The American Medical Association has been proposing one protectionist or statist piece of legislation after the next, and while their motives are just as impure as ever when it comes to challenging the growth of retail-store healthcare services, as Dr. Thomas Davis points out, these retail-chain clinics aren’t the free market supporter’s wet dream that some would have us believe.
The exchange by him and Tom Firey over at Cato is interesting, but I’d like to focus on Dr. Davis’s statement on what he (and putatively Mr. Firey) would like to see in a perfect world: “I would prefer a world where a patient can get any medication over the counter without a prescription, where doctors are not licensed, there is no insurance and patients paid cash at the time of service. Health care would be far more efficient and transparent in such a world.”
The problem with “perfect worlds” is that the way we develop our conception of them is flawed. We take observations of the real world, we then develop a model of real world dynamics that works under certain conditions, and then we take the model and try to extrapolate from it a vision of how the real world should be, ignoring those conditions in the process. I’ve dealt with this with market anarchists as well.
We must remember that the free market is a model, a very powerful one, but again dependent on certain conditions that never exist in the real world. To ignore the fact that those conditions do not exist in your “ideal” system is to lie to yourself.
What Dr. Davis’ admittedly appealing utopian view seems to suffer from are the myths of rationality and perfect information, necessary preconditions for a “free market” to operate under. Medicine is a complex and highly specialized subject. At least, that’s why my professors tell me that I won’t be ready to be a full-fledged doctor until I’m 30. And while I hate to come off as elitist, it is simple fact that the consumer — no matter how educated, intelligent, or motivated — would hardly be in a position to understand exactly what a service is, let alone how effective or necessary it may be.
Under such conditions, it’s hard to accept Dr. Davis’ view without a few qualifications:
“Where a patient can get any medication over the counter without a prescription” — so long as something similar to the Protection of Lawful Commerce in Firearms Act was established. I’m not a big fan of Big Pharma. Not of their predatory business practices, the outright lies they make about cause and effect, their connection with doctors, none of it. But when all is said and done, medicines are a good thing. And it is very costly to research new ones.
“Where doctors are not licensed” — where they don’t need to be licensed, sure. But I contend that licensing would become an important factor in mitigating the effects of imperfect information in the marketplace. Licensing would become a voluntary and private endeavor, and so become a form of branding. Rather than the patient having to research me with fervor, he could simply turn to my licensing agency, look at how rigorous their standards are, and then be able to make an educated inference about my own abilities.
In fact, turning to a free marketplace would only make licensing more meaningful. Academies and Board organizations would compete to attract the most competent doctors; organizations like the ever more irrelevant AMA would cease to exist, being more dependent on the consumer rather than the provider.
“Where there is no insurance” — Insurance has a several thousand year old history. Even if we were to somehow make it magically disappear today, it would reappear tommorrow in some other form. What we should do is decouple health insurance from employment. It was, as usual, well-intentioned legislation that created this juggernaut. If government had never mandated that employers pay health insurance costs, employers would have never tried to buy insurance in bulk. And if that had never happened, the monopolistic systems we see could never have been established.
The key point I’ve tried to make is the importance of freedom of choice. The idea that the American healthcare system is anything resembling a free market is nothing more than a myth. The idea that the American healthcare system can be a completely free market is also a myth. A free market is like a massless string, very useful for theoretical problems and simplifications, but very hard to find in the real world.
Nevertheless, when choice is maximized, individual and organization alike must compete and with competition will come efficiency and quality. Of that I have no doubt.
As to why I — unlike the AMA — am unafraid of the ensuing competition, I’ll have to quote Dr. Davis again: “My point is not that these clinics are ‘bad.’ The competition in the short run is probably a good thing, and I can out-compete Wal-Mart on the delivery of high quality health care any day.”
(No Ratings Yet)
Loading ...
Ultimately, the war supporters in Congress prevailed in the vote on the resolution. Still, the vote was significant because it places every member of Congress on the record as supporting or not supporting the unconstitutional, costly, violent occupation of a country that never attacked us. This vote should serve as an important reminder to the American people of where their representatives really stand when it comes to policing the world, empire building, and war.
Gardner Goldsmith explains why claims by politicians that consumers can become "irrational" and why claims by the same politicians that government can help "fix" markets are both false and misleading. He also explains what the terms Praxeology and Epistemology mean, which is key in understanding how to place free markets in their proper place among human history.
Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works license.
Video published by this site is licensed under a Creative Commons Sampling+ license.
Facebook
Digg
del.icio.us
reddit.com
Newsvine
Jun 27, 2006
Moonage Political Webdream
Jun 27, 2006
OK so I’m not really a cowboy. » How Free Should The Medical Market Be?
J. Bruno
Jun 27, 2006
Perfect information is not a requisite for a free economy. To contend so is contend that since man is not omniscient, he is incapable of any knowledge. It amounts to a denial that there are such things as facts and that man is capable of discovering and acting on them.
Neither is perfect rationality a requisite for a free economy, only that many men act rationally much of the time. This is already true; as evidence I offer any developed country. But if your fear is that some can not succeed in a world that provides only for rational individuals, and your wish is to provide a sanctuary for the irrational, my response is that it already exists. It’s called the Middle East.
I would take Dr. Davis’ use of the word “license” to refer specifically to government permission. Also, I would take “no insurance” to mean “no government mandated insurance.”
It doesn’t seem to me that you disagree very much with Dr. Davis’ notion of a free market, only the underlying principles that justify it. Your fundamental error is that of Kos and other libertarian-wannabes: entertaining the false dichotomy of the practical and the ideal. In fact, there’s no difference between the two. Action without purpose or context can never be considered practical, and no principle that flies in the face of reality, of facts, is ideal.
How can you claim that a free market is a utopian ideal, but that it would never actually work? Would it not, then, be something other than “ideal”– a non-ideal market? And if a free market is not an ideal market, then should we not make practical steps in the opposite direction, presumably to what is ideal?
IndianCowboy
Jun 27, 2006
a market will never be truly free without perfect information or perfect rationality. I stand by that. If the free market is the platonic form, then we can only approach it in reality, never quite achieving it.
An important part of applying a model to the real world is understanding when and how the conditions the model relies on will fail to be what is actally seen in the real world. Which is what my discussion was meant to show. I’m saying that whether through government or private corporations, we will end up with a less than free-for-all system. There will be a heirarchical structure, and such a structure is on balance a good thing.
your discussion of a false dichotomy in the 4th paragraph, maybe I’m just obtuse, but I’m not seeing your point. Is an ideal gas not really ideal? Maybe it’s my background in science rather than philosophy, but ideal has always meant a situation in which certain conditions apply; these conditions rarely apply in the real world. Economics being more or less scientific in its methodology, the same would apply to that field.
This is why economists model situations in which the degree of imperfection of information varies. This is why the ideal gas equation has to be modified to take into account that real gas particles do have weigth and do have volume. This is why saying ‘oh free markets!’ without acknowledging the fact that what you’ll have wont behave the way you think it will based on the model.
The kos kiddies say ‘free markets don’t work. time to head toward statism!’
I say ‘markets work. But they’re not completely free.’ Which is a completely different thing.
J. Bruno
Jun 27, 2006
“The market” is not a “platonic form,” not an imaginary construct, but a short-hand term for real people engaging in the activity of trade. So we can never achieve a perfect, unfluctuating market–so what? Such a fantasy “model” has no correlation to nor bearing on reality. The only matter of consequence is the fact that the less government intrusion, the more efficient the market. A market with no government intrusion is ideal.
I find your statements about “free-for-all systems” and “structure on balance” unintelligible. If your point has to do with the old socialist fiction that unregulated business will monopolize, drain civilization of all value, and finally enslave the humanity, I will direct you to those who those who concur.
I use the word “ideal” as it applies to reality. It is often mistakenly used to describe the impossible– scenarios that contradict facts. Such solipsisms have no place in meaningful conversation.
IndianCowboy
Jun 27, 2006
You are missing the basic point that market efficiency is dependent on the fidelity of information and the ability of the consumer to act in a rational manner.
you can keep repeating it over and over that this isn’t the case, but that doesn’t make it true.
I don’t think I mentioned government intrusion at all in my post. As for ‘unregulated business monopolizing’ I said nothing of the sort. What I did say was that laypeople will be taken advantage of in a market free from regulation.
which is true no matter how much you try to deny it. It’s supposed to take 11 or more years to train a doctor. Yet the patient is supposed to understand the ins and outs of procedures and medications as well as he did?
RIGHT.
If ‘the market’ is so efficient and so beautiful why do chiros peddle their crap?
J. Bruno
Jun 27, 2006
I addressed your first point in both my previous posts.
I could only guess what you meant by “free-for-all systems†and “structure on balance,†however I was not far from the mark. It’s the same premise: individuals are but the hapless pawns of some ultra-powerful mega-beings without a chance of survival absent the guiding, coddling hand of Big Brother who always knows best. Your ideological comrades welcome you with open arms.
Where there’s necessity there’s opportunity. You basically explained in your article how “lay people” would find doctors in a free economy: they would pay someone who knows to do it for them.
IndianCowboy
Jun 28, 2006
no matter how many layers we involve, there will be a LOT of misallocation of resources.
Competition is good, opening the market is good. But don’t turn a blind eye to the fact that the medical market will be comparatively inefficient. That is all I’m saying.
I don’t believe in government intervention unless it’s a commons or anti-commons situation. This isn’t one of those. ergo, I don’t believe in government intervention. But I don’t believe in whitewashing.
All I’m trying to do is say ‘yeah, free-er markest are good, but things won’t be as good as they might be in other markets’. It’s not a hard concept to understand.
This is much like when a doctor tells you that yes, with hard work and diligence you can recover, but you’ll never be quite as healthy as you used to be.
You can keep namecalling, though. I don’t mind.