for all Americans, health care has become unaffordable to many and typically involves extremely long waits.  Moreover, while advances in technology generally both increase quality and decrease costs (think of computers), the health care system has been a major exception.  Why does the market work well for food and computers, but not health care?  The reason is government.

There is no free market in health care: government policies are both restricting supply and stimulating demand, and the miracle is that the market elements that remain are able to function at all.  More than 50% of health care dollars are paid by the government already, and an illogical employer-based insurance system, which results from government taxing cash wages but making insurance benefits tax-free, has resulted in 85% of medical expenses already being paid for by third party payers instead of the consumer-patient.  The idea that socializing the remaining 15% will solve the problem is silly: the main beneficiary of universal health insurance will be insurance companies (wouldn’t YOU like a law passed to force everybody to buy your product?).

What can we do?

1. Get the FDA out of the way  — In a 34-page paper by research scientist Mary Ruwart issued in 2005, she detailed the horrifying cost of the Food & Drug Administration in money and lives.  In 1962, it was discovered that an estimated 12,000 European babies had been tragically born with birth defects attributed to a German drug, Thalidomide.  That year, the Kefauver-Harris Amendments to the Food & Drug Act gave the FDA the impossible task of determining that a drug was both safe and effective before allowing its sale, and empowered the FDA to prevent even the mere discussion of benefits of various substances by sellers without the same standard being met.  As a result, the cost of drug development today is 7 times higher than it would have been without these rules, development time is up to 14.5 years (and still rising), countless useful drugs have not been developed, and the free flow of information necessary for progress has been stifled.  As a result, virtually every person in this country has lost a loved one due to FDA regulations.  Through 1999, approximately 4.7 million premature deaths occurred to people prevented from taking life-saving drugs while the FDA was deciding whether to approve them, at least 4.1 million deaths resulted from potential drugs made too costly to develop by these rules, and both these losses were dwarfed by the deaths resulting from FDA prohibitions on the discussion of natural remedies, nutritional supplements, and off-label uses of existing drugs.  Against all this, using even the most optimistic assumptions, the FDA may have saved up to 68,000 lives from its extreme cautiousness.  Net result: FDA regulations are the equivalent of a new Thalidomide every week of every month of every year: year after year after year.  It is no surprise that the Life Extension Foundation calls the FDA the leading cause of death in this country.
2. Replace government licensing with private certification — Early in the 20th century, the American Medical Association was openly discussing another health care crisis.  Their concern?  Medical care was too widely available!  Responding to the demand, many people were choosing to be doctors, others were providing simpler care requiring less training, midwives were common, and competition was keeping AMA member incomes lower than desired.  Well, they managed to solve that health care crisis.  The AMA successfully lobbied to have the exclusive right to decide who should be a doctor, and to require that many types of care be performed by such a licensed doctor.  They also obtained control over the licensing of medical schools and hospitals.  Quickly, many schools were closed (including a disproportionate share of those that accepted women and minorities as students), and nurse and midwife “competitors” put out of business or restricted to limited subservient roles.  “Lodge” doctors, referring to those who made contracts with the enormous number of mutual aid societies that served the needs of poor and middle class working people, were threatened with the loss of their licenses or hospital privileges if they didn’t cease providing low cost care under these contracts.  Today, many procedures are performed by doctors which nurse practitioners, midwives, paramedics, or pharmacists could competently perform.  The AMA is also trying to close down low cost clinics being opened by nurse practitioners in department stores such as Wal-Mart, or at least require that doctors be hired to oversee operations.  Quality certification, relying on reputation, is very helpful to consumers, but the licensing monopolies should be eliminated.  The AMA can continue to certify, but not compel people to use their services: this will ensure that only reasonable requirements are imposed.  Other specialty certifications will also naturally develop, and people will be able to choose the level of expertise and not be compelled to pay a physician for services far below their competence but required by law to be performed by them.   (Note also that private certification will replace FDA licensing of medications: prior to the formation of the FDA, Consumer Reports and Good Housekeeping magazine hired independent researchers to test new medicines and provide the results to their readers.  In today’s Internet world, objective advice will be easily available to all.)
3. Deregulate insurance — It should be possible to obtain a health insurance policy that covers catastrophic costs, and doesn’t include coverage for ordinary medical needs or for services the insured will never utilize.  It should be, but it isn’t.  Consumers are held hostage to the rules of the state of residence, and most states have loaded up the law with mandates for coverages, often requiring that alcohol treatment programs, routine care, or other services the consumer prefers not to have.  Mandates should all be removed so that consumers can decide for themselves what they’d like to pay for, and prohibitions on the purchase of policies from other states should be removed.
4. Repeal personal income taxes — One of the early driving forces to increase the cost of medical care was the special tax status of employer-provided coverage.  During World War II, the government imposed wage controls, and employers got around the limits by offering medical insurance benefits, which were not included.  Today, many employees are forced to stay in unsatisfactory jobs because they cannot risk losing health care coverage, and those who have to buy coverage individually compete at a disadvantage.  While making all health care expenses deductible, or expanding medical savings accounts, would be improvements on the present system, a better solution is to repeal personal income taxes, simplifying the system, removing the artificial stimulation of costs resulting from deductibility, and combined with the reduction of government spending and regulation, increase prosperity so that people can afford more of everything, not just quality health care.
5. Allow liability waivers — Allow patients and medication users to agree to liability wavers in exchange for lower prices.  Also, allow patients and doctors to opt out of the government legal system and agree in advance to private arbitration of disputes that will be limited to restitution for actual harm.
6. Eliminate paperwork requirements — The Health Insurance Portability & Accountability Act piled extensive requirements for frivolous paperwork and unnecessary documentation.  A 2003 Harvard Medical School study revealed that 31% of the total cost of medical care was the cost of bureaucracy.  Allow doctors to use judgment in deciding what paperwork is needed.
7. Return Medicare and Medicaid to the private sector — The only way for a permanent, stable solution to health care is to get the government completely out of the health insurance business.  Without the adoption of the other proposals in this essay, Medicare and Medicaid are ticking time bombs anyway, with default only a few years off, and cracks already showing in the reduced reimbursements to doctors and restrictions on covered treatments.  With the adoption of the other proposals, the cost of health care will have been reduced so far that health care will, in fact, start to resemble food, as a necessary good reasonably priced.  Private charity along with free care for those who can’t afford to pay (which was a regular practice of doctors well before any laws were passed requiring it in the case of emergency rooms) will easily handle the rest.

BTW, universal health care insurance does not provide universal health care (as the Canadian Supreme Court said in rebuking Canadian health care authorities, “Access to a waiting list is not access to health care”).  Moreover, universal health care does not provide universal health.  There is plenty of evidence that lifestyle, not health care expenditures, is the key factor in living a long and healthy life, and the correlation between health care expenditures and health outcomes is disturbingly low.  Along with all the other problems caused by having health care become a government program, the worst is that the proper goal, health, has been almost totally forgotten.

* Humans Evolved Egalitarianism in Pleistocene

Egalitarianism and competitive urges are key elements of human nature and egalitarianism’s development came about to help people compete more effectively.

* The God that Failed: The 30 Year Lie of the Market Cult

This is one of the main facts that ordinary citizens around the world should take away from this crisis: the money to maintain, secure and improve the lives of their families and communities was always there — but their governments, and their political parties, made a deliberate, unforced choice not to use it for the common good.

* Chomsky on the Nature of Capitalism

A study by international economists Winfried Ruigrok and Rob van Tulder 15 years ago found that at least 20 companies in the Fortune 100 would not have survived if they had not been saved by their respective governments, and that many of the rest gained substantially by demanding that governments “socialise their losses,” as in today’s taxpayer-financed bailout.

* Three-Way Fight on Capitalism in Crisis

There is no evidence of capitalist complacency in the current situation – but there is a good possibility that many left radicals will relax and snooze their way through it. I recommend that those who see the current situation as just “capitalists just being capitalist” make sure they understand the concept and the function of “leverage” and then google - ‘collateralized debt obligation’ and ‘credit default swap’. This should provide some recovery therapy for business as usual disorders on the left.

* Physical Security Maxims

Double Edge Sword Maxim: Within a few months of its availability, new technology helps the bad guys at least as much as it helps the good guys.

* GPS Spoofing

This being Blog Action Day, I want to do my part in the voluntary collective request that bloggers post on the subject of Poverty today.    I want to briefly address 5 important ways in which legitimized aggression (i.e. government) prevents people in poverty from escaping it:

1. Licensing — In anarchist Mary Ruwart’s wonderful Healing Our World in an Age of Aggression, one of the recurring themes is the role of government licensing in keeping people down.  There is no way to sugarcoat licensing laws: they originated as racist and xenophobic attempts of people in certain professions to exclude competition from minorities and immigrants, while their ostensible purpose of protecting the public earned the support of well-meaning people (I say ostensible because the benefits are highly questionable: electrocutions actually go up whenever a state passes or strengthens licensing for electricians, because it makes the professionals so costly that more try to do the work themselves).  After the abolition of slavery, free blacks were the first victims of licensing (you can find a discussion in an older version of Ruwart’s book that is available online at no charge at http://www.ruwart.com/Healing/chap4.html, although I strongly encourage the purchase of her 2003 edition).  Although modern day proponents of licensing are far less likely to share the anti-black attitudes of the original propoents of licensing in America (sadly, they probably still do share the anti-immigrant attitudes), they continue to exclude competition, hurting the poor twice: (a) raising the price of services from those industries and (b) preventing them from entering those professions themselves as providers.
2. Import controls – Tariffs and trade barriers are used by domestic businesses to exclude foreign competition, increasing the costs of the products they provide.  Once again, there is no way to sugarcoat these: politically powerful firms lobby government officials for these barriers to benefit themselves at the expense of the general population of consumers (and businesses that export).  The passage of the Smoot-Hawley Tariff in June 1930 was a key factor in causing the Great Depression.  Trade is not only good for both sides, but is also one of the most important keys to peace.  As economist Frederic Bastiat stated, “When goods don’t cross borders, soldiers will.”
3. Minimum wage laws – The minimum wage is, has always been, and always will be, ZERO.  That is what someone makes when they’ve lost their job.  Black unemployment was actually the same or even slightly LOWER than white unemployment until 1930, when the Federal government, during the administration of Herbert Hoover, made it a key policy to keep wages high.  Indeed, the massive unemployment of the Great Depression was a direct result of Hoover’s policies, which began with a November 1929 meeting with big business leaders where he implored them not to cut wage rates after the stock market crash: the leaders complied, but when faced with business difficulties were only left with the choice of reducing their labor force or going out of business (and both results occurred with regularity).  It was made worse by a Federal Reserve System-engineered deflation of the currency, which effectively raised real wages even more, and the Davis-Bacon Act of 1931, which was the first Federal minimum wage law, in the construction industry, supported widely by Southern whites who were objecting to cheap black and immigrant labor (sound familiar?).  In 1938, FDR made the minimum wage a permanent part of the American landscape.  By 1940, black unemployment was far above white employment, and hasn’t recovered to this day.  Unemployment rises virtually every time the minimum wage does: the primary supporters are big businesses that pay MORE than minimum wage, wanting to eliminate small business competitors, and well-meaning people who don’t personally suffer from the loss of their own job (since 97% of the working public makes more than the minimum wage) and don’t realize the harm they are causing.
4. Inflation – If inflation were good for the economy, counterfeiters would be heroes.  When the Federal Reserve System creates new money, they don’t hand it to poor people, but the increase in the number of dollars buying the same goods and services causes prices to be higher than they otherwise would be for the poor.  Actually, in prosperous societies with honest money, prices have a tendency to slowly drop, as more goods and services compete for the same quantity of money.  Inflation is a complicated phenomenon: because it counteracts the harm caused by minimum wage laws, it can actually be beneficial to workers who would otherwise have lost their jobs, but the primary beneficiaries are banks (who are the first to get the new money) and those that provide goods and services directly to the Federal government.  To the mass of working poor, it simply makes it harder to make ends meet.
5. Taxes – In some ways, this is the LEAST important of the factors on this list: once the government is spending, they will tax, borrow, or inflate to get the money, and all of these choices are damaging.  Moreover, many politicians who are among the most irresponsible big spenders in history will pretend to favor free markets by supporting tax cuts: the current administration is a primary example.  That said, there is one tax that is especially damaging to the poorest workers, and that is the payroll tax, which raises the cost of hiring a worker by 15% and has the effect of making minimum wage laws even more destructive.  Also, while Federal payroll taxes theoretically are going to provide Social Security and Medicare benefits, the tax money is actually being spent as collected, much of it for general government activities such as war, with no “lockbox” or any other form of savings and investment of the money.  In any event, the poor don’t live as long as the rich, so they collect the benefits for a much shorter period of time: Social Security and Medicare are both programs that involve transfers of wealth from poor black men (who have the shortest life span) to rich white women (who have the longest).

WIth friends like the government, the poor don’t need enemies.

UPDATE: I owe so much to so many other writers that I’ve long despaired of being able to give them all the proper h/t for their ideas, but after racking my brain (wracking it didn’t help), I was able to remember that I organized my thoughts on this subject thanks to a piece that Sheldon Richman wrote a couple of years ago, and with a little searching I just located it online (or at least one version of it), on the Future of Freedom Foundation website at http://www.fff.org/comment/com0606j.asp . My apologies to Sheldon (whose blog, Free Association, is one of my “must” reads), for not crediting him in the first version of my post.

The whole concept of national defense disappears in an anarchist society: no nation, no nation to defend!  But I don’t want to be frivolous about it, so let’s assume that a form of collective defense is essential to protect a large free territory: just because there is no United States of America to defend doesn’t mean there is no America to defend.  Since anarchism precludes aggression, and taxes are obtained by aggression, we would seem to be coming up against a serious obstacle to protecting a free society from being conquered by an outside force that has no qualms about aggression.  But financing defense voluntarily is not nearly as hard as people think as long as three steps are followed:

(1) Define the problem correctly

A libertarian defense agency would consider the protection of the people in its jurisdiction to be its defense responsibility. That doesn’t require nearly as much money as being the world’s policeman. The US government spends nearly $1 trillion on “national defense” right now, while the second place country, China, spends less than $100 billion, with a population more than 4 times the US.

(2) Reduce the number of enemies

Probably 99% of those people who hate America enough to want to engage in violence against Americans are mad about the US government’s foreign policy (significantly less than 1% only hate us for our freedom). Are there SOME people who will want to engage in massive violence on American soil in the absence of an interventionist government? Maybe, but they will, by and large, be isolated madmen without the sympathy of any large group of foreigners, and as much a threat as common criminals.

We also reduce hatred with free trade: commerce makes two people benefit from each other’s existence (free travel and migration could help as well). In the final analysis, there is no reason for any large group of people to hate Americans who don’t intervene militarily and who exchange goods and services with them.

(3) Use a variety of voluntary methods of financing

It is quite unlikely that a purely defensive agency that covered the entire territory of America would require more than, say, $50 billion for the special forces and intelligence needed to deal with the relatively small number of threats, along with modest repairs, maintenance, and upgrading of military equipment. Although it is impossible to predict how a free society would finance the need, here are a few thoughts:

(a) Charity – Americans already give $300 billion a year to charities. With the enormous prosperity of a society free of regulation and taxes, it would be even more generous. Raising $50 billion from 300 million people for a service most of them believe is protecting their lives and liberty shouldn’t be very hard. Heck, people TIP close to $50 billion a year. Will there be free riders? Sure. There are free riders now.

(b) Advertising – “When you buy a Big Mac, you’re also helping protect America.” Businesses will pony up cash to sponsor activities seen by the public as defending the country.

(c) Insurance – People will insure their own life and property (rich people will pay more than poor people). Insurance companies want to minimize losses, and with sufficient numbers of policies at risk, will finance measures that reduce their risk. Multiple insurers will cooperate with each other to fund activities for mutual benefit. Social norms will ostracize those insurance companies that offer lower prices by not helping defend people.

(d) User fees – “National defense” and “defense from terrorism” are not generic services of one type: there are degrees. Businesses can pay for more security at their establishments. People can pay for background checks.

(e) Volunteers – Citizen militias, made up of retired military and others, can provide the reserves for local defense in the highly unlikely event that any large group is crazy enough to try to invade and rule. We can start challenging the Swiss dominance in the biathlon at the Olympics.

Every legitimate service that benefits large numbers of people can be financed voluntarily with a little imagination. The reason taxes are needed today is that nobody in their right mind would voluntarily finance most of what passes for government services.

On the broad issue of funding public goods without coercion, I strongly recommend Roderick Long’s Funding Public Goods: Six Solutions.

Arnold Kling, an economist who used to work at Freddie Mac, is developing fantasy testimony that he hopes to deliver to Congress (and might).  Overall, I have found his writings on the topic to be the most informative on the web, and if you want to get really informed on the FMs, start with http://econlog.econlib.org/archives/2008/10/more_fantasy_te.html and then browse EconLog for other gems.

The most fundamental point to be made about government interventions is that, even if we ignore issues of self-interest and political corruption, markets are too complicated to be centrally managed: the problem of knowledge being decentralized, which helped earn Friedrich Hayek a Nobel Prize in Economics, shows up repeatedly in the thinking of rational anarchists.