Free Markets, Free People


Health Care Blast From The Past – Hayek Has His Say

Here’s a post I did in January of 2007. It is very appropriate now that the health care reform business is well afoot.

So here’s ” Friedrich Hayek on Universal Health Care“, January 2, 2007:

As the 110th Congress prepares to convene and the run for the ’08 presidential nominations begins in earnest, we’re seeing far more appeals from the left, both from politicians, bloggers and opinion makers to address the supposed “health care problem”.

The appeals range from governmentally run universal health care to single-payer (again government) health insurance. The reasons given are also varied from the emotional “for the children” rhetoric favored by some to the technical “it would be more efficient and less costly” sobriquet.

Reading through Friedrich Hayek’s monumental “The Constitution of Liberty” again over the holidays, I revisited his discussion of the topic. And, willing to risk boring you out of you skull I thought I’d share it with you. Fair warning: Long post follows.

One of the most important thoughts he has on the subject gets to the crux of designing a system which would supposedly provide equal care to all. Health care cannot really be quantified and thereby presents peculiar problems which must be understood:

“They result from the fact that the problem of “need” cannot be treated as though it were the same for all who satisfy certain objective criteria, such as age: each case of need raises problems of urgency and importance which have to be balanced against the cost of meeting it, problems which must be decided either by the individual or for him by somebody else.”

And therein lies the great dilemma and the greatest threat to liberty. Because in a state run scheme it is the latter which will, indeed must, prevail.

He approaches the topic of health insurance and “free health care” by saying:

“But there are strong arguments against a single scheme of state insurance; and there seems to be an overwhelming case against free health service for all. From what we have seen of such schemes, it is probable that their inexpediency will become evident in the countries that have adopted them, although political circumstances make it unlikely that they can ever be abandoned, not that they have been adopted. One of the strongest arguments against them is, indeed, that their introduction is the kind of politically irrevocable measure that will have to be continued, whether it proves a mistake or not.”

That line is one of the most important points about this entire debate and one of the major reasons that many, especially among libertarians and fiscal and small government conservatives, resist the implementation of such a plan. Witness Medicare, Medicaid and Social Security. Once it is in place there is no turning back even if it is an outrageous mistake.

Fine, you say, but other than resisting it, to this point, because it may turn into an expensive and inefficient debacle, what can you offer to at least lend credence to an argument against such a system?

Fair question. And for that, I offer Hayek’s argument, an argument that is well reasoned, not emotional, and provides some unique insights.

He begins his critique by pointing out that the case for free health service is based on two fundamental misconceptions:

“They are, first, the belief that medical needs are usually of an objectively ascertainable character and as such that they can and ought to be fully met in every case without regard to economic considerations, and, second, that this is economically possible because an improved medical service normally results in a restoration of economic effectiveness or earning power and so pays for itself.”

But, as he argues, both miss the mark because they mistake the nature of the problem involved in decisions concerning “the preservation of health and life”:

“There is no objective standard for judging how much care and effort are required in a particular case; also, as medicine advances, it becomes more and more clear that there is no limit to the amount that might profitably be spent in order to do all that is objectively possible.”

Now make sure you’re clear on his point here. He’s not claiming it is profitable (or rational) to spend what is necessary to do all that is objectively possible. He’s arguing that if you agree that even marginal improvement, no matter how small, is “good” (“no objective standard”) then there is no limit as to how much you can spend for marginal improvement. Without an objective standard for making judgments as to how much care and effort are enough care and effort, the want is infinite.

He continues:

“Moreover, it is also not true that, in our individual valuation, all that might yet be done to secure health and life has absolute priority over other needs. As in all other decisions in which we have to deal not with certainties but with probabilities and chances. We constantly take risks and decide on the basis of economic considerations whether a particular precaution is worthwhile, i.e., by balancing the risk against other needs. Even the richest man will normally not do all that medical knowledge makes possible to preserve his health, perhaps because other concerns compete for his time and energy. Somebody must always decide whether an additional effort and additional outlay of resources are called for. The real issue is whether the individual concerned is to have a say and be able, by an additional sacrifice, to get more attention or whether this decision is to be made for him by somebody else. Though we all dislike the fact that we have to balance immaterial values like health and life against material advantages and wish that the choice were unnecessary, we all do have to make the choice because of facts we cannot alter.”

The fundamental issue he confronts here is the right of individual choice and the attack on that right which programs such as “free health care” pose. In essence individual choice is, at some point, overruled by collective choice. As Hayek implies in his discussion of “objective standards” and the real lack of them in judgments of how much care and effort are required in a particular case, those sorts of standards must be part and parcel to any “free health service”. Infinite need/want meets finite fiscal and physical resources in such a system, and consequently some method of defining the limits of “health care” within those fiscal and physical constraints must, of necessity, be made. Individual choice then is reduced to those standards and the freedom to pursue “additional sacrifice” in terms of spending more on your health is removed from your array of choices.

Even when such “objective determinably standards” are outlined, they prove not to be well considered or, as Hayek says, have any “relation to reality:”

“The conception that there is a an objectively determinable standard of medical services which can and ought to be provided for all, a conception which underlies the Beveridge scheme and the whole British National Health Service, has no relation to reality. In a field that is undergoing as rapid change as medicine is today, it can, at most, be the bad average standard of service that can be provided equally for all. But since in every progressive field what is objectively possible to provide for all depends on what has already been provided for some, the effect of making it too expensive foremost to get better than average service, must, before long, be that this average will be lower than it otherwise would be.”

Why the US continues to be the gold-standard for the most progressive and best medical care available instead of the British National Health Service is to be found in that paragraph. When their health is involved, people will rarely, if ever, chose the “bad average standard of service” over one which provides them the opportunity to access the best and most progressive. Health care, as provided by any universal scheme can, at best, only offer that “bad average standard of service”.

Hayek then addresses another part of the base misconceptions he identifies above:

“The problems raised by a free health service are made even more difficult by the fact that the progress of medicine tends to increase its efforts not mainly toward restoring working capacity but toward the alleviation of suffering and the prolongation of life; these, of course, cannot be justified on economic but only on humanitarian grounds. Yet, while the task of combating the serious diseases which befall and disable some in manhood is a relatively limited one, the task of slowing down the chronic process which must bring about the ultimate decay of us all is unlimited. The latter presents a problem which can, under no conceivable condition, be solved by an unlimited provision of medical facilities and which therefore must continue to present a painful choice between competing aims. Under a system of state medicine this choice will have to be imposed by authority upon individuals. It may seem harsh, but it is probably in the interest of all that under a free system those with full earning capacity should often be rapidly cured of temporary and not dangerous disablement at the expense of some neglect of the aged and mortally ill. Where systems of state medicine operate, we generally find that those who could be promptly restored to full activity have to wait for long periods because all the hospital facilities are taken up by the people who will never again contribute to the needs of the rest.”

Or who are presently too young to contribute.

What Hayek says, without saying it, is even in a system of “free health service”, there must and will be a system of rationing. Of course one of the main objections to our present system is we ration health care by price. But it doesn’t matter as the nature of health care, unlimited need meets limited means, requires it in every scenario imaginable short of a magic solution of some sort.

If we deal just in the economics of such a system, that which makes the most sense is to give priority of treatment to those who can recover quickly and contribute. That wouldn’t be the retired and children. Or stay at home moms. And those, usually, are the ones first identified as needing this sort of a system. But they are the very reason such systems fail to deliver on the promises made.

Hayek hints that such a system has an outside chance of working if it focuses on “restoring working capacity” and not much else. If and when it becomes focused on the “alleviation of suffering and the prolongation of life”, economic justification is impossible because the need/want for that is unlimited.

Such a system that gives priority to restoring those able to work productively would give further priority to treatment of the immediate problem and not necessarily the treatment of the chronic problem, if there is one – not if it wished to remain economically viable.

Thus far then, with such a system we’re reduced to a “bad average standard of service” which will, in some way, be rationed and in which individual choice will be abridged.

Last point, and privacy advocates should zero in on this:

“There are so many serious problems raised by the nationalization of medicine that we cannot mention even all of the more important ones. But there is one the gravity of which the public has scarcely yet perceived and which is likely to be of the greatest importance. This is the inevitable transformation of doctors, who have been members of a free profession primarily responsible to their patients, into paid servants of the state, officials who are necessarily subject instruction by authority and who must be released from the duty of secrecy so far as authority is concerned. The most dangerous aspect of the new development may well prove to be that, at a time when the increase in medical knowledge tends to confer more and more power over the minds of men to those who possess it, they should be made dependent on a unified organization under a single direction and be guided by the same reasons of state that generally govern policy. A system that gives the indispensable helper of the individual, who is at the same time an agent of the state, an insight into the other’s most intimate concerns and creates conditions in which he must reveal this knowledge to a superior and use it for the purposes determined by authority opens frightening prospects. The manner in which state medicine has been used in Russia as an instrument of industrial discipline gives us a foretaste of the uses to which such a system can be put.”

Now scoff if you wish, but that is the inherent risk any such system has because of its very nature. Such access to information is ripe for abuse, and, as Hayek notes, the fundamental change in the relationship of the doctor to the patient in this scheme makes such a risk of abuse more likely instead of less. The authority in this process is no longer the patient for whom the doctor used to work, but the entity which instructs the doctor on what he can or can’t do and pays him for the service. And the authority which makes such decisions must and will have access to all the information necessary to make them. What was once privileged information shared between doctor and patient would become shared information within the bureaucracy with possible potential abusive uses of which Hayek reminds us. Some may see those abuses as far fetched. I see their potential as a logical result of the system. One of the arguments we constantly make about corruption in the Congress is that the problem is systemic. It comes from the very nature of the institution its structure. This system is of similar construct and cannot help, at some time, becoming corrupt. Such corruption would most likely see the information within its databases used for purposes other than the treatment of patients.

An example? How hard do you suppose it would be to sort all the new mothers out of the population and offer them a choice of limited future service or complying with a government mandate that they see a doctor regularly? Some might argue that’s actually good. Ok, how about obese people? Alcoholics? Drug users?

Oh, wait, couldn’t the list of drug users be used for other purposes?

Yes. And so could a lot of other lists.

While all the lure of “free” health care sounds wonderful, especially to those who may not have access to health care at the moment, it is an emotional appeal which ignores the huge down-side such a program imposes on a society. No one argues that the system we have is perfect, and it certainly isn’t the least expensive, but, it appears it is the most responsive and provides access for most to the best and most innovative medicine available. There are some obvious things which could be done to improve it (remove health insurance from the realm of the employer, for one). But given the power of Hayek’s arguments, it should be a little more clear that putting our health care into the hands of the government is not one of them.


Comment “Reply” Problem

It appears there is a problem with directly replying to a comment, i.e. if you left click on reply, it doesn’t thread it under the comment you are replying too.

I have no idea why. We recently upgraded to a newer version of WP and it may be a bug in that.

However, there is a workaround that Billy Hollis noted in the comment section of one of the posts. If you will left click right click [edited by Billy] on “Reply” and open a new tab, the reply you leave will be threaded with the comment.

Sorry for the inconvenience, but we do have a work around until we figure it out.

Questions and Observations #2

For new readers the title is that for which the shortened “QandO” stands. This is the second in a series of questions and observations.

  • In the “you can’t make this up” department, China will block the sale of Hummer for “environmental concerns”.  I guess that’s their nod to the rest of the world after flatly refusing cut CO2 emissions in the future.
  • Ezra Klein is suddenly for smaller government, specifically the elimination of the Agriculture Committee. Of course the only reason he’d like to see it given the deep 6 is because it has, in Klein’s opinion, badly weakened cap-and-trade by extracting “a truly mind-boggling array of tax breaks, exemptions, and straight subsidies”. I guess Klein would like to temporarily make government smaller to make it larger.
  • Yes, Michael Jackson is dead – but for heaven sake, do we have to devote every minute of the news day to running “Thriller” vid and spreading rumors about the possible cause of his death? Is this what “news” organizations have become?
  • Apparently we’re still stalking the North Korean ship enroute to either Singapore or Burma. For those who are waiting for us to confront it and board it, that’s not going to happen. The “tough” UN resolution only provides for boarding if the North Koreans agree. And, while we can demand that they then go to the nearest port for inspection, the North Koreans can refuse that as well. The plan, it seems, is to convince the refueling port the NoKos pull into to refuse to refuel the ship. Then, when the NoKo ship runs out of fuel, put it under tow and then inspect it. As I understand it – they can then inspect it legitimately. Amazing.
  • Waxman-Markey, aka cap-and-trade, survived an earlier test vote that moved the bill to the floor for a 5pm vote. As I recall the margin was 5 votes. It is a job destroyer in the middle of a recession. The Center for Data Analysis of the Heritage Foundation figures it will cost 50,000 jobs in the transportation equipment sector alone. Their data for other sectors is available here.
  • House liberals have staked out a bit of ground on the health care bill saying they will not vote for it if it doesn’t include a public option – period. That is actually good news as the public option does seem to be in trouble. Any bill showing up without it will most likely not get the 80 members of the Congressional Progressive Caucus to vote for it. Add in the Republicans and the Blue Dogs, and it may be in very serious trouble without just the sticker shock of 1 to 3 trillion dollars of cost.
  • Mark Sanford? He should resign. The affair is between he and his family. He should resign because he was derelict in his duty and he misappropriated government funds to pay for his trip to Argentina.  Kinda like Bill Clinton should have resigned, not for the affair, but for lying under oath to a grand jury and attempting to obstruct justice.


The Man. The Myth. The Legend.

In The New Ledger, Christopher Badeaux has penned one of the most withering takedowns of a public figure since H.L. Mencken’s obituary of William Jenning’s Brian. Badeaux’s target:  Andrew Sullivan.  A few samples are in order.

On Sullivan’s campaign against circumcision:

To say that Sullivan has focused his laser-like mind on human reproductive organs is to engage in an understatement worthy of the master himself. We could simply look at Sullivan’s relentless, years-long focus on circumcision (a relentlessness not well-captured by the internet tubes, as Sullivan’s archives traditionally become difficult to search when he moves from site to site), an unusual genre for a man who will never have children and who is not Jewish or Muslim, though perhaps not so unusual given his general interest in the member in question. One could focus on his decision to start calling a 4,000 year old religious tradition “male genital mutilation,” thus cleverly calling untold generations of Jews child abusers and torturers, a decision that marks the sort of intellectual territory into which only a man bravely unwilling to live in Israel can tread.

On Sullivan’s participation in the Sarah-Bristol-Trig Palin controversy:

Andrew Sullivan immediately leaped into the fray. Unlike the rest of these non-experts, many of whom began to back off of the story when word emerged that Mrs. Palin’s daughter was pregnant and had been close to the time of Trig’s birth, Sullivan, who apparently received a secret medical degree while attending Harvard, began obsessively following this story, turning the Atlantic from a fairly uninteresting opinion website into a leading journal of gynecology and obstetrics. Rarely in human history has a gay man been that obsessed with a married woman’s vagina.

On Sullivan’s views about the Catholic Church:

Sullivan sees deep plans within plans, and lives by undercurrents the likes of which we mere mortals cannot fathom; is it any wonder that his break with any apparent connection with Catholic teaching or thought, Scripture, and reality came when he perceived a great teaching moment on Benedict XVI’s ascension? Certainly not, because if there is anything about which we can be certain, it is that Sullivan is as constant as the polar ice.

Sullivan’s problem with pre-35th Century Catholicism, he has repeatedly assured his readers, is in its offenses against human dignity, human dignity only usually being a code word for sodomy.

On Sullivan’s thoughts about The Jews:

One sign of a writer’s mental disfigurement, laziness, undiagnosed psychoses, or, obviously in the case of Sullivan, inhuman insight, is the gradual realization that the term “neoconservative” is a useful stand-in for “Jews whose loyalty belongs first to Israel, and then to the United States, if at all.” Sullivan has clearly reached this point, as one can note from some of his most recent thoughts...

Surely Sullivan, keen observer of men, sees what we cannot: That the Jews (or rather, a subset of American Jews) are in close collaboration with Israel, are working to undermine our brave President’s policy of allowing Iranians to die in their streets, never understanding that President Obama’s indifference is actually a brilliant ploy to force the theocrats of Iran to spontaneously step down and allow a thousand fabulous flowers to bloom. You see, he’s clearly not taking issue with the “neocons” for wanting to toss out the clerics; he discerns that because of their love of blood-of-Gentile pastries and determination to overtly strike out at theocrats, dictators, and Palestinian children, they’re being counterproductive.

The whole thing is brutal.  And brutally funny.

This Blog Post Saved At Least 10 Jobs Today


At least that’s what the macro model I built says.  It has some very sophisticated algorithms.

According to the model, the associated bandwidth cost for this post was enough to keep the blog hosting gang going and because of that, they kept making payments on all the computer equipment, power and rent/lease obligations they have associated with their hosting site, which in turn kept a computer retailer/power company/real estate firm from laying off folks while also paying those down the line from them today and having the same effect.


Go ahead – prove me wrong.


Part 3: Whelan Figures It Out …

And apologizes to Publius for doing something he shouldn’t have done and can’t undo:

On reflection, I now realize that, completely apart from any debate over our respective rights and completely apart from our competing views on the merits of pseudonymous blogging, I have been uncharitable in my conduct towards the blogger who has used the pseudonym Publius. Earlier this evening, I sent him an e-mail setting forth my apology for my uncharitable conduct. As I stated in that e-mail, I realize that, unfortunately, it is impossible for me to undo my ill-considered disclosure of his identity. For that reason, I recognize that Publius may understandably regard my apology as inadequate.

Publius responds:

Ed Whelan has written both publicly and privately and apologized. I know it was not an easy thing to do, and it is of course accepted. I therefore consider the matter done, and don’t intend on writing about it anymore.

Hat tip to Whelan for apologizing and making it public. That took some courage.  And to Publius for the gracious acceptance. Lesson?

You don’t get to decide whether or not the privacy concerns of another are legitimate (unless very specific types of exceptions are extant – “shouting fire in the theater” type) – that’s why we talk about privacy rights. It appears Whelan has finally figured that out.


Whelan/Publius – Round 2

I enjoy analyzing arguments. Not two people shouting at each other mind you, but arguments people make to support their positions.

Yesterday I posted about Ed Whelan of NRO outing Publius of Obsidian Wings (no, I’m not going to use Publius’s name). I found it to be a very juvenile reaction to what appeared to me a fairly typical blog war – someone wrote something, another disagreed, and they went back and forth hammering each other’s arguments. But in terms of provocation that might warrant what Whelan did, I found nothing.

Simon Owens, at Bloggasm, contacted each of the parties involved and talked to them about what had happened. If you’ve read each of their blog posts, the reasons given are mostly a recapitulation of those. However there were some other interesting arguments used, one of which I found very wanting.

Ed Whelan:

Whelan even objected to the term “outed,” which has been used by many (including me) to describe what he had done to Blevins. “I think the word ‘outed’ confuses understanding here. I think people are drawing on the ugliness of identifying that someone is homosexual. In this context, to say I outed publius, well publius doesn’t exist. I identified who’s hiding behind publius. I think to identify someone who is blogging behind a pseudonym is very different than exposing some private aspect of a person’s life. I think that the term outing confuses things.”

I don’t think it confuses anyone but Ed Whelan. He claims that publius didn’t exist.  But neither did the person pretending to be straight. In the case of the homosexual, both personalities may have had the same name, but one of them certainly doesn’t exist in reality.  It is a pseudo-personality. Outing is a completely apropos description of what Whelan did and nonsense such as this argument is just epic rationalization in an attempt to justify the unjustifiable.

Publius makes the argument that he’s not really anonymous, but is instead an established personality with a reputation. And the reputation, achieved while writing under that name and on that blog is of value to him and something he doesn’t take lightly.

“It’s one thing for an anonymous commenter to come in and just be a flame thrower, but what I do is I write pseudonymously, and I have a reputation of my own. It’s an online reputation. It’s a reputation that I care about, that I’ve invested a lot in, and I don’t want to be embarrassed in the blogosphere. I try to think through my arguments. To say there’s no real world effect, I don’t agree with that, because if I write something stupid, I’m going to get called out for that. In fact, I have written stupid things and I got called out and it affected my reputation. So I do have some reputational incentives to be honest, to be respectful in all these things.”

Given that, the arguments on both sides should have been dealt with on their merits and nothing else.

Whelan opines:

“A law professor should especially be held to minimal standards, and I was surprised that this guy was a law professor given the poor legal understanding of his posts. Let me be clear, I have no objection to bloggers who want to hide behind pseudonyms, but if someone is hiding behind a pseudonym to take cheap shots at me, I don’t think I owe him any favors.”

And outing him did what to enhance Whelan’s arguments or counter those of Publius?

Zip. Zero. Nada. Nothing.

The fact that Whelan’s outing of Publius added nothing of weight to his arguments nor took away from those of Publius smacks of petty vindictiveness. He knew he could hurt Publius by doing something to him that Publius had carefully avoided over the years. In a word it was petty. Juvenile. Something a 10 year old would do.

The more I read Whelan the less I care for him. He may be a heck of a bright guy intellectually, but socially and ethically he’s still in grade school.


Anonymous Blogging and Outing (Update)

There’s a bit of a kerfuffle rippling through the sphere today (which means, of course, that most of us are going to comment). Ed Whelan, who blogs over at NRO has outed Publius who blogs at Obsidian Wings.

There seem to be mixed feelings as to whether what Whelan did is “ethical” or not. In terms of ethics, we’re essentially talking about right and wrong. Is it right or wrong to reveal the name of an anonymous blogger?

And the answer?

Well, it depends. It depends on what action by the anonymous blogger might drive such a decision by another blogger. I’m sure if I thought long and hard enough I could come up with a few that I think would justify doing so. But one of them wouldn’t be because some blogger had been “biting at my ankles in recent months.”

I’m sorry but that comes with the territory of blogging.

Heat. Kitchen. Either grow a thick skin or quit blogging.

If you are going to write and post publicly, and if you have any prominence whatsoever, someone is going to bite at your ankles. But that certainly isn’t a good reason to out someone who, for whatever reason they may have, has chosen to remain anonymous by using a pseudonym.

Oh sure, you can flog him or her for not having the gonads to use their real name and come out from behind the screen and stand by what they say (and that has some validity as an argument), but you don’t just decide you have the right to violate that person’s privacy because you’re annoyed.

For years I was simply “McQ” on the net and the blog for various and sundry privacy reasons. Certainly there were those who knew who I was, but they too respected my decision to maintain my anonymity. And that included people I annoyed on a regular basis. The decision to use my real name was mine and mine alone. As it so happens, I decided that if I wanted to be taken more seriously I should be willing to sign my work with my real name.

I find Whelan’s outing of Publius to be very bad form -unethical- especially for the reason given. If I had a nickel for every anonymous ankle biter I’ve endured for years, I’d be retired. The trick in dealing with them is not to do something as juvenile and “ethics challenged” as violating their privacy, but instead by making tight and considered arguments which leave them little room for rational criticism. At that point they usually do one of two things – go irrational and begin the inevitable descent into ad hominum attacks or go away.

What Whelan just did instead was create a martyr and become the bad guy.   And his poor judgment in this case ends up hurting his own credibility while adding at least sympathetic weight to his antagonists arguments.

Many people on the internet want anonymity for a variety of reasons. Certainly some abuse it. But the unspoken rule of netiquete is you don’t reveal another’s private information publicly over some silly disagreement – ever. Whelan did exactly that and for that act, deserves all the condemnation he’s now receiving.

UPDATE: Whelan is obviously unfamiliar with the First Law of Holes:

A blogger may choose to blog under a pseudonym for any of various self-serving reasons, from the compelling (e.g., genuine concerns about personal safety) to the respectable to the base. But setting aside the extraordinary circumstances in which the reason to use a pseudonym would be compelling, I don’t see why anyone else has any obligation to respect the blogger’s self-serving decision. And I certainly don’t see why someone who has been smeared by the blogger and frequently had his positions and arguments misrepresented should be expected to do so.

Of course the desire for privacy is always “self-serving”. Why that is a justification for outing someone remains a mystery. Whelan, however, thinks he has the right to be the sole arbiter of what is or isn’t a “compelling” reason.

Few reasonable people are going to buy into that bit of illogic. If, as Whelan admits, a person can have a compelling reason for privacy, where does someone like Whelan derive the right to determine it isn’t compelling enough?


Twitters Moved

You may have  noticed that the twitter posts about the daily economic stats are gone.  They have been moved over to the sidebar, under the add banners.

This will give me the ability to provide the ongoing econ updates via my phone–just as I am posting this–while keeping the main blog section untouched.

This should be a solution that pleases everyone.