TRN Perspectives: Empathy and the Health Care Debate

William Buckley, in his 1959 book, “Up from Liberalism” points this out to an audience of people who remembered that time.

There were soup kitchens everywhere – but almost none of them were government-run. How did this happen? We had strong private and charitable organizations in this country. The Salvation Army was a large organization compared to the small program it is now. Church charities were more widespread.

The hope in the New Deal was that Government could help out with this work – fill in the gaps of what the private sector was missing. In fact, government has virtually replaced it. The establishment of programs like Medicare and Social Security has led to a decrease in charitable giving. In the past, people were motivated by compassion for the suffering they saw. Now that government has stepped in, they can clean their hands of the whole affair, and Americans simply don’t give because the government is already giving for them.

But the government giving isn’t enough – never can be. In response to this, over the years, we’ve started putting in tax breaks for people who donate to charity in order to stimulate more private giving. The problem is that there are inevitably a few charities that don’t deliver on their promise and some charities (some of the ones with ties to radical Islam) which divert the money for non-charitable work. Now, the Obama administration is cutting those tax breaks, either out of a twisted logic of encouraging more government spending, or simply as a campaign promise to liberal constituencies to put a greater burden of taxes on the rich.

The other problem with these government charitable programs is that as they expand to larger numbers of people, three things happen.

1. They become less effective and more subject to corruption, fraud, waste and abuse.

2. They become disincentives for work, because they provide a safety net that is an easy fall-back for people, rather than a minimalist net that is in itself an encouragement to improve their situation.

3. At a minimal level, they improve the economy by providing a baseline of services for people, but as they expand, the costs begin to overwhelm the benefits. You simply can’t give (for sake of argument) $30,000 of services to someone who creates only $20,000 of economic output per year. If that’s 10 percent of the population, the number is manageable. But as it grows, it becomes less manageable.

The logic behind single-payer and behind the whole Obama theory, is that the costs will decrease because efficiencies will be discovered in a single-payer system. Even if this were true, and the services burden of individuals fell on average below their economic benefits they provide, you would still be playing an economic shell game with taxpayer money that would decrease the multiplier effect of economic output. Simply put, government spending stimulates the economy, but at a lesser rate than private input, which is generally driven by more logical spending priorities driven by individual choices and priorities.

However, history shows that even this hope – of increased efficiency of government programs – is wrong. Look at your cable bill, or your electricity bill. A single-payer system is just a nice phrase for a monopoly, and monopolies never make things more efficient. Many liberals complain about businesses being oligarchies, but never consider the fact that the government is exactly that. But it doesn’t have your best interests at heart any more than big business. Maybe even less, since big business does whatever makes them money, and occasionally, that matches up with what’s good for people. But government has the best interests of lobbyists and special interests at heart, and very often, that is not in the best interest of individual Americans.

So, can a government option work within a competitive framework? In theory, yes, but it has to be set up as a completely outside company that does not take extra taxpayer subsidies. Otherwise, it can simply run at a loss forever and that will kill the remaining private companies, which cannot operate at a loss. This, I would argue, is virtually inevitable: in the public option, when people complain about prices being too high, the politicians will always undercut the rules and safeguards and lower the prices to make political gains by “giving” to the people. But what they’re “taking away” in this process is the guarantee of a stable, viable system.

This is exactly what happened to Fannie Mae and Freddie Mac. They are quasi government entities, set up to help ordinary people get home loans. They are, in model, exactly the same thing that the new public option would be. The idea was to provide low interest loans to the poor. Unfortunately, some of the poor couldn’t even get them because they couldn’t meet the credit requirements. They couldn’t do this because they were high risk people with a history of defaulting on loans. So Fannie and Freddie, bowing to pressure from congress (actually an order), lowered the standards and the loans were approved. When those loans went into default (as anyone in the credit business could have predicted), then the companies collapsed.

Now just imagine if our ONLY health care option was this, and if it collapsed. Of course, it wouldn’t. We’d bail it out, but you see where this is going.

Friederick Hayek wrote a very good book in 1948 called “The Road to Serfdom” in which Hayek (a refugee from Nazi Germany) argued that state control of the economy inevitably creates a death spiral in the industries controlled, because prices are artificially decreased, bringing down first quality of goods produced (if you have a $10,000 car, you’ve got to sacrifice some features), and then bringing down all the benefits from that quality, which is a drain on the economy, and finally, because it is publicly subsidized, bringing about a growing tax burden that is the economic equivalent of cutting up the goose that laid the golden egg.

Empathy, when it comes from the government, has a cost, and that cost sometimes ends up counter-productive. How can we pay for this cost? Sure, we can raise taxes on the rich, a favorite answer. But the top fraction of earners already pay the vast majority of the taxes. You can only go so far with that, and ultimately, it becomes a counter-productive strategy. The rich are the people who hire other Americans, and if you tax them too much they will stop hiring. In fact, with 10 percent unemployment now for the first time in over 20 years, you can argue many of them already have.

These are not problems that can’t be solved, and if we had true bipartisanship, maybe they could be. But now, we’ve got a president whose idea of bipartisanship consists of telling people to shut up because “I won.” After 8 years of a president who said “you’re either with us or you’re with the terrorists” on foreign policy, now we have a president who says essentially the same thing on domestic policy.

The GOP and even moderate Democrats have some good ideas that are simply not even being allowed to be brought to the table in the rush to create a single-payer system, either in fact, or by establishing a system that evolves into that.

The only way we can have a true debate on the issue is if all sides get out. It is out of a sense of getting out one side on the issue which I do not think is being heard enough, that our publication exists. If you disagree with the articles, fine. But free speech and free debate requires that all perspectives be aired.