Healthcare isn’t a marketplace

A great summation exhorting us to stop using the term “marketplace” to describe healthcare.

The key point and question that the author goes on to answer is:

A market is a place where buyers and sellers, functioning as independent agents in pursuit of their self interest, meet to negotiate a mutually agreeable exchange of money for products/services.  At Wharton, they taught us, furthermore, that an efficient market has three basic qualities: A critical mass of buyers and sellers, low transaction fees, and information transparency between buyers and sellers.   Do either of those two scenarios remind you of the American healthcare system?

The rest of the post is succinct and on point.

What freedom entails: facing the good and the bad consequences of our decisions

For men and women to be free from paternalistic domination from others and free to make our own choices necessarily means that we are in turn subjected to the vicissitudes and the consequences, for better or for worse, of those decisions. It is a fundamental concept that for us to remain free, we must not in turn be “protected” by government from the downside risk of flawed choices or bad luck. It was in fact this form of “protection” that for centuries kept peasants under the feudal domination of their class superiors – the knights, earls, and dukes under which they served and whom they paid exorbitant rents to. Predictably, famine only ever struck the peasants when harvests failed, while nobles and priests always maintained a relatively bountiful diet. Ostensibly, this was the price to be paid for protection by the lords of the castle and his soldiers and mercenaries. The reality was that for most peasants throughout the ages, the only real danger to their lives was in fact the deprivations of the lords supposedly protecting them.

Alas, for centuries and the better part of human history, this system kept a stable class of hereditary beneficiaries in control of a never growing and largely agrarian-based economic pie. People lived consistently on the modern equivalent of $3 a day and under a Malthusian system in which population growth led to a decrease in individual agrarian and artisanal wages, wages which only rose again the next time a plague wiped out swaths of the population and the supply of labor.  On that note, this never growing economic pie also led to no real advancements in science and medicine, and those frequent plagues (thought for centuries to arise out of miasmas in the sky that needed to be avoided by clustering indoors and blood that needed to be let out of the body – an ignorantly fatal combination) killed noble and peasant alike. In the words of Thomas Hobbes, life for the vast majority of our ancestors’ histories was lived in “continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.” Shakespeare poetically wrote of death as, “the arbitrator of despairs, just death, kind umpire of men’s miseries…” Let me pause for a moment and express my extreme gratitude to have been born into the relative bounty and ease of modern-day American life. Whatever our problems, they pale in comparison to the way humanity lived for thousands of years; well into the 1800s most people lived in these Hobbesian conditions. Many millions of people on earth still reside in dark removes of similar medieval conditions in places such as Somalia and Afghanistan.

Deirdre McCloskey, in her remarkable book, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, makes the above points eloquently and with her unique ability to draw upon an impressive panoply of analogies, anecdotes, and historic intellectual luminaries’ thoughts and writings to buttress her points. I highly recommend the book and credit it with much of my facts (i.e. the $3 a day factoid, Malthus’ theories). In direct contrast to the idea that we as individuals need protection and on the topic of the reality and essential connection between freedom and potential loss, she observes:

“The ideas of equality led to other social and political movements not uniformly adorable. Hannah Arendt remarked in 1951 that ‘equality of condition…is among the greatest and most uncertain ventures of modern mankind.’ Alexis de Tocqueville had said much the same a century earlier. And Scottish equality has a harsh, even tragic side. It entails equal reward for equal merit in a marketplace in which others, by freedom of contract, can also compete. As John Stuart Mill put it in On Liberty, ‘Society admits no right, either legal or moral, in the disappointed competitors to immunity from this kind of suffering; and feels called on to interfere only when means of success have been employed which it is contrary to the general interest to permit – namely, fraud or treachery, or force.’ Yet in the real world, unhappily, if the poor are to be raised up, there is no magic alternative to such competition. An ill-advised and undercapitalized pet store, into which the owner pours his soul, goes under. In the same neighborhood a little independent office for immediate health care opens half a block from a branch of the largest hospital chain in Chicago, and seems doomed to fail the test of voluntary trade. Although the testing of business ideas in voluntary trade is obviously necessary for betterment of the economy (as it is too by non-monetary tests for betterment in art and sport and science and scholarship), such failures are deeply sad if you have the slightest sympathy for human projects, or for humans. But at least the pet store, the clinic, the Edsel, Woolworth’s, Polaroid, and Pan American Airlines face the same democratic test by trade: Do customers keep coming forward voluntarily? Does real income rise?
We could all by state compulsion backed by the monopoly of violence remain in the same jobs as our ancestors, perpetually “protected,” though at $3 a day. Or, with taxes taken by additional state compulsion, we could subsidize new activities without regard to a test by voluntary trade, “creating jobs” as the anti-economic rhetoric has it. Aside even from their immediate effect of making national income lower than it could have been, perpetually, such ever-popular plans – never mind the objectionable character of the violent compulsion they require – seldom work in the long run for the welfare of the poor, or the rest of us. In view of the way a government of imperfect people actually behaves in practice, job “protection” and job “creation” often fail to achieve their gentle, generous purposes. The protections and the creations get diverted to favorites. Laws requiring minority or female businesses to be hired, for example, tend to yield phony businesses run in fact by male whites. In a society run by male whites or inherited lords or clan members or Communist Party officials, or even by voters not restricted by inconvenient voting times and picture IDs, the unequal and involuntary rewards generated by sidestepping the test of trade are seized by the privileged. The privileged are good at that.”

 The implicit conclusion is that while there are unfortunate consequences of freedom and a free market, the alternative is worse. The plea, as McCloskey states in her book’s foreword, is this:  “Perhaps you yourself still believe in nationalism or socialism or proliferating regulation. And perhaps you are in the grip of pessimism about growth or consumerism or the environment or inequality. Please, for the good of the wretched of the earth, reconsider.”