The myth of “free” health care
Bill Anderson posting at the Lew Rockwell Blog spotlights one of modern America’s most persistent medical economic myths:
It seems that [Nobel Prize-winning economist Paul] Krugman really does believe that government magically provides free health care, and even though doctors and other medical personnel continue to be paid, apparently such a system has no opportunity cost. Granted, he has written elsewhere that a “universal” system would be less costly than what we have now because profits are “costs” to the economic system. A system that does not have profit by definition will be less costly, and that everything else will operate just as it did before the nationalization. (Yep, he really seems to believe this nonsense.)
A few quotes from chapter 6 of economist Thomas Sowell’s fantastic book Basic Economics: A Citizen’s Guide to the Economy will show where Mr. Krugman has gone astray:
Socialists have lon regarded profits as simply “overcharge,” as Fabian socialist George Bernard Shaw called it, or a “surplus value” as Karl Marx called it. Only after socialism went from being a theory to being an actual economic system in various countries did it become painfully apparent that people in socialist countries had a harder time trying to afford things than most people in capitalists countries…
The hope for profits and the threat of losses is what forces a business owner in a capitalist economy to produce at the lowest cost and sell what the customers are most willing to pay for. In the absence of these pressures, those who manage enterprises under socialism have far less incentive to be as efficient as possible under given conditions…
In short, while capitalism has a visible cost — profit — that does not exist under socialism, socialism has an invisible cost — inefficiency — that gets weeded out by losses and bankruptcy under capitalism.
It is a constant source of amazement how large a subset of the population believes that health care — a highly visible and pervasive profession involving millions of extensively trained people and much advanced technology, and costing at present well over $2 trillion a year — can somehow be made totally free of charge by government decree.
As American humorist James Thurber once quipped, “You can fool too many of the people too much of the time.”
This entry was posted on December 2, 2008 at 11:47 pm and is filed under Economics of Health Care with tags Capitalism, Economics, Health Care, Socialized Medicine. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.