US Federal Government

[Vi-Zer0Skill]

Please critique my plan to balance the US federal government's budget. Despite my cynicism regarding the extent of corporate influence at this level of government, I think even many Democrats agree this deficit spending is a crisis so I'm cautiously optimistic this might get addressed.



The American federal government has overspent by an average of $860 billion (2012 US$) in each of the past 12 years. That’s nearly 2/3rds of the entire federal debt (currently $16 trillion) accrued in the past decade! I really want to see Congress and President Obama work on balancing the federal budget. I’ve outlined the best ideas I’ve heard on how to do this below:


Primary Production/Capital Gains Tax Revenue Increases: $250 billion

A flat 75% tax rate on the operating income of all companies involved in primary production (e.g. mining, oil and natural gas extraction, modeled after the Norwegian system) in the U.S. would generate at least $100 billion in additional annual tax revenue. This estimate takes into consideration a considerable decrease in consumption of gasoline and other petroleum based products as the higher price of producing these goods equates to smaller quantities making it to market.

An increase from 15% to 35% in the capital gains tax rate would easily generate an additional $150 billion in annual taxes.

There are a myriad of economic benefits are associated raising the capital gains tax rate. For one, it would likely lower the average interest rate the federal government pays on its debt by drawing some investors away from the stock market and towards Treasury bills. This would increase demand for shares in government debt, which would lower the interest rate the government would have to offer to attract customers.

I was astonished to learn that reductions in the capital gains tax rate (lowered from 35% to 15% since 1980) have been by far the biggest contributor increases in economic inequality in the United States.

Income Tax Reform: $60 billion

We also need to reduce tax credits and deductions for the top income earners. The effective tax rate for the top 1% of income earners was 23% on a group income of roughly $400 billion. If we raised the effective tax rate from 23% to 25%, it would generate $40 billion in new annual tax revenue.

Income earners in the top 2-5% pay an effective tax rate of 21% on a group income of roughly $200 billion. If we raised the effective tax rate from 21% to 23%, it would generate an additional $20 billion in annual tax revenue.

These tax revenue projections assume these very well paid workers wouldn’t be discouraged from working as hard by 10% increases in their federal taxes. I think this can be done if this group can be persuaded to trust the federal government with a greater share of their income. This trust can best be earned by showing a commitment to reduce spending.

Tax revenue collected from top income earners will also increase as the economy continues to recover from the Great Recession.

Current Non Defense/Entitlement Programs Budget: $1,300 billion
Goal: save $15 billion (1.1% of total budget)

Unlike our latest Congress, I’d leave the IRS, FAA, EPA, and related regulatory programs out of budget reduction negotiations. The IRS and FAA generate at least as much in tax revenue and economic activity as they require for their operation – I’ve no idea why a thinking person would subjugate them to the proverbial axe.

The EPA disproportionately benefits the poor and unborn generations, groups that are vastly underrepresented by our current government, so I wouldn’t disrupt its operation either.

However, I would exclude agribusinesses from the federal crop insurance program, which cost almost $15 billion a year to run in 2012. The US Postal Service regularly runs operating deficits in the billions; I would also work to reduce government involvement in the postal industry.

Current Defense Budget: $650 billion
Goal: save $150 billion (by 2023)

This budget line is the toughest because a lot of this government spending supports low and middle class jobs in American communities. Then there are the strategic implications of a smaller military which I won’t pretend to understand. Still, I would follow the recommendation of the Budget Control Act of 2011 that proposed a gradual (over 8-10 years) reduction in funding for the Department of Defense that eventually reduced their budget by 23%.

Current Social Security Program Budget: $800 billion
Goal: save $60 billion

When it comes to Social Security, the biggest policy change that can be made to balance the budget is to increase the retirement age. It would be imprudent to critically reduce the size of the benefit checks for retirees as this program enables older workers an attractive alternative to participating in the work force, thus freeing up jobs for younger workers.

The current retirement age is 65 or 67 – depending on when you were born – and the average life expectancy is 78 (higher for women, lower for men). There’s also the option to enter early retirement at age 62 where you can claim 75% of the full benefits. Also, 30% of Social Security recipients are not retirees, but disabled persons and widowers.

If the retirement age for Baby Boomers were raised from 67 to 70 (I would leave the benefits for older retirees untouched as most of them have already exited the workforce), the average number of years a recipient could claim full retirement benefits would reduce from 11 to 8. Assuming life expectancy doesn’t change much and those in the 67-70 age group would still collect 75% of full benefits, expenditures still get reduced by $60 billion per year.

Current Medicare/Medica Budget: $700 billion
Goal: save $350 billion

Universal healthcare should be a benefit of being an American citizen. Unfortunately, American society seems adamant that they have their cake (and eat someone else’s too). The NHS in Great Britain is a fantastic model I would love to see the U.S. emulate. The per capita cost for healthcare in the UK is $2,500. In the U.S.: $6,000.

Despite the dramatic difference in cost, America and the UK are remarkably similar in their rates of obesity, alcohol, and cigarette consumption. The biggest difference is clearly in the efficiency with which the single payer system dispenses healthcare services.

American society needs to live healthier, but also accept that healthcare is a trillion dollar industry and that financial resources are not infinite. I do not find healthcare rationing to be as morally repugnant as burdening future generations with an unmanageable level of debt.

[wufwugy]

NGDP level targeting and UHC, and watch as the debt becomes a non-issue

Over the years, ACA will bring us closer to a healthy healthcare system, but probably still a few percentage points shy of the performance of other countries. The system is entrenched in its negative ways and it will take a long time to fix that, but enough competition and ability to negotiate costs will eventually do that.

NGDP level targeting is less probable a policy to be adapted because the Fed, economics profession, and populace believe too much in false ideas like the need for hard money or bubble avoidance. It does appear that the Fed is opening up a little more to understanding their need to encourage a perpetual, steady growth level no matter what else the economy does. The Fed listening to Market Monetarists like Scott Sumner or even Paul Krugman's monetary policies would do more for the deficit than anything else.

The debt issue isn't much other than an under performing economy and healthcare industry cartel

[wufwugy]

I should add that the debt and deficit are not currently issues. If they were, it would show by the federal government not being able to borrow cheaply. But instead of that being the case, it borrows more cheaply than has happened in a very long time.

The problem is the deficit trend over decades due to ballooning healthcare costs. That is fixed, not by reforming taxes or spending, but by reforming healthcare specifically. Most of the fix is involved with things like universal coverage and price negotiations, which are two new things that are coming about from the ACA. We will have to wait to see how strong they end up being, though

The reason the debt and deficit appears to be a problem right now is twofold. 1) A bad economy makes it pronounced and 2) significant factions of the GOP care only about power and are gutting the economy as much as they can so they can blame the President. The latter is something that has been revealed repeatedly on the internet, but the former is not. The only real solution to the bad economy is an evasion of shocks. Had the Federal Reserve not had their heads up their asses, they would have easily countered the tight money created by a reduction in home sales, and the entire financial crisis would have been avoided. Not only was the housing bubble not a problem, but it wasn't even a bubble the way people think. All sorts of "bubbles" exist all over the economy and have for a really long time, but they don't "pop" because liquidity is steady. The Federal Reserve has one and only one thing to learn from the financial collapse, and that is that the only reason why soft money works is because it can be manipulated in order to meet steady demands. Before soft money, crises were frequent and unavoidable, and all the financial crisis of 08 really was about was the Fed treating monetary policy as if it was hard, thus they allowed for drastic tightening that cascaded into a complete collapse.

The great economic lesson of the 20th Century was that hard money fucks everything up, and the great economic lesson of the 21st Century should be that soft money can be inadvertently treated like hard money and still fuck everything up

[Renton]

I only skimmed your post, I'll read it more closely later. Most of your solutions are standard lib stuff, exception being the reforms to SS and Medicare which libs don't want to touch with a 50 foot pole.

The solutions to the budget are simple, but impossible given the incentive structures in place.

1) End the wars and close most of our military bases, thus firing the majority of those employed by the military, a major lobby.

2) End the drug war, thus firing tons of correctional officers and police, another major lobby.

3) Start privatizing shit. Education, energy, transportation, anything that can be handled by the free market.

4) While you are doing #3, auction off all the land and buildings that the government no longer needs, and use this huge windfall to pay off the debt.

5) Kill medicare. It's not an affordable program anymore.

6) Kill social security if you aren't gonna treat it like a trust fund. Pay everyone back the money they've put in so they can put it in an actual trust fund.

[Vi-Zer0Skill]

Thanks for the detailed responses wuf/Renton. I will have to read up more on NGDP level targeting to understand how that would work in practice.

Healthcare is the single biggest policy area that needs reform -- I am very curious to see how the ACA affects healthcare delivery and prices.

Renton, the best reasons I can think of to privatize a government service are to: 1) improve cost efficiency and 2) diffuse power.

I think Milton Friedman first suggested it and I would love to see a voucher system implemented for preschool-12th grade. Really the quality of education at this level can only go up in most communities in the US.

We already privatize energy resources don't we? Nationalizing oil resources leads to suboptimal production efficiency and, as you know, provides a breeding ground for the forces of cronyism.

I'll have to think more about how returning Social Security contributions to a private retirement savings would work in practice, but on the surface it seems like low income workers and those who spent the most time out of the labor force (either through laziness or their skills being rendered obsolete) would lose out massively.

Thanks again for giving me things to think about!

[boost]

Renton, have you figured out how privatizing transportation would work? Or are you just spewing spew to spew spew?

[kiwiMark]

buckle up, this ride is now departing

[Renton]

Not gonna derail the thread, just search youtube for "privatization of roads" for some cool lectures on the subject. Here's a wikipedia article: http://en.wikipedia.org/wiki/Free_market_road

[a500lbgorilla]

Renton,

It's easy to throw wrenches into things, and so I want to.

There is a growing concern about CREs ( http://www.health.state.mn.us/divs/i...cre/index.html ). They're super bugs that laugh in the face of our greatest antibiotics. And they're a big concern in the world today http://www.hispanicbusiness.com/2013..._hospitals.htm .

Dr. Tom Frieden, director of the CDC, called CRE a "nightmare bacteria" because of its high mortality rate, its resistance to nearly all antibiotics, and its ability to spread its drug resistance to other bacteria that otherwise would be vulnerable to vaccines.

The current logistics for dealing with them is to put the patients and the hospital itself on lock down. That's if you can identify them and their carriers. Sometimes people carry these superbugs and are a-symptomatic. But it's a losing strategy in that once the bugs get loose, containment becomes more difficult. And once containment fails, it fails for everyone.

Naturally one avenue of attack would be to develop superior antibiotics, but the economics of it are grim. No one knows the form of the next generation of antibiotics, and to develop them will shoulder an enormous upfront cost for a foreseeable lame payout. Someone stricken with a superbug will only take the new product for a few weeks and then never again.

With no free market payout to an enormous free market concern which requires scaling an expensive wall, how would the free market address this concern?


It's also easy to bolster positions that are already well established, and so I will.

http://www.npr.org/blogs/money/2013/...-is-doing-fine

Andrew Sullivan bucked the horrid ad-revenue model and found that people were willing to pay for content. Hoorah Capitalism! Quality over Click-ity.

[Renton]

I don't think that you can state that the economics of that are grim. It's really hard to know what markets have a grim outlook unless you are an speculator who deals with such risks and projections all the time. Speculators are extremely good at knowing where to invest and seeing very long term payoffs. I think the free market would do a far better job of coming up with that medicine than any government program. If people are getting afflicted with flesh eating apocalyptic bacteria, then I assure you rich white people are getting afflicted with flesh eating apocalyptic bacteria as well, and where there are rich white people there are investors. Government aided studies would be much more likely to become quagmire money pits since there is a poor incentive structure in place. They actually have a disincentive to come up with the fast cure because that means the project is over and the faucet is turned off.

It's hard to argue something like this without using broad stroke platitudes like lolo free market can handle it, competition etc etc, but it's true so I have to say it.

[a500lbgorilla]

Give it some time and mull it over. The problem falls into a class of rare, hugely expensive catastrophes like killer asteroids or super storms out of nowhere. And I'm very interested in how a devout free marketer would see them being tackled.

There's another thing that I'm interested in which is the logistics of transitioning to a purely free market without being exposed to corruption. Wherever anyone can get an edge in edge-wise they will, and that comes by way of greasing palms and tricking rubes. If we all agreed that the country needs to be privatized, how do we make it happen in a way that doesn't seed systemic advantages to those clever enough to position themselves well at the fore.

[a500lbgorilla]

I want to ask a very stupid question.

What is a speculator?

[Renton]

Well in this context I'm talking about people who manage risk for others by estimating the present value of something whose value is unclear. It could be a financial speculator, like someone playing the stock market, who's function is to absorb risk for other investors and increase the liquidity of a market. Or it could be a venture capitalist who decides whether it would be +ev to invest in someone's upstart business. Or in your medicine example it could be someone who advises investors on potential research projects based on his best estimate of the costs vs the possible benefits.

The other thing I think you are overlooking is charity. There will always be research into causes people are passionate about, and money will always flow into such causes without it being coerced from people by a government.

[boost]

Renton-- I am afraid you have been bamboozled.

You have based much of your arguments on the (obvious) falsehood that, at a minimum, monetary incentive is the strongest possible incentive, and frighteningly you seem to at times hold financial incentive up as if it is the only valid incentive.

Even if it were the case that financial incentives are the only true catalyst to forward progress, your analysis of the grant system is woefully flawed. If I get a grant to find out how many licks it takes to get to the tootsie roll center of a tootsie pop, and I drag my feet, someone else is going to come along, get a grant to do the same, start after me, finish before me, and insure that I have that much harder of a time getting a grant in the future.

I mean, seriously, are you under the impression that the teams of researchers made up of grad students working under a professor are dragging their feet to "keep the faucet turned on"?

You're letting your ideology cloud your view and bias your thoughts. You're brushing aside grant work in a flawed, simplistic and almost laughable manner because it doesn't fit into the worldview you've adopted. That's pretty lame.

[Jack Sawyer]

1) print mo' monies
2) ?????????
3) profit!


Renton,

There is no way that anything that has to do with education should ever be privatized. Ever. A for-profit (insert school type here) is such an abomination that whomever dreamt up the idea should be executed and then confined to Tartarus.

Privatizing utilities is an equally bad idea. See Bolivia, and then Quantum of Solace.

[Renton]

You have based much of your arguments on the (obvious) falsehood that, at a minimum, monetary incentive is the strongest possible incentive, and frighteningly you seem to at times hold financial incentive up as if it is the only valid incentive.

Monetary incentive exists one way or the other regardless of whether the government is the one doling out the money, the difference is that governments lack the accountability for such spending. Private individuals have to be accountable for their costs or they will go bankrupt. Do you not think that people who use government aid/grants for research are incentivized by those grants?

Even if it were the case that financial incentives are the only true catalyst to forward progress, your analysis of the grant system is woefully flawed. If I get a grant to find out how many licks it takes to get to the tootsie roll center of a tootsie pop, and I drag my feet, someone else is going to come along, get a grant to do the same, start after me, finish before me, and insure that I have that much harder of a time getting a grant in the future.

This is true, but less true than would be the case if the money was provided voluntary by individuals or corporations, who again, have to be held accountable for that money. The Wire and Treme illustrate quite well the problem of how government decides to allocate money and aid resources, despite David Simon being pretty much a liberal.

I mean, seriously, are you under the impression that the teams of researchers made up of grad students working under a professor are dragging their feet to "keep the faucet turned on"?

No, probably the researchers are as conscientious as one can be, given the sometimes warped incentive structure inherent in government aid. I'm more worried about a government's (who has basically no expertise on the intricacies of bacteriology) lack of ability to determine the value of what it's paying for, and thus, propensity to overpay on dead end projects, or underpay and prematurely cancel ones with promise.

I'm not saying its pure retard incompetence that leads governments to make mistakes like this, its actually quite natural for them to be so clueless on such esoteric subjects. The problem is that governments presume to know whats best in every situation, in a world rich with intricacy.

Renton-- I am afraid you have been bamboozled.

I mean, seriously,

You're letting your ideology cloud your view and bias your thoughts. You're brushing aside grant work in a flawed, simplistic and almost laughable manner because it doesn't fit into the worldview you've adopted. That's pretty lame.

Could you please stop arguing with me like I'm your 12 year old little brother? It's mildly infuriating.

[Renton]

1) print mo' monies
2) ?????????
3) profit!


Renton,

There is no way that anything that has to do with education should ever be privatized. Ever. A for-profit (insert school type here) is such an abomination that whomever dreamt up the idea should be executed and then confined to Tartarus.

Privatizing utilities is an equally bad idea. See Bolivia, and then Quantum of Solace.

I don't know much about bolivia but I imagine a third world country with private utilities has a lot of crony capitalism going on so I doubt that is a great example of privatization gone awry.

Your paragraph about education is annoying because it doesn't state any facts at all other than your opinion that for-profit enterprise is an abomination if that enterprise is a school. It might be true that privatizing education will result in lower quality education, although I doubt that. That wouldn't however change the fact that state budgets are in deep shit all over the country because of runaway spending on education, while schools are getting worse and worse. Interestingly, since states cannot run massive deficits like the federal government can, we'll probably see public schools dumped in state after state in the next few decades, I think. Either that or they'll start handling schools federally, which would be the other direction it could go.

[Renton]

Re: private roads and highways, one cool benefit would be a smoothing of traffic loads on freeways. As it is, there are zero financial incentives for people to go to work at a different time than between 8 and 10 am, other than the desire to not sit in traffic. If highways were private there would be peak load pricing that would give workers and companies a big incentive to stagger shift hours to non peak times. This would save tons in energy costs and reduce pollution. There would also be greater incentive for carpooling.

[Chelle]

let them eat cake.

[bode]

I don't know much about bolivia but I imagine a third world country with private utilities has a lot of crony capitalism going on so I doubt that is a great example of privatization gone awry.

Your paragraph about education is annoying because it doesn't state any facts at all other than your opinion that for-profit enterprise is an abomination if that enterprise is a school. It might be true that privatizing education will result in lower quality education, although I doubt that. That wouldn't however change the fact that state budgets are in deep shit all over the country because of runaway spending on education, while schools are getting worse and worse. Interestingly, since states cannot run massive deficits like the federal government can, we'll probably see public schools dumped in state after state in the next few decades, I think. Either that or they'll start handling schools federally, which would be the other direction it could go.

i can't say whether it would lower the overall quality across the board, but it would most certainly create an even bigger gap in quality between the lower and upper classes than we already have.

[Renton]

i can't say whether it would lower the overall quality across the board, but it would most certainly create an even bigger gap in quality between the lower and upper classes than we already have.

Why is that certain? There will be a fierce market for low cost education, just like there's an aggressive market for toothbrushes. I bought a perfectly functional colgate brand toothbrush a couple of weeks ago for 30 cents. Is it as good as a 5 dollar toothbrush? No, but there isn't a very large gap in quality. Most people won't bother paying for a fancy toothbrush or can't afford it so theres a great demand to minimize cost while maximizing quality. This principle can be observed in every market for every product or service we enjoy.

Also, there already is a wide gap because the rich often choose to go with expensive private schools anyhow. The differences would be in the incentives. Private schools would have strong incentives to constantly improve the product or fail financially. Government schools' incentives aren't as strong as that. Essentially the only driver of improvement in gov't schools is public outrage and demand.

[boost]

Should government mandate that children be educated to a certain level? Or would school attendance be completely voluntary?

[boost]

Monetary incentive exists one way or the other regardless of whether the government is the one doling out the money, the difference is that governments lack the accountability for such spending. Private individuals have to be accountable for their costs or they will go bankrupt. Do you not think that people who use government aid/grants for research are incentivized by those grants?

Bankruptcy is not an insurance against bad investments. Just like the possibility of being voted out of office isn't an insurance against bad investments. A small government society could be poorly implemented and utilized just like a large government society. You've done little to show that one is better than the other. Is our current system working perfectly now? No. Otherwise we wouldn't be having this chat. But you have to make a pretty strong case if you want it to be scrapped and replaced instead of just tweaked.

This is true, but less true than would be the case if the money was provided voluntary by individuals or corporations, who again, have to be held accountable for that money. The Wire and Treme illustrate quite well the problem of how government decides to allocate money and aid resources, despite David Simon being pretty much a liberal.

They illustrate problems with our current system. You have inferred that these problems, to the extent that they are present, are inherent. That's on you to prove that.

No, probably the researchers are as conscientious as one can be, given the sometimes warped incentive structure inherent in government aid. I'm more worried about a government's (who has basically no expertise on the intricacies of bacteriology) lack of ability to determine the value of what it's paying for, and thus, propensity to overpay on dead end projects, or underpay and prematurely cancel ones with promise.

Maybe I missed it, but I'm pretty sure you never addressed the point brought up, up thread. There are threats which are so great and nearly insurmountable that the investment needed to mitigate the risk would be so large, and when it comes time to employ the fruits, the consequence of not doing so would be so dire that profit is no longer a concern. A few examples were given: a plague which would only require a one time inoculation, or a mass extinction capable asteroid.

As well, you seem ignorant to the benefits of science for the sake of science. NASA is a perfect example of this. Without NASA, which in many ways has simply set out to achieve for the sake of achieving, our aerospace industry would be decades behind where it is. Pretty much every industry would have suffered without NASA. The discoveries and advances made while trying to push the boundaries of our knowledge and ability are endless and priceless. Entire industries have sprung up around some of these developments. But it's not an easily tallied sum, so NASA is treated as frivolous government spending.

I'm not saying its pure retard incompetence that leads governments to make mistakes like this, its actually quite natural for them to be so clueless on such esoteric subjects. The problem is that governments presume to know whats best in every situation, in a world rich with intricacy.

You have presumed to know that all governments have and will always presume to know what's best in every situation, in a world rich with governments and possible governments.

Furthermore you presume that the free market knows what's best in every situation.

Could you please stop arguing with me like I'm your 12 year old little brother? It's mildly infuriating.

I guess I'm just disappointed that you've adopted and are standing on this simplistic ideology.

[a500lbgorilla]

Is there a free market solution to the justice system?

[Renton]

Should government mandate that children be educated to a certain level? Or would school attendance be completely voluntary?

That is a separate issue. I think the staunchest of libertarians would say no mandate. I'm not the staunchest of libertarians.

Nor do I think privatizing education means that I want to fuck poor people into having to spend all their money to put their kids in school. You can easily free up education to the private sector while providing vouchers to low income parents.

[Renton]

Bankruptcy is not an insurance against bad investments. Just like the possibility of being voted out of office isn't an insurance against bad investments. A small government society could be poorly implemented and utilized just like a large government society. You've done little to show that one is better than the other. Is our current system working perfectly now? No. Otherwise we wouldn't be having this chat. But you have to make a pretty strong case if you want it to be scrapped and replaced instead of just tweaked.

Of course it is. The incentive of profits (and thus the threat of losses) are a constant force on those participating in a market, which inevitably leads to the most efficient and quality good or service for that market. This forces are virtually nonexistent in a government monopoly. There are hundreds/thousands of schools that are leaking money like a sieve and providing a poor education to their students. Ever see a school get shut down? I haven't.

You can't tweak the system. There have to be incentives, strong incentives in place to foster a quality good or service, and those incentives will never exist until competition is allowed to happen.

OK, if I were a god, here's how I'd tweak the system. I would make every governor and state legislator have a preternatural knowledge of education theory and a PhD in accounting. Also, I would remove from these politicians the personal motivations and incentives having nothing to do with the education system that inevitably would influence their decisions about education.

On the other hand there are tons of experts in education and accounting who would coalesce in a free market environment to provide quality education if there was a profit in it.

They illustrate problems with our current system. You have inferred that these problems, to the extent that they are present, are inherent. That's on you to prove that.

Mis-allocation (at best) and corruption (at worst) are inherent in our political system. That is, like you said, currently they are present, but I think there would have to be large and probably impossible changes to the system to fix that, so it might as well be inherent.

When you are proposing solutions to a problem you have to be realistic about the likelihood of success of those solutions. Would I love it it governments weren't corrupt? Of course. But the more practical solution is to remove government from the equation. Markets have sooner been privatized than governments have been reformed.

[Renton]

Is there a free market solution to the justice system?

Some have been proposed if you look around the internet but I'm not that hardcore. I don't scoff at the concept of it though.

[dranger7070]

+1 privatization.

[dranger7070]

Also this thread was a very enjoyable read, please keep the debate going.

[Savy]

Profit driven organisations are fantastic at delivering things like health and education. I mean, how could the consumer possibly suffer when profits are all that matter.

Some things should run at a loss, because they are too important.

[Renton]

Profit driven organisations are fantastic at delivering things like health and education. I mean, how could the consumer possibly suffer when profits are all that matter.

Some things should run at a loss, because they are too important.

I read the first sentence of this post and was like "aw hell yeah someone is making some sense around here!"

This anti profit stuff is pure fallacy borne out of a misplaced compassion for the poor and unfortunate among us. Pretty much everything that is good in your life, all the things you enjoy and take for granted, only exist because of profits. Profits are a signal for new businesses, new products, new technology to emerge.

If the government took control of the automobile industry and "ran it at a loss" because its "too important" as you say, then we'd all be driving terrible piece of shit cars, and they wouldn't be constantly getting better and cheaper over time, at least not at the breakneck rate they have over the last 50 years thanks to free markets. That's not a hypothetical by the way, its observable. The Indian government until fairly recently had massive protectionist policies on its automobile market, imposing heavy restrictions on imports of American and Japanese cars and imposing restrictions on entrepreneurship in that field. The results were that most of the cars on the road were clunkers that looked like they were made 20-30 years ago.

[Savy]

The thought of people getting turned down at an emergency room because they don't have enough money to pay a bill (something that happens in America, no?) is something I'd quite happily never see.

In the exact same way that you think governments are a bunch of crap, and don't get me wrong it is a very flawed system, a completely free market is really not something which benefits the customer. For example, in the UK are public transport got privatised, it's awful. Trains are usually in pretty bad condition, prices are constantly rising at a pathetic rate and they are constantly getting cancelled and running late.

If we look at an example like education, we will find that the children who are the hardest to educate and get the least from the education process are statistically much more likely to come from a very poor background. Why on Earth would a company bother with that market? They quite simply wouldn't unless there was huge incentives provided for them.

[wufwugy]

I'm not wading into this thread because I don't want to argue (shocking), but I will point out that the Cold War is over. Capitalism beat the piss out of Communism, yet the private vs public debate is anachronistic and is inadvertently casting back to that time. Civilization has advanced beyond that dichotomy, and economic solutions are found, not in the ideology of either side, but in the details that involve a plethora of other dynamics.

For example, the problem of education costs is primarily due to government subsidization of private tuition. Many people point at this and claim it shows that government is the problem, but when you get into the details you find that the reason for the subsidization is mostly sound and really just needs to be tweaked a little. Removing government education subsidization is disastrous, and there is not a modern society on the planet that doesn't exemplify this fact. The sensibility behind subsidizing tuition for private colleges is a flawed one (that poor should have access to private institutions regardless of the fact that equal education is provided at public ones), and THAT is the problem. If we moved to an education setup where the government doesn't provide any tuition assistance for private schools like Harvard, but does for public schools like UW, then tuition costs will drop substantially while the optimal number of people still get an education. If we moved to a fully privatized system with no government/tax assistance, there will be a cataclysmic increase in inequality and decrease in social mobility.

As for one thing mentioned in this thread that some think should be privatized, Medicare exists because private insurance companies failed to cover the elderly. Even libertarian havens like Singapore have UHC, and every single nation on the planet is unable to insure the old and sick through profit institutions.

Modern economics does not espouse communistic command economies nor anything remotely like them, but the private vs public debate inadvertently assumes it does.

[Galapogos]

I'm not wading into this thread...

... well... maybe a little.

.

[dranger7070]

The thought of people getting turned down at an emergency room because they don't have enough money to pay a bill (something that happens in America, no?) is something I'd quite happily never see.

In the exact same way that you think governments are a bunch of crap, and don't get me wrong it is a very flawed system, a completely free market is really not something which benefits the customer. For example, in the UK are public transport got privatised, it's awful. Trains are usually in pretty bad condition, prices are constantly rising at a pathetic rate and they are constantly getting cancelled and running late.

If we look at an example like education, we will find that the children who are the hardest to educate and get the least from the education process are statistically much more likely to come from a very poor background. Why on Earth would a company bother with that market? They quite simply wouldn't unless there was huge incentives provided for them.

2 things on this.

1.) My mother has worked as an RN at the same hospital for 21 years. I've never heard a story where a patient was totally refused care. Worst case scenario I've heard is they patch them up with as little cost as possible. Then they send bills that the person does or doesn't pay. If the choose not to pay then the hospital eats the cost, raising prices for the people that come in after.

2.) Government run education already ignores poor areas. Can't see how the profit/charity run education would be much worse in areas like Detroit.

[dranger7070]

As for higher level education, the government seriously needs to stop giving away grants and student loans to everyone like its pretend money. There needs to be a limit on how much you can borrow and/or some sort of qualification exam that you have to take. Too many people, including friends of mine have wracked up over $50k in student loan debt and are still considered a freshmen. Its sickening to think about how royally fucked these individuals are later in life.

On top of this, throwing this amount of money at universities all over the country leads to them being able to jack up their tuition costs because there's such a high demand for their "services." I don't see how this has been allowed to continue for this long.

[Savy]

The hospital doesn't just eat the cost and that's the end of it, all these things go on peoples financial records and could ruin their credit at a later date. People who have kids with illnesses which basically bankrupt them. Isn't really something that should happen when it doesn't need to. People should have access to decent free healthcare.

[dranger7070]

It definitely should ruin their credit if they don't pay. I agree that UHC is a must in this country. Insurance companies are out of control with not paying people what they are owed when it comes to healthcare to help their bottom line.

[wufwugy]

As for higher level education, the government seriously needs to stop giving away grants and student loans to everyone like its pretend money. There needs to be a limit on how much you can borrow and/or some sort of qualification exam that you have to take. Too many people, including friends of mine have wracked up over $50k in student loan debt and are still considered a freshmen. Its sickening to think about how royally fucked these individuals are later in life.

On top of this, throwing this amount of money at universities all over the country leads to them being able to jack up their tuition costs because there's such a high demand for their "services." I don't see how this has been allowed to continue for this long.

The grants are actually great. They're pretty low, and the costs of state run colleges, especially community ones, are quite low. The main problem with government WRT loans is laws not allowing them to be like normal loans. The inability for students to default on them through bankruptcy is an enormous driver of skyrocketing costs.

This is the epitome of an issue that is solved by smarter laws, not by hopping onto either side of the false pro-government vs anti-government debate

[Savy]

It definitely should ruin their credit if they don't pay. I agree that UHC is a must in this country. Insurance companies are out of control with not paying people what they are owed when it comes to healthcare to help their bottom line.

You are married and have a child. You have always been fairly good financially but just never earned that much money so don't really have any savings, without ever really being in any debt. Your child is in a car crash and is quite badly disabled as a result.

Now you'll probably have a better idea of prices than I would, however sorting that out is not going to be cheap. You most likely aren't going to be able to afford it.

So you feel your credit rating should be ruined as a result?

[Renton]

The hospital doesn't just eat the cost and that's the end of it, all these things go on peoples financial records and could ruin their credit at a later date. People who have kids with illnesses which basically bankrupt them. Isn't really something that should happen when it doesn't need to. People should have access to decent free healthcare.

You have to look at the incentives and disincentives that are put in place by government policy. Yes, it is quite unfortunate that people become financially ruined by medical costs when illness or accidents happen. But when you have free healthcare, or pseudo free healthcare like in America as dranger described, you change the incentives a lot. The tragedy of the commons is applicable to free healthcare, whereby a person will be a lot more willing to take risks and squander his resources (in this case the resource being his life and health) because he has little financial incentive to do otherwise.

This also applies to education. People treat education much differently (read: worse) when its a free and infinite resource than when it is a costly and scarce one. It is obviously the latter even in the case of free public education, but it feels like the former in practice because no one directly pays for it. People on both sides of the student/educator line experience this phenomenon. Parents are likely to treat public school like a daycare to dump off their kids when they aren't paying directly for it, and educators are less accountable to parents and students than they would be if the school was a business.

Anecdote warning: In many high schools in my home state of Georgia the coaches were also teachers, and I don't mean P.E. teachers. At my high school all the social studies and civics classes were taught by the coaches. One of the most important subjects was being taught to 11th and 12th graders by these unqualified knuckleheads who might pass for 8th grade intelligence. I seriously doubt that would ever fly at a school which has a financial bottom line to worry about.

[dranger7070]

1.) should have insurance.

2.) as it stands yes.

But to expand on 2, hospitals and healthcare insurance companies shouldn't be treated like a business. I agree with renton that most things should be privatized but healthcare or at the very least insurance shouldn't be one of them.

[Renton]

You are married and have a child. You have always been fairly good financially but just never earned that much money so don't really have any savings, without ever really being in any debt. Your child is in a car crash and is quite badly disabled as a result.

Now you'll probably have a better idea of prices than I would, however sorting that out is not going to be cheap. You most likely aren't going to be able to afford it.

So you feel your credit rating should be ruined as a result?

Absolutely. Credit rating is a reflection of the risk of loaning money to a person. A person who was imprudent enough to have a child without getting at least a bare minimum of insurance (catastrophic coverage with a high deductible is like 10-20 bucks a month) is a high risk and creditors should be aware of that.

And its not as if someone's credit being ruined is a fate worse than death. At least his child got the medical care he needed despite his father not having money or insurance to pay for it. Ruined credit was a tiny cost next to the benefits.

[wufwugy]

Healthcare is not an issue that is addressed appropriately by capitalism because shocks in its supply and demand are severe and turbulent unlike most other aspects of an economy. It is detrimental to an economy when active participants in it are devastated by unforeseen circumstances, and the only salve to this is a spreading out of burden. It's no different than stopping a pointy object from piercing a net by flattening its point. Lack of healthcare is economically no different than trying to run an economy in a war zone where some people are randomly hit by shrapnel (it is just far less pronounced and obvious).

The debate on the subject is over. UHC (some of which include some private insurance) is the one and only paradigm that has ever worked, and the only paradigm that makes any theoretical sense whatsoever.

[a500lbgorilla]

The more I sit down to write about it, the more there is to write.

I will say this, civility is a virtuous weapon. It invites people to come and appreciate your position.

[a500lbgorilla]

The free market and all its trade and traders is not something that needs to be protected. The free market is primarily trade and traders, all the ancillary things that inform those trades between traders draw attention away from this. Whereever free trade is allowed or able to take hold, it will and it should thrive and innovate and compete.

But each of those is measured by and in terms of trade itself. They will innovate better ways to trade. Allowing for and nurturing free trade should improve a lot of aspects of life, but there is a dubious mistake in assuming that innovation in trade correlates strongly to innovation in the human condition. Allowing for and overseeing free trade should work much the same, but with additional benefits for traders and non-traders all the same.

This post could have been 20 pages long.

[Renton]

Not sure if I'm interpreting your post correctly, but it seems to me like free trade is under assault from a hundred different angles, and could stand some protecting. Every country in the world in some form or another is stifling free trade, its just a matter of degree.

I think what frustrates libertarians the most about liberals and conservatives is that they (dems and repubs) have well meaning positions but an utter lack of economic sense regarding those positions. In most cases their positions on policy worsen the exact problems they intend to alleviate.

Liberals are anti-privatization of almost any kind because they believe that private industry exploits consumers for profits. They support price controls of every variety, be it in the form of minimum wage laws, rent controlled apartments in cities, or laws against price gouging in disasters. They generally take these positions because they tend to have a great empathy toward poor or lower class income people, or they are poor and lower income people themselves. However, though admirable, this empathy is useless because their positions are ignorant of basic economics. They aren't aware that voluntary trade between individuals is mutually beneficial, not exploitative. They aren't aware that minimum wage laws lead to higher unemployment in young people and more discrimination by hiring companies. They aren't aware that rent control leads to less and more expensive housing in cities, or that price gouging in disasters saves lives. It's just ignorance and misplaced emotion.

Conservatives are just as bad (economically) but in a different direction. They are pro-subsidy all around. They are general stalwart protectionists who are completely ignorant to how trade between nations works. They think that we should have a trade surplus, and that since we import more than we export that must mean we are getting poorer. See the exploitation in trade fallacy I mentioned above. They fail to understand that as a rich country it's quite natural and optimal to have a trade deficit. While the libs take positions of misplaced empathy and compassion, conservatives take positions of misplaced self-interest, which is kind of ironic because the whole point of capitalism is to put self interest and greed to work for the greater good of society.

[a500lbgorilla]

I believe two things about basic economics.

First, it's the study of trade. I've always had difficulty understanding the value of something economically but I recently read 'A Modern History of Hong Kong' by Steve Tsang and it struck me.

I remember the example I was given was about the two man island, the lumberjack and the brewer. They trade lumber for beer and vice versa and everyone is wealthier.

The lumber has no value economically when it's in the lumberjack's possession. Nor the beer for the brewer. People will ascribe them values in terms of preference or desire or utility or other very human metrics but I disagree. It is only at the point of trade that the items have any value and that value is wholly quantified in that trade. After the trade, they return to being economically bereft of value.

The second thing I believe about economics is that it is a debate. I said it before in a different thread and would, if asked, elaborate but the difference between the economic method and the scientific method is the experimental method.

In scientific debate, someone is proved right through a demonstration of the 'answer key'. They craft a way to read from nature the answer. In economic debate, someone is never proved right. There hasn't even been a successful experimental economist.

I have many more points of the nature of the free market and its application and interface with the world as I see it but I'll leave it for later.

I believe Libertarians desire that traders be put in charge of everything, to fully integrate all things into the marketplace and that they do not like it when the traders which establish a judicial system or a governmental system are eventually replaced with professional justices and professional politicians. They do not see that not all participants in an economy are traders and that trade alone does not always deliver the greatest results by any standard but standards of trade themselves.

[wufwugy]

Yeah I'm not a fan of rent controls or minimum wage either, but they're not wholly bad. The problem of a lack of social mobility is addressed so much more appropriately by a negative income tax, but we'll never get that in this country

[Renton]

U.S. has the child tax credit, welfare, and medicaid. That's definitely an implicit negative income tax. My mother has gotten more back from income tax than she paid in for the last 20+ years. The standard deduction on the 1040 is pretty large, such that the bottom brackets pay little or no income taxes. Maybe you think that's not enough.

Honestly one of the major gulfs between my views and most libertarians is that I don't quite buy the whole "taxation is tyranny" argument. One of the last remnants of my former liberal views is that I'm basically pro progressive income taxation. I think libertarians take too hard of a line on taxation, but its understandable given how poorly governments make use of tax dollars. My view is IMO a little more realistic. It's probably easier to convince people that we need less government programs and costs in general than it is to convince people that there shouldn't be taxes at all or that the government is wholly useless in every regard.

Anyway probably its necessary to have some elements of a welfare state. I'm basically fine with that as long as we aren't controlling the price of goods/labor. But as I mentioned earlier, it seems pretty clear that medicare is about to be finished, one way or the other.

[wufwugy]

Scott just put up a great intro to why monetary policy is the chief cause of economic expansion and contraction

http://www.themoneyillusion.com/?p=20114

NGDP level targeting would revolutionize the US economy, but sadly many at the Fed are stuck in the stagflation era and the overwhelming majority of lay people believe and support the wrong ideas. With NGDPLT, the crisis and recession would have been completely avoided. The Fed is using the wrong baseline and measurement tool, and it's causing them to think monetary policy is loosening when it's actually contracting. This makes soft money act as hard money and creates supply shocks

[a500lbgorilla]

So I've been taking jibs and jabs at free market economics but I've landed one two central points.

1) The system of free trade, whatever its flaws, whatever its inability to be engineered, is the demonstrated best system for generating human progress in the world. (Science is of course the best star-map for that progress)

and 2) Its greatest weakness is an inability to pin the costs associated with pollution with the producers of that pollution. Which is to say, anytime someone pollutes, they're essentially shirking a cost. Anytime a trade occurs where pollution is a by-product, they're essentially involving a third, un-consenting party to forfeit 'value'.

If there were some way to incorporate the costs of all pollution in a trade, free trade would be much closer to perfect.

[Renton]

So I've been taking jibs and jabs at free market economics but I've landed one two central points.

1) The system of free trade, whatever its flaws, whatever its inability to be engineered, is the demonstrated best system for generating human progress in the world. (Science is of course the best star-map for that progress)

and 2) Its greatest weakness is an inability to pin the costs associated with pollution with the producers of that pollution. Which is to say, anytime someone pollutes, they're essentially shirking a cost. Anytime a trade occurs where pollution is a by-product, they're essentially involving a third, un-consenting party to forfeit 'value'.

If there were some way to incorporate the costs of all pollution in a trade, free trade would be much closer to perfect.

What you are talking about is externality or "external cost." It doesn't only apply to pollution but thats the best example of it. Certain policies such as cap and trade seek to internalize those costs.

Many free market advocates believe that if you empower individuals and increase property rights, many externalities in trade can be handled freely/voluntarily. For example, there'd be a hell of a lot less water pollution and over-fishing if individuals could own the water. Instead, when the government owns the water its a lot harder to deal with polluters because no one has a big vested interest in the problem. But if I own a plot of ocean, you can be sure I'm gonna make sure no one is dumping shit in it or pulling too many fish out of it, and if they are I'm gonna sue the shit out of them.

[a500lbgorilla]

Well, you can never truly predict what the free market would do with those seas.

You could integrate them into trade, but what happens from there is an exercise in imagination.

[Renton]

Well, cows and pigs aren't going extinct any time soon. If if private property were extended to bodies of water, I doubt we'd be worrying about over-fishing anymore, because there's no longer a tragedy of the commons scenario with the fish.

[a500lbgorilla]

Well, cows and pigs aren't going extinct any time soon. If if private property were extended to bodies of water, I doubt we'd be worrying about over-fishing anymore, because there's no longer a tragedy of the commons scenario with the fish.

Until someone finds a way to monetize that ocean that doesn't care what happens to the fish.

Underlying this is that there is a supreme inability to predict the future. You can trust that they'll find some way to do something with the ocean, but you can't always know what.

[Renton]

Some things should run at a loss, because they are too important.

Man I was daydreaming today and just thought of this sentence again. It seems to be a common go-to for liberals and its just such a fallacy that it makes my head hurt. I might easily argue that the most important things are too important to be run by government.

I think liberals are in favor of running programs at a loss because they believe that somehow that means the product will be cheaper. They point to examples like the post office which will mail a letter for 30 cents or whatever. In reality of course the product isn't necessarily cheaper at all, and its almost invariably of lower quality than a privately produced counterpart.

You have to take into account the hidden costs, the amount of money in the state budget that goes to run these programs which comes from tax dollars. The overall cost is often far more than it would be in a for-profit industry. This is because prices weren't allowed to do their job of allocating resources efficiently. A state-run program doesn't have the incentives to minimize costs and increase productivity. It doesn't have the infinite knowledge of individuals in the market to adjust prices accordingly. And it doesn't have the ever-present threat of bankruptcy to push it toward greater efficiency.

[Savy]

I think liberals are in favor of running programs at a loss because they believe that somehow that means the product will be cheaper. They point to examples like the post office which will mail a letter for 30 cents or whatever. In reality of course the product isn't necessarily cheaper at all, and its almost invariably of lower quality than a privately produced counterpart.

The thing is though, that's not the point at all. Let's take your example about the post office.

The idea behind keeping the post office public isn't that the product will be cheaper at all. In fact as you have pointed out I'm fairly sure the product will be more expensive. The reason people want to keep the post office public is because it deliver to places where it makes no sense for a profit ran business to deliver too.

A good example for the UK at the moment is the NHS. There are lots of private companies already involved and becoming more involved in the treatment procedure. There are certain procedures they don't offer, because quite simply they won't make any money from them. That doesn't mean that people don't need them procedures though, however when these companies take away the profitable procedures and run them slightly cheaper, that means that all the money that was going directly to the NHS is now being taken away and they don't have the money to run these non profitable procedures either. Therefore, they just aren't available to people who need them.

You also make out that when something is government ran it's just all laid back and relaxed, just throwing money around for fun. These institutions are constantly streamlining and attempting to become more effective. That isn't just something private companies do.

[WillburForce]

A state run program doesn't have the threat of bankruptcy and therefore won't be cutting corners.

I personally don't like the thought of paying for medical care in a place that has the ever-present threat of bankruptcy.

[Renton]

The thing is though, that's not the point at all. Let's take your example about the post office.

The idea behind keeping the post office public isn't that the product will be cheaper at all. In fact as you have pointed out I'm fairly sure the product will be more expensive. The reason people want to keep the post office public is because it deliver to places where it makes no sense for a profit ran business to deliver too.

I'm not enough of a post office expert to back this up, but if what you say is true it's probably not true in the modern age with modern technology. And I'm having trouble figuring out why a for profit shipping company wouldn't deliver somewhere assuming the price was right. I.E. it might charge a higher price to deliver to Alaska because the costs are simply much greater. And if one for profit company decides to back out of that market, that's simply another signal for more private enterprise to scoop that up.

A good example for the UK at the moment is the NHS. There are lots of private companies already involved and becoming more involved in the treatment procedure. There are certain procedures they don't offer, because quite simply they won't make any money from them. That doesn't mean that people don't need them procedures though, however when these companies take away the profitable procedures and run them slightly cheaper, that means that all the money that was going directly to the NHS is now being taken away and they don't have the money to run these non profitable procedures either. Therefore, they just aren't available to people who need them.

Again, I fail to see why a private hospital would deny giving a procedure in a price-coordinated economy. They don't just say "fuck that I'm not doing that." They adjust the price upward as necessary until it covers their costs. Now in your example they might be refusing to do such procedures because they are coexisting with NHS, which provides such procedures at low cost to all the citizens. But that hardly points out a flaw in the free market, its a flaw in the hybrid state/private healthcare system in the U.K.

You also make out that when something is government ran it's just all laid back and relaxed, just throwing money around for fun. These institutions are constantly streamlining and attempting to become more effective. That isn't just something private companies do.

Governments aren't ineffective at running markets because of laziness or incompetence. They are ineffective because its a relatively small group of people in a position to control a market to which they have no expertise. The best they can do is make decisions that have favorable political consequences, and maybe appoint those who they think are the top experts on a field. It's a very sloppy and ineffective process compared to what goes on in a free market, which has a way of tapping the ingenuity of individuals in a large group (society).

The cooperation of individuals in free trade is far better at determining the relative value of goods and services in the economy, whereas all a government can do is make a rough guess of what something should cost. Prices are in a constant state of fluctuation depending on innumerable factors. No one person or group has the knowledge necessary to determine what they are, yet that's exactly what socialist governments seek to do, with dire economic consequences that can be observed repeatedly throughout history.

[Renton]

A state run program doesn't have the threat of bankruptcy and therefore won't be cutting corners.

I personally don't like the thought of paying for medical care in a place that has the ever-present threat of bankruptcy.

Yeah I'd rather get treated at a hospital which has zero economic accountability for its mistakes and inefficiencies.

[Savy]

I'm not enough of a post office expert to back this up, but if what you say is true it's probably not true in the modern age with modern technology. And I'm having trouble figuring out why a for profit shipping company wouldn't deliver somewhere assuming the price was right. I.E. it might charge a higher price to deliver to Alaska because the costs are simply much greater. And if one for profit company decides to back out of that market, that's simply another signal for more private enterprise to scoop that up.

It's a pretty old argument that isn't really that relevant anymore. Certain parts of Scotland are a complete cunt to get to, but still needed regular postal service. It isn't a one off letter type thing.

Again, I fail to see why a private hospital would deny giving a procedure in a price-coordinated economy. They don't just say "fuck that I'm not doing that." They adjust the price upward as necessary until it covers their costs. Now in your example they might be refusing to do such procedures because they are coexisting with NHS, which provides such procedures at low cost to all the citizens. But that hardly points out a flaw in the free market, its a flaw in the hybrid state/private healthcare system in the U.K.

That's not the case at all. The government funds the majority of procedures that people will need to have done, through the taxes that people pay. The NHS uses this to prop up other areas which aren't profitable. If the private companies were to offer these procedures that I'm talking about, the price would have to be extortionate and therefore unaffordable to the majority of people who need it. Which is why they wouldn't offer it.

Governments aren't ineffective at running markets because of laziness or incompetence. They are ineffective because its a relatively small group of people in a position to control a market to which they have no expertise. The best they can do is make decisions that have favorable political consequences, and maybe appoint those who they think are the top experts on a field. It's a very sloppy and ineffective process compared to what goes on in a free market, which has a way of tapping the ingenuity of individuals in a large group (society).

Yeah, all the people who run organisations like the NHS are completely clueless. They aren't some of the most well educated people in the world. They have absolutely no expertise in the areas that they work in.

[Pascal]

Too many middle managers in the NHS make the management massively bloated and really inefficient. Just look at their IT project

[Renton]

If the private companies were to offer these procedures that I'm talking about, the price would have to be extortionate and therefore unaffordable to the majority of people who need it. Which is why they wouldn't offer it.

God there is no extortion, if a procedure is cost prohibitive that's because it takes a lot of scarce resources to provide. The NHS is "extorting" everyone to fund that procedure through taxation. Either way you are paying for it. I'm arguing that through publicly financed healthcare you are paying more for a worse product.

Yeah, all the people who run organisations like the NHS are completely clueless. They aren't some of the most well educated people in the world. They have absolutely no expertise in the areas that they work in.

Not what I said. Not at all. I said that GOVERNMENTS do not have the expertise to run a healthcare industry, and that they certainly do not have the knowledge to set prices for healthcare. No one has that knowledge except for the millions of people in the market who are buying, selling, or working in healthcare.

I'm not saying that the management in the NHS are ignorant or incompetent (reiterating from my first post by the way), I'm saying that the people they are beholden to, government officials, are lacking in such expertise. Politicians are likely to decide on sensitive healthcare issues based on short term political ramifications. And again, even if there was a conscientious politician, he, being an individual human, would never have the infinite knowledge that exists in markets. This is the base problem that affects every socialist regime from the most extreme centrally planned economies like the Soviet Union to the more mild socialist countries in present day Europe.

[WillburForce]

Yeah I'd rather get treated at a hospital which has zero economic accountability for its mistakes and inefficiencies.

I really couldn't give flying fuck whether the place I have surgery is economically accountable or not. A hospital is there to give the best possible treatment, not be a profitable enterprise.

What a depressing thought that everything comes down to money.

[WillburForce]

You say we're paying for it like that is a bad thing. I'm happy to pay taxes that provide a service, which includes treatments I may or may not need.

I am happy to provide expensive cancer treatment through my taxes for people who cannot afford it.

I am also happy to provide free education to all children as I believe it for the good of the country.

[Renton]

You say we're paying for it like that is a bad thing. I'm happy to pay taxes that provide a service, which includes treatments I may or may not need.

I am happy to provide expensive cancer treatment through my taxes for people who cannot afford it.

I am also happy to provide free education to all children as I believe it for the good of the country.

If I believed my tax dollars were being allocated to their most valued use and money wasn't getting squandered on substandard services that would be cheaper and better if provided privately, then I'd feel the same way.

[a500lbgorilla]

If I believed my tax dollars were being allocated to their most valued use and money wasn't getting squandered on substandard services that would be cheaper and better if provided privately, then I'd feel the same way.

You'd enjoy A Modern History of Hong Kong by Steve Tsang.

[boost]

Sorta grunching here, sorry..

Renton. What happens when the poor are disproportionately or even exclusively affected by an ailment? Like most tech, medical procedures are initially very expensive. In your free market, the price drops as early adopters who can afford to subsidize the R&D do so. But when the rich are not affected, who will subsidize the R&D?

Maybe the answer is "tough luck." Or, "they should have bought insurance" or, I don't know what. But the fact is, there are poor people, and I would think you'd agree that in your free market there would be poor people. While these people may be poor, they do play an essential roll in the economy. What happens when a large swath of the work force can't afford to pay the up front cost for the treatment? How stable will this free market be?

[Renton]

Sorta grunching here, sorry..

Renton. What happens when the poor are disproportionately or even exclusively affected by an ailment? Like most tech, medical procedures are initially very expensive. In your free market, the price drops as early adopters who can afford to subsidize the R&D do so. But when the rich are not affected, who will subsidize the R&D?

Maybe the answer is "tough luck." Or, "they should have bought insurance" or, I don't know what. But the fact is, there are poor people, and I would think you'd agree that in your free market there would be poor people. While these people may be poor, they do play an essential roll in the economy. What happens when a large swath of the work force can't afford to pay the up front cost for the treatment? How stable will this free market be?

Well for one thing you can still subsidize the poor while allowing for a relatively free market. For example, you could close down all public schools in America and instead subsidize the poor with vouchers for private tuition. I think some of the more hardcore anarcho-capitalists would even be against that but I don't personally see a problem with it. IMO, the major problems emerge when the government tries to actually run these industries.

Applying the same logic to healthcare runs into a few problems because of the tremendous disparity in the way humans live and what quantity of healthcare they required throughout their lives. For example, the cost of educating a child from kindergarten to high-school is basically a constant regardless of the person, but as those kids grow up they will have different ailments and require different amounts of healthcare.

That said, insurance serves to smooth this out and if a government subsidizes health insurance for the poor (we already do that, its called Medicaid), then it becomes effectively the same as the education example. If people who are above the income threshold for subsidy who can perfectly afford health insurance opt out of it voluntarily then they are taking a personal risk, and risks have costs and benefits. People should be free to take risks with their lives, and when the time comes that they need healthcare, then they will face economic consequences for the risk they took or they will have health insurance and be covered.

Anyway back to my original point. I don't have any real problem with safety nets for the poor as long as those work outside of the context of markets.

[CoccoBill]

Many free market advocates believe that if you empower individuals and increase property rights, many externalities in trade can be handled freely/voluntarily. For example, there'd be a hell of a lot less water pollution and over-fishing if individuals could own the water. Instead, when the government owns the water its a lot harder to deal with polluters because no one has a big vested interest in the problem. But if I own a plot of ocean, you can be sure I'm gonna make sure no one is dumping shit in it or pulling too many fish out of it, and if they are I'm gonna sue the shit out of them.

And putting this in a practical context, do you think the oceans would be owned by Renton, or by Shell, Exxon and BP? I wonder what their interest in the preservation of the oceans and their wildlife would be.

[Renton]

Shell, Exxon, and BP are already fucking up the oceans to their heart's content. At least under private ownership they'd be hurting their own ocean. People tend to treat something they own a lot differently than something that is un-owned by anyone. People are a lot less likely to piss and shit all over the bowl or throw their bloody tampon on the floor if its their own bathroom than if its a public toilet.

Imagine if the Deepwater Horizon spill happened in a Caribbean sea owned by many different private individuals or corporations. BP would all of a sudden have been accountable to all of those people. As it was in reality they were only vaguely accountable to the U.S. and got off pretty cheap in the end.

[CoccoBill]

My point is that Shell, Exxon and BP would have vastly more cash to spend on claiming these resources than private individuals. The sole value of said resources to them would be to drain them from oil at minimum cost, with absolutely no oversight or care about repercussions beyond the next quarter's profits. They would get off not for cheap, but for free. To think that the oceans would somehow be the property of private citizens, the WWF and billionaire philanthropists instead of corporate multinationals with vested interests, is perhaps a tad bit optimistic.

Who would, in your capitalist utopia, buy ocean properties without clear economic incentives? What are some economic incentives that would preserve the health of the oceans, that would be so profitable they would be willing to outbid Big Oil?

[Renton]

My point is that Shell, Exxon and BP would have vastly more cash to spend on claiming these resources than private individuals. The sole value of said resources to them would be to drain them from oil at minimum cost, with absolutely no oversight or care about repercussions beyond the next quarter's profits. They would get off not for cheap, but for free. To think that the oceans would somehow be the property of private citizens, the WWF and billionaire philanthropists instead of corporate multinationals with vested interests, is perhaps a tad bit optimistic.

Who would, in your capitalist utopia, buy ocean properties without clear economic incentives? What are some economic incentives that would preserve the health of the oceans, that would be so profitable they would be willing to outbid Big Oil?

It's kind of insulting and degrading to refer to someone's position as a utopia, but whatever.

First of all, oil drilling and spills don't even hold a candle to over-fishing as an environmental concern. Over-fishing would be all but solved if we got rid of the tragedy of the commons scenario by privatizing waters. That said I'll try to address your oil concerns.

When the oceans are allowed to become a tradable commodity, like anything else they will go to their most valued uses. Yes, oil companies will have a very large interest in exploiting the oil resources that are in the oceans. However, there is other value and resources to be had from the oceans, including fish and other natural resources besides oil. Most likely, due to the ephemeral and speculative nature of oil drilling, oil companies wouldn't just buy all the oceans in order to speculate and drill in a few select spots for a few years each. That would be tremendously wasteful. More than likely they would lease the water from other owners who are using it for different purposes, people who have a major interest in not having the oceans be ruined forever.

We're getting into territory in which I have not much expertise, but there is a lot of good stuff on ocean privatization if you feel like looking for it.

[CoccoBill]

It's kind of insulting and degrading to refer to someone's position as a utopia, but whatever.

Wasn't meant to be insulting, sorry if it came out that way. Just my view on the feasibility of your suggestion.

First of all, oil drilling and spills don't even hold a candle to over-fishing as an environmental concern. Over-fishing would be all but solved if we got rid of the tragedy of the commons scenario by privatizing waters. That said I'll try to address your oil concerns.

I absolutely agree, oil drilling was just the first example that came to mind, one of many similar scenarios.

When the oceans are allowed to become a tradable commodity, like anything else they will go to their most valued uses. Yes, oil companies will have a very large interest in exploiting the oil resources that are in the oceans. However, there is other value and resources to be had from the oceans, including fish and other natural resources besides oil. Most likely, due to the ephemeral and speculative nature of oil drilling, oil companies wouldn't just buy all the oceans in order to speculate and drill in a few select spots for a few years each. That would be tremendously wasteful. More than likely they would lease the water from other owners who are using it for different purposes, people who have a major interest in not having the oceans be ruined forever.

We're getting into territory in which I have not much expertise, but there is a lot of good stuff on ocean privatization if you feel like looking for it.

If by going to their most valued uses you mean going to the use of those, that can and are able to pay the most for them, and be used in a way most profitable to those parties, yes, I agree. The actual value gained from their use, and to whose benefit the value will be, are largely undetermined. I think its safe to assume the benefit will not be for the common good nor the oceans themselves, automatically.

Likewise, overfishing is a problem everywhere right now, even when it dramatically affects the fishing industry itself. Whether it would make financial sense for the oil companies to acquire the oceans or for some other parties would depend on the price set by the markets, that is, we have no clue. I see no reason to assume they would only, or even largely, be acquired by parties, who have any kind of incentive or commitment to care about their well-being, that is purely speculation. For it to make sense for someone to own a piece of ocean and use it sustainably, preserving and nurturing it would have to be the most economical option, which it clearly isn't. Far greater short-term profits can be acquired by drilling and overfishing, the effects of which are the problem of the next fiscal year or generation.