Sunday, November 15, 2009

Trial and Error

This New York Times editorial about health care legislation points up some fundamental differences between the statist point of view, which advocates big government, and the libertarian concept, which would limit government to its essential functions.

The editors' main point is that:

The fundamental fix — reshaping how care is delivered and how doctors are paid in a wasteful, dysfunctional system — is likely to be achieved only through trial and error and incremental gains.

The godfather of American statists, Franklin Roosevelt, famously advocated the trial-and-error approach, with the following words:

It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.

But that method ignores the Law of Unintended Consequences.

When government acts with the intent of doing some good thing, other things tend to flow from that action, and they often have effects that are contradictory to that good intent.

For example, President Richard Nixon implemented price controls on gasoline in the early 1970s, with the intent of making it easier for people to buy gasoline, by keeping it affordable. But, when the market price rose above the level of the government-imposed maximum, the laws of supply and demand imposed gasoline shortages, and we started waiting in line at gas stations. The controls that were supposed to make it easier to buy gasoline instead made it more difficult.

When government follows Roosevelt's admonition to "above all, try something", that something often does more harm than good. And when the federal government tries it, the harm is perpetrated on a large scale.

That's why I disagree with the Times on the advisability of experimenting on the American health care system.

Also, when big government initiatives cause problems in that way, the statists often propose further big government programs that they think will alleviate those problems.

I explained here how government policy, first wartime price controls, and then tax policy, created incentives for employers to pay for their employees' health care, in place of cash compensation to those employees, who could then spend their own money.

The "wasteful, dysfunctional system" that the Times decries was largely created by consumers spending other people's money (or at least it seems that way to them). The Times wants to correct the problems that government has produced, by giving us more of the same. I fail to see the logic in that.

1 comment:

Anonymous said...

This morning I took the bus and the metro into work. It had been several months since I'd used public transportation and was surprised to see that my bus fare into the city had gone from $3.00 to $7.00.

That doubling of the fare was accomplished by my county government.

Now, my experiment in public transportation completed I will free myself of gov't tyranny, and high bus fares, and return to my auto.

What my experience highlights is that government can be inefficient. Government can rais rates. And government sure as hell can raise taxes.

Once health care is taken away from individuals and we are made wards of the state prices will climb as well taxes. We, of course, will pay the fare.

And, we won't be able to get off the bus.