MichieuxPosted January 1, 2011 at 4:34 pm
Would you you care to elaborate on the “serious defects” in the “standard arguments for state provision of health and education services”? That is, could you explain what you take those arguments to be, and provide some evidence not only for those arguments, but also how they are defective? Also, and perhaps more importantly, how would you measure a nation’s health?I will sketch a skeletal outline. I admit numerous qualifications.
Why the State cannot make any useful contribution to the medical care industry or the education industry.
The government of a locality is the largest dealer in interpersonal violence in that locality (definition, after Weber). A law is a written threat by a government to kidnap (arrest), assault (subdue), and forcibly infect with HIV (imprison) someone, under specified circumstances. Individual A has a “right” to do X if the government has pomised not to interfere when A attempts to do X and, further, has promised to interfere with individuals B,C, etc. if they attempt to stop A when A attempts to do X. A State grants “title” to a resource X to an individual A when the State reecognizes the right of A to control X which includes the right to transfer control to other individuals B (to sell the resource) on terms mutually agreeable to A and B. Market-oriented policies combine title and contract law. Because barter and commerce benefit both sides of a transaction, markets unite control over resources with the incentive to use resources is socially benefiicial ways.
A society is free in proportion to the range of behaviors between compelled and forbidden. The advantages of freedom are obvious: how many times should you chew your next bite of apple? Should we conduct a nationwide vote on that? Each individual is the best judge of his own interests.
Separation of powers, federalism, and markets institutionalize humility on the part of government actors.
At this point, I invite critics of market economies to address two questions:
1. From a State presence in which industries does society benefit, beyond what the State contributes to markets generally (an original assignment of title and enforcement of contract law)? You may imagine either a) two categories: A = likely candidates for State operation or subsidy, and B = unlikely candidates for State operation or subsidy or
b) a continuum
(highly unlikely) -1_____._____+1 (highly likely).
2. What criteria determine an industry’s categorical assignment of position on the continuum?
Usual welfare-economic arguments for State intervention in an industry involve externalities, economies of scale, and information assymetries between buyers and sellers. In the case of the medical care and education industries, the information assymetry argument applies with greater force to remote State actors than to exchange between doctors and patients. Beyond a very low level, there are no economies of scale at the delivery end of the education industry as it currently operates. Education only marginally qualifies as a public good as economists use the term and the “public goods” (positive externalities) argument implies subsidy and regulation, at most, not State (government, generally) operation of school. The State cannot subsidize education without a definition of “education” and the State’s definition will then bind students, parents, real classroom teachers, and taxpayers to the State’s definition.
Similarly, the State cannot subsidize medical care without a definition of “medical care”. The taxpayers of one medium-sized US State could probably afford one band-aid and one aspirin for every person on Earth, but the entire Earth’s GDP is insufficient to keep even one person alive forever. Everyone dies. Barring a fatal accident, most of us will consume medical resources which we will never repay. In an unsubsidized market in medical services, relatives will face the decision: pull the plug on grandma and put braces on the kids, or sell the house, extend grandma’s life another six months, and declare bankruptcy. In a tax-subsidized market or a State-operated medical care industry, some State body will make the decision when to pull the plug (a “death panel”). Aggregation of resources and authority for control over resources into government hands contributes nothing to the performance of the medical care industry.
The “public goods” argument for subsidization of medical care or education has the logical hole I mentioned earlier, that oversight of corporate functions is a public good and the State itself is a corporation. Therefore, oversight of State functions is a public good which the State itself cannot provide. State assumption of responsibility for the provision of public goods transforms the free rider problem at the root of public goods analysis but does not solve it.
This was overlong, and the site owned complained, so I brought it here.