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Sunday, June 3, 2018

Post #3690 Some Things Young Voters Don't Understand

I used to be a young voter, even a socially liberal (but fiscally conservative) one. [NB: We libertarians or classical liberals dispute the use of "liberal" to describe pro-State leftists. There is nothing "liberal" about enforcing majoritarian decisions at the point of a gun.] One of the tricks leftist politicians use is to select idealistic names for their corrupt-bargain bills, like the  oxymoron "Affordable Care Act". So idealist young adults actually thought they were supporting "affordable care";  they didn't have a clue that the real problem really stemmed from bad government policies.  During WWII, government imposed economically illiterate wage and price controls. So what do you do with you run into labor shortages during the war which would normally push wages higher? Well, FDR and his minions resorted to a conceptual gimmick which would allow them to pay lip service to a wage cap. The real labor cost was worker compensation: wages and benefits. Now of course if you increase compensation, a real cost, how do you keep prices down? Well, by offsetting the cost of that additional compensation, e.g., tax exemptions/deductions. (Of course, lower margins mean lower profits and hence taxes anyway.)

This was just the start of federal intervention, including spending and regulations, Medicaid, and Medicare. Not to mention traditional heath regulation by the states, with various high-cost mandates in effect constituting barriers to entry and thus restricting competition.

If you look at healthcare costs have been contained over the past 60 years or so under increased federal intervention, you are in a state of denial; the industry has been inflation-bound, unlike other segments (e.g., less-regulated high tech). And yet, the response to sector issues is that the free market is the problem?  Every government regulation, every government string, every government cost diminishes market competition and cost-saving innovation. In short, government is part of the problem, not the solution.

What young "liberals" don't understand is we free market people don't disagree with the concept of "affordable care": we just know that the market is the key to affordable health care, just like for other sectors. Government simply gets in the way, e.g., government occupational licensing,  FDA drug approvals, e.g., of generics, paperwork, cost caps (when costs can vary locally or regionally).

To give a small example. I've had a thyroid condition where dosage depends on the results of a series of blood tests. Quite often blood tests may need to be taken at approved (not available) lab centers. (To give a similar issue, consider drug tests.  Because of a car repair, I had to get taxis to and from a specific location, even though I was in walking distance of a local walk-in clinic.) I've seen costs of lab center tests range literally in the hundreds of dollars. When I was unemployed during the Great Recession and had to pay out of pocket, I discovered there was a nominal fee to have one of the nurses draw my blood at the doctor offices and a discounted price for lab test analysis from the doctor's vendor; it was something like $4 for the blood sample and $25 for the analysis, much lower than the costs I've seen through the years. (In one case in the 90's, I got sent an invoice for over $300 when they wrongly thought I had left insurance coverage.)

I could give lots of other examples. For example, there was a period of time I had a doctor in the north Baltimore suburbs. He had an incentive to require office visits just to review routine blood test results. (I ended up showing late to just one such visit, and he dropped me as a patient.) There was no medical reason for me to visit the doctor's office; I could easily be contacted by phone or email about any routine change in prescription. From my standpoint, I had to find a way to rearrange my work schedule and battle heavy traffic to get to his office.

For the most part, insurance has morphed from its real intent--shielding people from relatively rare, costly catastrophic disease incidents, like cancer, to basically full medical costs, so even things like personal expenses, like birth control, are covered. The risk of pregnancy is not like a rare disease; it's part of the normal young adult condition while engaging in active sexual intercourse behavior.

Think of how we handle auto insurance, largely not (except for coverage mandates for driving privileges) handled by government. For the most part, you are ensuring against relatively rare risks of catastrophic accidents (losing your car), personal injury (to pedestrians or other drivers), or damage to public or private property. You are NOT insured against normal maintenance or operational expenses, like gas, oil changes, various part failures, replacements or repairs (changing your battery, wiper blades, brake work, etc.) Basically, you have the incentive to minimize these expenses on your own from competition among car care centers, gas stations, auto part stores (e.g., do your own oil changes). (I've been changing my own wiper blades, carried by WalMart.). Imagine of government tried to replace or regulate  all of these things; government itself would have to build its own bureaucracy funded by what?  Not that government is able to improve on the decisions made by competing suppliers and consumers from among more than 320M people.

Once you consider how the auto industry can operate with a relatively lighter government footprint, why is the health care industry any different? What does a remote bureaucracy know about the nuances of local economy? The reality is in a mixed economy like ours, bigger suppliers co-opt the government against nimbler smaller competitors and the process of cost-crumbling creative destruction. The government regulatory regime (essentially an implicit $2T compliance tax on the national economy) largely constrains smaller competitors and undercuts price competition in the marketplace.

This essay was motivated by a tweet by some perplexed progressive during the quixotic Illinois legislature's ratification of the ERA amendment 36 years after the congressional expiration date. He looked at the high percentage of Republican votes against ratification and in frustration, "How can you vote against equal rights?"

So here's the point: equal rights are already natural and God-given. The Constitution already guarantees equal protection under the law. Women already earn the majority of college degrees conferred overall (there are some distributional nuances, e.g., in STEM fields), a factor correlating with higher career income. I have seen studies where single young women actually earn more than their gender counterparts. In many cases, observed differences in pay by gender are explained statistically by chosen profession (i.e., supply and demand), hours worked and/or experience. Men often choose higher-pay, higher-risk occupations like offshore oil rig work, logging, etc.

Even if you suppose somehow there was a vast male conspiracy against fair pay for women, the reality is the free labor market would allow competition (including women-owned businesses) to arbitrage any such differences. And government markets can't discriminate by the Constitution.

The likelihood is that a nebulous, pushing-on-a-string amendment would likely introduce economic uncertainty, incite countless ideologically-motivated, baseless, costly lawsuits, and raise compliance costs, all with little, if any tangible "gender justice" benefit. In fact, widespread free press, social media is far more effective in exposing allegedly private sector discrimination than some feckless government bureaucracy and its costs. (Just look at universities with extraordinary high cost "diversity" offices, unmarketable gender studies and multicultural programs, etc. How in hell does that contribute on a cost-benefit basis? Are we to believe that 5 decades after the women's lib movement began, high-school male graduates, with mothers, aunts, and older sisters in the marketplace and a culture heavily promoting feminist values, are all basically misogynists? What is the basis for that?  Three of my 4 younger sisters are working professionals; I've had a number of female supervisors over my career. This is all pushing-on-a-string nonsense.

We libertarians (and I don't presume to speak for all) don't oppose equal rights; it's part of our classical liberal roots. It's not the concept but the instrument. We believe a free market along with unfettered free expression is far more efficient and effective than a government elite. We think the government is already oversized, and adding to government conferred so-called "positive rights" mandate is unnecessarily opening up a Pandora's box of government intervention. We like a small Constitution, which better embodies the principle of the rule of law versus an unknowable universe of government regulations, where any citizen violates some rule and can be arbitrarily arrested by politically motivated officials. It's bad enough that the Constitution has allowed a bloated government that consumes around 40% of national income, largely on matters beyond its level of competence.