Posted tagged ‘Scarcity and Supjective Value’

Healthcare: Market Solutions vs. Bureaucratic Decrees

March 28, 2017

Modern thin line design concept for HEALTHCARE website banner. Vector illustration concept for healthcare diagnosis and treatment.

Our current battle over healthcare is being debated from a false premise. Most people have bought into the lie that healthcare is or should be a right. It isn’t a right as understood by most people. The right to keep and bare arms doesn’t mean someone else is obligated to supply a gun. The right to free speech  doesn’t mean someone else is obligated to supply a microphone, a stage and an audience. But for some reason we think a right to healthcare means someone is obligated to provide it.

The truth is healthcare is an economic good or service produced by individuals. These individuals own what they produce. It is their property. No one has a right to what someone else produces.

How can you gain possession of what someone else owns? 1) You can produce something they want and exchange it for what they have produced. 2) They may give it to you as a gift. 3) You can steal it. 4) You can have someone steal another persons production, exchange it for what you want, and have them give it to you indirectly. 5) You can have someone else steal it and give it to you directly.

Government intervention into the healthcare market, up to and including Obamacare, has been an incremental march away from the first two and toward the last two. Everyone knows that direct theft of another person’s property is unethical and immoral because it is illegal. But when we are one or two steps removed from the direct theft, for some reason we think it’s ethical and moral because government says it’s legal.

hand writing economic demand - supply graph on chalkboard


Healthcare is an economic good ruled by the laws of economics. Scarcity, subjective value, supply and demand are a few laws we need to look at in order to understand why government central planning isn’t the right process to ration the scarce good we call healthcare.

SCARCITY: Healthcare has to be produced. It is a scarce good. It isn’t like the air we breathe. Air doesn’t have to be produced by anyone. The abundant supply of air exists naturally. You might say the air I put in my tires Isn’t free. The air you put in your tires is first compressed and then forced into your tires. Compressed air has to be produced, therefore it is an economic good and not free like the air you breathe.

SUBJECTIVE VALUE: Everyone values healthcare differently. There is no objective value that can be placed on healthcare. The value for healthcare is subjective depending on each individual’s needs and wants. Both the demand for and the supply of healthcare is valued subjectively.

SUPPLY AND DEMAND: Since healthcare is scarce and valued subjectively, the law of supply and demand comes into play coordinating its production and consumption. The price reflects subjective valuations by individuals related to supply and demand. The subjective valuations at the existing price drives supply and demand to a new coordinating price.

The law of supply and demand states that more is demanded at a lower price than a higher price and more is supplied at higher price than a lower price. Price changes are constantly re-coordinating supply and demand according to the subjective valuations of individuals.

The supply of healthcare is limited by the scarcity of the resources, labor, capital and time needed to produce it. It is also limited by the demand for healthcare. If the demand for healthcare increases against a fixed supply, the price will go up in order to ration the scarce resource. As the price rises more resources, labor, capital, and time will be attracted to producing healthcare. As the supply increases to meet the higher demand a point will be reached where the price will stabilize and then decrease as supply outpaces demand.

The changing price sends information to consumers and producers about the scarcity of healthcare. These price changes are figured into the subjective valuations of how much each consumer will demand and how much each producer will supply.

Free market prices are the most efficient way to ration healthcare in a world of scarcity and subjective value.

government regulations, magnifier, pencil


Government mandated healthcare subsidies, taxes and regulations distort the prices that would normally exist in a free market. Consumers demands and producers supplies are going to change according to these distorted prices. A mismatch of the supply of and demand for these scarce resources is brought about by government intervention.

What did you think was going to happen when more consumers were brought into the market by the Obamacare individual mandate? Subsidies also increase demand. Prices were guaranteed to rise as demand was artificially increased.

What happens when prices for healthcare services paid by Medicare and Medicaid are fixed below what they would be in a free market? The supply of health care would decrease at these lower prices.

Obamacare created more demand and at the same time created the incentive to supply less. What happens to the price when more is demanded and less is supplied? Even though our politicians told us costs would go down under The Affordable Care Act, anyone who understood basic economics could have predicted which way the price would go. And that isn’t even including paying for the government bureaucracy needed to implement the ACA.


The failure of the Republican repeal and replace bill is a good thing. The bill was just an exchange of a set of not quite as bad new government regulations for the existing bad government regulations. Their is only one way to reduce the cost of healthcare. Get rid of government subsidies, taxes and regulations. Unfortunately all Democrats and a majority of Republicans don’t understand basic economics.

Quoting Ludwig von Mises – “Economic history is a long record of Government policies that failed because they were designed with a bold disregard for the laws of economics.

Republicans are also scared of political fall out when they get rid of healthcare entitlements. The Democrats and their accomplices in the main stream media will trot out all the sob stories of people whose ‘access’ to healthcare was taken away. Of course the MSM didn’t tell the stories of all the people who had their healthcare costs sky rocket under the ACA. These rising premiums paid for the increased costs and subsidies caused by government intervention.

Millions of families got crushed by the higher cost of healthcare. These were small businessmen and people who worked for small businesses in the more rural counties in America. These are the same people who were barely able to stay afloat when the economy crashed in 08. They cut their discretionary spending to the bone. Many had to use their savings and retirement accounts to make it through the recession.

When the Affordable Care Act was implemented after 2013 there was no spending left to cut to pay for the higher cost of healthcare. Wives had to go back to work just for the insurance. Men took second jobs for the same reason. These are the people in the swing states of Ohio, North Carolina, Florida, Iowa, and the Democrat States of Wisconsin, Michigan and Pennsylvania who voted for Trump. He was their only hope. They literally couldn’t afford to vote for Hilary.

Fortunately market alternatives to Obamacare are starting to appear around the country.

Read Here- Direct Primary Care, A No-Insurance Model.

Read Here – Florida West Virginia Lawmakers Take Interest In Insurance Free Approach.

Read Here – Atlas MD, Wichita’s Premiere Cash-Only Clinic.

As the price of Obamacare goes higher the demand for Obamacare will decrease. This higher price will also bring about lower cost market alternatives to the Government run system. These alternatives will be outside of the system. We can call these free market alternatives as long as Government doesn’t try to shut them down with regulations. If they do try to shut them down they will then become black market alternatives (the new free market).

Fracking is an example of a market alternative to the OPEC cartel and our Governments regulations on drilling off shore and on public land. When the price of oil rose to above $110 dollars a barrel it became affordable for hydraulic fracturing to take off on private land. Now that it is profitable to frack at $45 a barrel the OPEC cartel has lost its monopoly power. The high price of $110 was what eventually brought the price of oil down. Healthcare will be no different. The market will find an alternative as the price goes higher.

Read Here – Trumpcare Defeat Could Be A Small But Important Victory For Healthcare Freedom.

Read Here – Ryancare Is Failing -What Should Happen Next?

Read Here – Forget Obamacare, Ryancare, And Any Future Reformcare – The Healthcare System Is Completely Broken.

Economic reality will end Obamacare. Let’s hope the Government doesn’t end the market alternatives that have started to take root.



Must Reads For The Week 3/26/15

March 26, 2016

This is from Mark J. Perry at carpediemblog. “Scaling Back Government: a) A state legislative subcommittee in North Carolina recently approved draft legislation that would dissolve 15 occupational licensing boards in the state, and b) Nebraska hair braiders can’t be jailed for performing their services without a government permission slip, thanks to a new law.” This is a move in the right direction. Shrinking government is possible at the state and local levels. It is difficult at the Federal level.

Venn Diagram Sunday, by Mark J. Perry, at carpediemblog. Mark Perry’s Venn diagrams are always interesting. He shows 12 of his most recent diagrams in this post. Here is an example.


Obamacare Turns 6 – $55 Billion In Waste, So Far, at We had lower cost healthcare when the 30 million who didn’t have health insurance went to emergency rooms for their care. Why did we pass 2500 pages of rules to help 30 million people when they weren’t denied healthcare in the first case? Answer. Politicians wanted more power.

Under Revised Policy, College No Longer Threatens To Lock You Up For Passing Out The Constitution, at I bet the college administrators are worried that the Marxist propaganda they’re feeding the students might have some competition.

Transgenders And School Bathroom Question Solved, at This is an outside of the box solution. “Abolish the public school system.” This would also solve a lot of other problems.

Forget “Unity” We Need The Freedom To Disagree, by Gary Galles, at misesca. In a world of scarcity and subjective value, there can be very little agreement. Using government power to force people to agree has a high cost. To have less contention between people all we need to agree on is individuals have property rights and voluntary exchange (contract). Our country was founded on these basic principles.

This Place Needs A Recession, at From the article: “The power center of America (Washington D.C.), where politicians, crony capitalists and lobbyists plot, continues to grow……..built on the backs of US taxpayers. DC needs a recession.” The growth in the power of government has allowed politicians to split Americans up into groups and pit us against each other. While we waste time bickering with each other about which party or politician has the “solutions”, government power continues to grow. We don’t realize that answers to our problems can’t come from government because the problems were caused by government “solutions” in the first place. Read (People Want A President Who Will ‘Get Something Done”.)

The Nanny Always Wins: Fantasy Sports Stop Operations In New York, by Scott Shackford, at This is an example of private property and voluntary exchange being trumped by politicians and bureaucrats using the force of government.

German Response To Negative Interest Rates, by Paul-Martin Foss, at Just as Japanese people responded to negative interest rates by purchasing more safes, German people are responding by withdrawing money from their accounts and putting it in safe deposit boxes. This is a perfectly logical response. But it is a response that our anointed central bankers somehow failed to see. Do you think the banks, sanctioned by government, would go into these safe deposit boxes and take the money and leave an IOU?


Markets Are Our Best Hope For Peaceful Cooperation, by Andres Syrios, at Excerpt from the article: “…although selfish, human beings are a social species who long for a sense of community….and while morality – such as the golden rule, may be applied universally – human cooperation and empathy are not…The question left before us is what societal arrangement does such a nature best lend itself to. Karl Marx envisioned a future that would be “From each according to his ability, to each according to his need.” But as the biologist E.O. Wilson cleverly noted of communism, “Wonderful Theory, wrong species.” Yes, what works well for ants doesn’t so much for human beings.”…….”Cooperation is a great thing, but it has only been shown to work in small groups. All that’s left with regards to large group interactions is force or exchange. So democracy, on a large scale, is merely people voting on if, when and how to use force against each other.” Read, Individual Liberty Is The Least Contentious Way Of Settling Differences.