As mentioned in an earlier article, we can see that some things are problematic: health care, the housing market, the environment, education, and of course the ever growing poverty problem. These are true maladies: some may rightly call them crises. But how well are the causes understood? What are the true causes? So often, the causes go unseen, just as the true effects of potential solutions would.
What’s wrong with health care? For some, very little. But for many, costs have risen significantly, and it looks as if they will continue to do so. Quality has improved, of course, but so has cost. Why is this so? We can rewind a few decades, when things were cheaper. Yes, the technology was not as good. Procedures were not as developed. And so many think that the improvements in medicine and technology are to blame for increasing costs. But let’s compare another industry that also had technological improvements in the last few decades: the electronics industry. The electronics industry has grown by leaps and bounds in the last few decades. New products and new technologies are coming out all of the time. And yet prices remain relatively low. Any increase has surely not been as dramatic as in the medical industry. How has this been done? How have prices remained low while technological advancements expand? One big difference is the involvement of government.
Regulation costs money. For the government to regulate, an arbitrary price is set by bureaucrats. This is because an arbitrary regulatory role is set by bureaucrats. This arbitrary role obviously has some costs tied to it. When the market regulates, prices are determined by market forces, which ultimately reflect the consumer’s wishes. Competition drives prices down and quality up. Monopolies tend to give inferior service at high prices. There’s little incentive, much less necessity, to streamline unnecessary functions in favor of optimal ones. The market has no such luxury. Only the critical items and processes can be included. Fluff must be left out for the company to remain competitive. In many cases, even this is not enough. The right processes done poorly leads to poor business performance. This can only be solved through drastic measures (i.e. restructuring) if at all.
It is understandable why the medical industry has been so regulated in the last few decades. After all, people’s health and lives are at stake. But why should such decisions be left to distant bureaucrats? Why are individuals so untrustworthy in this regard?
One can look at market-based certification methods (i.e. ASTM, Consumer Reports, J.D. Power, etc.) and find remarkable incentives to achieving a certain certification. Aren’t market-based methods subjective and biased, you ask? I would question the objectivity of government agencies. What makes us think that monopolistic bureaucratic regulation is unbiased? Wouldn’t there be at least the possibility of an agenda there, as well?
In fact, we can see industrial-governmental collusion in many areas (FDA, military-industrial complex, etc.). These are far from the rare exception, and indicate a pattern of unhealthy collusion. Why, for instance, are utilities companies monopolistic? We can trace this back to government involvement. Why are there so few telecom companies? Again, we can trace this back to government involvement.
What about problems with the housing market? Again, we see government involvement. Not only do we see government involvement, but we see the problems increase as government involvement increases. These are the same types of unseen problems that come from the proposed solutions to these problems. To blame the problems on “greed” is disingenuous: has greed risen by 400% in the last few decades? As I remember it, greed has been around for some time.
In the case of education, there has been comparatively little private involvement in recent years. It is quite hard to blame “greed” here when the benevolent hand of government has been so involved. Government has had their heavy hand involved for decades. We can look at the ballooning Department of Education and wonder how many billions of taxpayer dollars are needed to bump the average performance on an arbitrarily determined test up a couple of percentage points? How many more billions will we have to borrow from the Chinese to stop students from dropping out in record numbers? How many billions will we have to print to narrow the ethnic achievement gap? It must be frustrating for the educational bureaucratic establishment to see so much mediocrity and poor performance, and not have the usual suspect to blame it on: free enterprise. Instead, the ineptitude all falls in government’s lap. The cry goes out, “Mismanagement! We need better management!” I would ask what evidence do we have that the system works? What evidence do we have that we will ever find a manager who will actually be able to achieve what they are paid to achieve? I would suggest that in all reality, federal government involvement has done many things we hoped it would not do, and not done many we hoped it would. Problems are getting worse, and until we realize that federal involvement is at least partially to blame, they will only keep getting worse.
And yet few see it this way. The problems we see are to be solved by more government, not less. The great irony of this situation is that we are continually turning to the source of the problem to solve the problems they have caused. Time and again, the government is the (at least partial) cause of the problem, and paradoxically it becomes part (an objective part, of course) of the proposed solution. It is like asking a vandal to paint your house. Or a thief to protect it. Or a demolition expert to build it. Why are we continually surprised by the ineptitude of central government planning when we have been shown this time and again?
This is indeed an irony, and sad to say, a bipartisan one. Few understand that we got ourselves into this mess with taxation, regulation, and government involvement. And so it is few that truly understand how to get us out.