This article by Tom Henderson is so spot on, so I wanted to share it with you today. This is the part that scares me about the government: both sides seem to have forgotten about the importance of free markets. The government is not here to help, they are here to control. See what you think. -Greg
TOM’s ECONOMIC OBSERVATION: Trump, Republicans and Obamacare
by Tom Henderson
Many of you have requested that I comment on what I expect economically from the Trump presidency. Since he has just started, I would just be just another pundit if I speculated.
However, it appears one of the first items on the Republican agenda is Obamacare, which encompasses several economic principles and applies not only to Obamacare, but to Trump and the Republicans’ economic game plan in general.
We are hearing the same ole mantra from the Democrats that “Health care is a right, not a privilege.” What is more disturbing is nobody from the Republican side is challenging this premise. Instead, the Republicans are coming up with their own “plan” to provide health care that is better than Obamacare. By not challenging the major premise that health care is a right, the Republicans are in essence accepting this premise. The only difference is the Republicans believe their plan is better because they have “good intentions.”
Stating that health care is a right overlooks the primary axiom of a free society: each individual is the owner of his/her life, and no government body has the right to lay claim to it. What necessarily follows is the question; “Does my misfortune or hardship give me the right to lay claim to another’s life to support me?”
If you accept the axiom that no one can lay claim to another’s life, then the answer to this question is; “NO!!” Does it then not follow that health care is not a right?
When asking if anything is a right, including health care, we must first ask the question; to be provided by whom, and at whose expense?
If the answer is to force a third party to provide and/or pay for a good or service, then it is therefore not a right, but merely another form of wealth redistribution.
By forcing another to pay for ‘my right’, I am saying, “I need health care, shelter, food, and clothing, and YOU are responsible for providing it to me. If you disagree, you are heartless and mean spirited.”
What do we call a system based on one group being forced to pay for goods or services of another group? Wealth redistribution. Obamacare is another form of wealth redistribution, which is why it is failing.
The Republicans do not contest that health care is a right in favor of asserting that health care is a commodity just like food, housing and transportation, and as such will comply to the laws of supply and demand, as well as a price system. When a price system is distorted, the wrong signals are given to the market (you and me), which results in undesirable consequences.
There is no industry more regulated and controlled by government and organizations than the medical industry from the licensing of medical schools to the availability and price of drugs. The medical industry is not governed by free market principles, but rather by artificial forces of government regulations.
The regulation of the medical industry was not introduced to protect the public, as is the reason for all government agencies, but rather to limit the supply of doctors because in the view of at the time, they were not getting paid enough and formed the American Medical Association.
The AMA lobbied heavily to control medical schools, and therefore the medical industry. Once the AMA got control of the medical system, it did not take long for medical schools which did not teach giving drugs to be deemed unworthy, and likewise, the pharmaceutical companies to strongly influence prices and what is taught in medical schools.
Rather than return the medical industry to free markets, the Republicans seem to perpetuate the myth that health care is a right, they believe they have a better plan than the Democrats to make the health care system functional, because the Republicans have “good intentions”.
Obamacare is imploding, not because it was an idea of Democrats, but rather because Obamacare based on redistribution of wealth, which violates the free market principles of the laws of supply and demand, no matter how much “we care.”
So now the debates begin as to who has the better plan based on false economic assumptions that a service is a right. Politicians from both parties believe they can tinker with the laws of supply and demand and not have undesirable consequences.
A good example is Great Britain’s National Health Service, NHS, which many tout as the hallmark of medical care. However, the NHS is having financial problems which is resulting from everything from hospitals being shut down and not enough beds, to the Red Cross having to provide ambulance service. Unfortunately, both Republicans and Trump believe their good intentions will override economic laws. However, in the long run, reality will always win.
The Republicans might come up with plan which is “better” in the short run, but in the long run, it is still a plan based on politicians distorted view of reality, that health care is a right, rather than to acknowledge health care is a service and as such is governed by the laws of supply and demand, not political dogma from either side. When the laws of supply and demand are distorted, in the long run good things do not happen.
Conclusion: Healthcare is not a right, but rather a commodity, just as food, shelter, clothing and transportation. As such, healthcare is subject to economic laws. If we want our medical system to provide care in the most efficient and most economic method, we need to discuss returning the medical industry to free markets, and demolish the medical monopoly of the AMA and pharmaceutical companies.
Having a “better” plan because of good intentions will have the same effect as having a plan based on “caring.” At some point the plan will unravel. However, not challenging the concept that healthcare is a right only shows how politicians believe they can actually provide goods and services. Sadly, “to be provided by whom and at whose expense” will not be discussed.
Tom Henderson /a.k.a. THE NOTE PROFESSOR
Copyright © H&P Capital Investments LLC All rights reserved