Saturday, November 7, 2009

Public insurance is socialistic medicine? I think not.


An economic system in which the production and distribution of goods are controlled substantially by the government rather than by private enterprise, and in which cooperation rather than competition guides economic activity. There are many varieties of socialism. Some socialists tolerate capitalism, as long as the government maintains the dominant influence over the economy; others insist on an abolition of private enterprise. All communists are socialists, but not all socialists are communists.

The American Heritage® New Dictionary of Cultural Literacy, Third Edition
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.

I find a dictionary definition of socialism to be very useful in public discourse. Way too many people are using that word to smear-paint other people's ideas, and almost none seem to know what it means, really.

A prime current example is the branding of a public insurance option as "socialism". It is not.

One needs to remember the outcome of the world's biggest experiment in socialism-as-the-only-economics plus ideology-gone-overboard: Soviet Russia. Complete and utter failure, greatly compounded by its hidebound rigid dictatorship.

The arguments that a government program competing with private entities will drive the private entities out of business presume two things. (1) the government program will efficient enough to outcompete by providing better value at lower "cost" (because of "invisible" taxes), and (2) that there is no legal bar prohibiting private enterprise.

The Russian experiment failed precisely because assumption (1) is untrue in actual practice. Large bureaucracies are never efficient, not even corporate ones. Our largest organizations present the illusion of efficiency, not the fact. See today's NASA. See also Boeing after absorbing McDonnell-Douglas, et al. I rather doubt the 787 will be a success, and that failure will put Boeing out of business (eventually).

For that same reason, I think our free market economic system might work a lot better if one of the "fair play" rules imposed upon it, acted to prevent unlimited growth. "Too big to let fail" is just too damned big. Too big is too economically dangerous to the rest of us, and when they misbehave, requires "bailouts" that just don't need to happen.

Regarding assumption (2), prohibiting private enterprise by dictatorship fiat is the only reason Russian socialism lasted as long as it did.

For the same two reasons, Red China is quietly going capitalist (although they haven't shed their ideology yet). Eastern Europe already shed their ideologies and went capitalist. About the only country that didn't was Cuba, and yet they were never exactly Soviet-style. (Once rigid-ideologue Fidel is dead, I think you will see Cuba belatedly transform.)

The main take-home lessons from the history of economic activities in all the western civilizations are twofold. (1) that market economies really do work best, but also (2) that "free market" is not synonymous with the "market-free-of-rules" espoused by some in American politics for about 30 years.

Further, Europe, Japan, and Australia provide good examples that democratic societies can operate just fine with a blend of capitalism and government-run entities. In particular, France and Germany have been quite successful. There is nothing wrong with this, it works, and they are still free.

I would point out that, excepting Japan, people in these countries generally enjoy more paid holidays, better retirements, better working conditions, and in some cases, longer and healthier and happier lives than we do here. All one need do is actually talk to them to find out, one-on-one. I did that during my trip to Spain for the international technical meeting last April. It was a real eye-opener.

I think we here in the US may be too tightly constrained by unjustified ideological beliefs mandated by some late-19th and 20th century traditions. These ideologies were not mandated by the 18th century Constitution our forbears wrote for us.

To truly succeed, one simply does what actually works.

Screw the ideologies.