Ignoring The Blue Whale In The Room

One of the unassailable facts of social life is that centrally directed economies never out-perform economies that organize collective activity through competitive markets. The “natural experiments” of the last century, some of which continue today (e.g., see the experiment on the Korean peninsula), easily prove the superiority of competition and markets. On the basis of this evidence a call for central planning is equivalent to a call for economic stagnation and decline.

So what do these experiments mean for healthcare in the U.S.? Well, the evidence suggests we pursue reform that creates more genuinely competitive healthcare markets. Yet, liberal healthcare policy wonks, who claim to be “empirically driven,” continue to call for centrally directed healthcare. For example, this post at The Determined Statist (aka The Incidental Economist) contains a list of seventeen statements that “most health economists would agree with about the economics of health care.” None of the seventeen “facts” cited by the blog even address the issue of competition vs. central planning.*

Never mind ignoring the elephant in the room, this is more like ignoring a blue whale in the room. Liberal wonks often compare European healthcare to that in the U.S., insisting that Europe outperforms America on both quality and prices. Could Europe be the source of liberal confusion? Perhaps the wonks reasoning is two-fold:  (a) European healthcare and economies are great and (b) healthcare in Europe is centrally directed (on the country level). So why fear centrally directed healthcare in this country? Maybe liberals even believe the European healthcare experience nullifies the natural experiments.

But is European healthcare really superior? Christopher Conover, a healthcare policy expert at Duke University, would say no. In a response to Steven Brill’s Time magazine cover article, Conover pointed out that, when properly analyzed, spending on healthcare in the U.S. is exactly where we would expect it to be, given our higher incomes, and that quality in the U.S. is higher than in Europe. Not surprisingly, liberals tend not to  link to many of Conover’s posts that contradict their worldview.

The liberal wonks not only exaggerate European results in healthcare, but they also ig-nore the general economic situation in Europe. The 25% unemployment rate in places like Greece and Spain combined with widespread stagnation elsewhere suggests that the social democracies and their welfare states are falling apart before our eyes. Apparently, even big government democracies can’t overcome the inherently destructive nature of centrally directed economies. The European experience doesn’t justify the wonk’s love of big government.

Although European healthcare doesn’t generally rely on markets and competition, it is decentralized in one respect:  the E.U. doesn’t dictate healthcare to its member countries. Most people go to doctors and hospitals that are located near where they live, so health-care is a local activity for which local government is appropriate, when necessary. We call this “self-government” and the Europeans have the right idea, although in most countries they ultimately discredit themselves by rejecting markets and competition.

The European equivalent in the U.S. would be for the states to regulate healthcare, but don’t expect the liberal wonks to support a genuine federalism. Rather, their preference is a system set to place 315 million people under the thumb of a single authority. The liberal wonks seem congenitally unable to grasp the concepts of freedom and self-government. It’s almost as if Dostoevsky’s Grand Inquisitor and his minions are editing the liberal wonk blogs.

Liberals reject markets and competition in healthcare and that fact alone explains the inadequacy of the liberal view. Yet the wonks continue to pontificate about all kinds of healthcare details that in the overall scheme of things are truly irrelevant. They remind me of the medieval scholars who debated how many angels can dance on the head of a pin, except that the liberal exercise is not quite so benign.

* When I suggested they add the truth about competition to the list, not a single reader or contributor responded.

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