Comment on The Belmont Club "The Miracle of the Loaves and Fishes"

Robert Reich has half or maybe a third of the problem solved. venividivici is correct that Reich's assumption that only government and not the market can provide cost controls is unwarranted.

Reich sees the costs in solving problems, including the opportunity costs. For a person on the Left that is a major revelation. He does not understand how wealth is created or how that can help solve the problems. If the economy was unchained then there would be wealth to provide improved care for the elderly. The Left, including Reich, think that increasing wealth automatically increases costs, especially externalities like pollution. This does not come from Marxism, it has piggybacked on and may come from the Romantic tradition that was opposed to Capitalism.

In a soundly managed market economy government would punish corruption, competition would reduce costs and innovation would increase wealth.

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Change happens at an interface. Inside the traditional envelope of activity is where things are tested and reliable or at least predictable. Change is by definition "cutting edge" and therefor beyond general actuarial rationality. That is why in a healthy market economy a small number of wealthy people are willing to pay for high risk innovative treatments. The changes that they pay for either fail to work, to bad for the dead old rich guy, or result in improvements that improve service at a lower ongoing cost for everyone.

This model applies to all forms of technical innovation. Automotive engineering benefited from enthusiasts and race car fans. The internet benefited from the expenditures of sexual adventurers and foolish rich people willing to pay an outrageous amount for tobacco created the trade networks that created America. None of these innovations were justifiable as an economic good or a moral good, if the time static interests of the whole society are used to justify the expenses that individuals were willing to incur.

Reich and Zeke Emanuel evaluating whether a treatment for Grandma is rational based on what the society as a whole could do with the money misses the point. It shouldn't be society that decides but Grandma and her family. It shouldn't be society that pays but Grandma and her family.

Young liberals always defend seatbelt laws by pointing out that people foolish enough not to use them get injured and then "we all have to pay." If I respond by asking "Why?" they accuse me of wanting to shut down the municipal hospitals and the Public Health Service. Then they laugh like they were remembering a particularly fun Professor. There is no connection between the existence of a public hospital and the imposition of a control over private conduct, and if there was I would prefer the freedom of private conduct and hope that if I needed it I could benefit from the freely offered charity of my neighbors. Of course the same young people who feel entitled to sit in judgement on the conduct of others will engage in every self indulgent form of risky behavior that offers itself to them. If I am driving the car you will use your seatbelt, because I told you to.

Oct 14, 2009 - 9:37 pm