AUSTRIAN ECONOMICS ADDICT

The grass roots of the Democrat party is trying to pull the party toward an ideology of a centrally planned socialist economy. The grass roots of the Republican party is trying to pull the party toward an ideology of individual freedom and free markets. The establishment leadership of both parties only pay lip service to the ideologies of their grass roots base, because the status quo leadership of both parties wants two things. 1) They want to protect and grow the power of government. 2) Each wants to be the majority party that wields this Government power.

The ideology of the grass roots is a petty annoyance that has to be finessed politically in order to cobble together a 51% majority to gain control of the levers of power. You can see this playing out in the current healthcare issue.

The establishment Republicans in congress want no part of getting rid of Obamacare and replacing it with a free market in healthcare. Grass roots want government to get out of the healthcare industry and allow the best possible solutions to be spontaneously created by individuals cooperating in a free market. This article; DISGUSTING New Senate Healthcare Bill Adds Back Taxes That Were Originally Eliminated, at economicpolicyjournal.com. shows the Republican establishment for what it is. It’s a party giving big government favors (at taxpayer expense) to people who fund their reelections. This is being disguised as solutions to our current healthcare problems. The original problems in healthcare were caused, in the first place, by government intervention into the free market over the last 100 years. (Read: New Government Healthcare Regulations will Not Cure The Results Of Previous Government Regulations.)

The Democrat party is having a similar problem in California. The establishment of the party had an opportunity recently to pass a single payer healthcare system. When they didn’t pass the bill, the grass roots of the party started to rebel because they want government run healthcare. This article; California Democratic Party Civil War Underway, at cacus99percent.com. shows that even the Democrat establishment realizes a single payer system isn’t workable and will bankrupt the state.

So are the grass roots of the Democrat party and the establishment of the Republican party fighting for the same thing? The Republican establishment wants more government intervention in healthcare than the grass roots constituents of their party, and the grass roots Democrats want more government intervention in healthcare than members of the establishment in their party. Although they differ in the degree of government intervention, I think, California grass roots Democrats and establishment Republicans agree with the direction healthcare is moving. And similarly and grass roots Republicans and California establishment Democrats disagree with moving in that direction.

SO WHERE ARE WE?

We’re in a mess? The first thing I want to clear up is this point. There are no “solutions” to the problems in healthcare. There are only trade offs or tolerable bests that exist. Why do I say this? Because healthcare is an economic good. Which means it is a scarce. It doesn’t exist in abundance. It has to be produced by someone before it can be consumed. It is not like the air we breathe. Everyone on the planet can breathe as much air as they want because it exists naturally in abundance. It doesn’t have to be produced by anyone before it can be consumed. Some might say “I pay for the air I put in my tires”. Yes you do, but you are not paying for the air. They are paying the cost of compressing the air. Compressed air in particular is an economic good, air is not.

As much as some would like to believe healthcare is a right, saying it is a right doesn’t make the reality that is a scarce economic good magically disappear. Because of this fact, there has to be a way of rationing healthcare because there is not enough to satisfy the demand for it. There are two ways to ration economic goods. Through prices in a free market, or by bureaucrats in a central planned government system.

WHY HAS THE PRICE OF HEALTHCARE SKYROCKETED?

You have to look no further than the law of supply and demand to figure out the answer to this question. What do I mean? On the one hand every regulation passed by politicians and bureaucrats concerning healthcare over the last 100 years works to restrict the supply of healthcare. When supply is decreased against a fixed demand the price will increase. On the other hand politicians and bureaucrats are using tax payer dollars to subsidize healthcare which increases demand. When demand increases against a fixed supply the price will go up.

Bureaucratic intervention into the healthcare market by government has worked to decrease supply and increase demand over the last 100 years. We don’t have to look any farther than the law of supply and demand to understand why the price of healthcare has increased.

Over the last few decades the price of healthcare has gone up exponentially. Politicians see this increase but instead of getting rid of the policies that caused the increase, they try to to shift the increased costs of healthcare to the tax payers or insurance policy holders. But shifting costs doesn’t cut costs. In fact, shifting the cost increases costs because the only people who have an incentive to keep costs down are the people who pay them.

REPLACE WITH WHAT?

The truth is a free market is the only way the lowest possible price can be discovered. Healthcare can never be “free” because it is an economic good. Third party payers and cost shifting schemes distort supply and demand information. This distortion increases the costs above what they would be in a free market. Replacing Obamacare with a different set of government regulations won’t work. The only thing that can bring down costs is a free market in healthcare.

Unfortunately most people have a hard time wrapping their head around the abstract concept of a spontaneous order of a market vs. the seemingly concrete plans by central planners.

Having an order formed by individuals cooperating and competing inside of laws concerning property, contract and tort, allows for trial and error of multiple ideas by millions of people. The best way of doing something will be discovered and imitated.

A top down order formed by bureaucrats making plans that boxes individuals inside of narrow rules limits the amount of knowledge that can be brought to bare in discovering the best possible way of doing something. It also makes it almost impossible to change direction when the one and only plan is obviously not working. Just look at our present situation.

SOLUTION

Remember there are no solutions to healthcare, just trade offs. There is only one way to get to a point where individuals actually can make the decisions about the trade offs concerning healthcare. Get Government out of healthcare.

Since the grass-roots and the establishment of the Democrat party is never going to allow a free market in healthcare, the only chance is to help the grass-roots of the Republican party purge their party of the establishment leadership in their party and replace them with members who understand how free markets work. Repealing and replacing members of the Republican establishment takes consistent effort over many election cycles. Just look at what has happened to the shift in political power since the Democrats ruled all three branches of Government, most state houses and most governorships in 08 (read here).

Related Article – Spontaneous Order = Free Market Economy, at austrianaddict.com.

Related Article – Spontaneous Order More Complex Than Top Down Planning.

Related Article – Spontaneous Order Utilizes More Knowledge than Central Planning Could Ever Hope To Utilize.