Rationing again: For all ponies, there is some pony, such that you won’t get that pony

Once again, you are working far to hard.
There is no rationing now, and there will not be rationing in the future.

Make an analogy with food. Is there rationing of lobster and sirloin steak and meals at the French Laundry and the Inn at Little Washington? Of course not. If you have the cash, you can have the meals. If you don’t, you can’t. And so with health care -you can buy whatever you want. There are doctors waiting to serve you, if you have the cash. That’s not rationing, that’s the market setting a market price. It’s the exact opposite of rationing.

But if you are poor and you must use food stamps to eat, can you use them for dinner at Chez Panisse? Sorry, Alice Waters doesn’t take food stamps. That doesn’t mean those meals are rationed.

And so with health insurance. Your insurance program, private or government, won’t buy everything – but it should buy what you need to stay alive. That’s not rationing, and calling it rationing is cute but false. Nobody’s going to stop you from buying services outright, as long as you have the cash.

Well, in Ms. McArdle’s defense, an awful lot of people who are proposing single payer in the US somehow *do* seem to believe that it would allow *everyone* to get the same level of healthcare that the well-insured currently do. And *that*, specifically, is dreaming in technicolour.

Of course, as a Canadian who likes our health care system, I have no problem with real, honest-to-goodness rationing and denying Grandma the ability to buy her pacemaker (in Canada, at least). And yes, I and my family have been on wait lists for various treatments (including cancer).

It’s simply worth the trade-off of much lower health care costs for a little lower health-care standards.

I would like to propose a simple, easy-to-grasp term for the mechanism by which the (McArdle first sense) sort of rationing is carried out by the invisible – if occasionally contractually visible – hand of the free(ish) Market when allocating scarce goods. Why don’t we call it “rationing by price”?

Obviously, it would have been rhetorically stronger if we’d somehow managed to hoodwink economists into using this term for some time ahead of this particular debate. But a very young pony is better than none.

I am pretty sure that an important part of the meaning of rationing is that it is government interference in the market. Hence it’s use as propaganda for glibertarians. If you health insurance won’t pay for X, that’s just too bad. If the government won’t then it’s….arrrrgghhh..RATIONING!

Iow I have to agree with Ben A that you are trying to philosophically analyse something that is really just shallow rightwing propaganda. The word was presumably chosen for its Evul Gubmint connotations and not much else.

To echo a number of the other posts: brilliant as it is, where do you find the patience?

Also Engels and others: I don’t know about elsewhere (UK\Canada) but can say that the top up\ purchasing of additional healthcare etc is somewhat controversial in Ireland because the same hospitals, doctors and other infrastrucutre are routinely used for both private and public healthcare. So if you have private healthcare (which is 100% voluntary) you will get preferential treatment over public patients.

No Ben, I disagree, and find it therapeutic.

Seriously I think it is good to think this stuff through when done well, and if there was more of it there might be a little less confusion. That way, should the dead-wood press ever stop their inane horse-race fixation and make it their business to inform we might get a result.

“They slipped through the cracks. But no one built the cracks, in a positive sense. The cracks themselves just sort of slipped through the cracks in some higher sense.”

this seems an excellent point of very general import; indeed, far too excellent and general to be wasted on this debate.

in other words: this is a notice of intent to re-purpose.

in other words: i’m gonna steal that line one a these days.

But perhaps you don’t need to specify the domain of either ‘all imaginary goods’ OR ‘all people’ in order to say that ‘there exists some imaginary good x that is scarce or unattainable for person y’ . Both seem to be implied (asserting the existence of a particular is dependent on the existence of the universal category of which that particular is a member, so it must be assumed?)

@6, hmm, that’s odd: why would you deny anyone the ability to buy a pacemaker? Pacemaker is just a gadget.

Just to make it clear, I’m talking about medical services in general – not the gadget.

pragmatic concerns that allowing the middle class to buy their way out of the public system may lead to the evisceration of the public system.

John Holbo nailed it. Also, Canada has some geographic advantages here, and I’m all for taking as much advantage of it as possible. Specifically, Canada *does* have a second tier: it’s called the USA.

This second tier is just far enough away that it rarely impinges upon the our consciousness, but does allow the wealthy or the truly desperate to obtain extra health-care. This arrangement works beautifully as both a valve to release pressure towards a second tier and keeps pretty much all Canadians invested in the system.

First, hammering McArdle into the ground on a regular basis is a good thing. Otherwise, she becomes the ‘respectable center’.

Second:

Tom West:
” Well, in Ms. McArdle’s defense, an awful lot of people who are proposing single payer in the US somehow do seem to believe that it would allow everyone to get the same level of healthcare that the well-insured currently do. And that, specifically, is dreaming in technicolour.”

That’s odd, because I missed that awful lot of people.

Let’s go back to the “inherently” in “inherently scarce goods.” Let’s say that the presence of doctors in a society is a good, and that short of everyone being a doctor, the supply of doctors is “scarce,” and perhaps even “inherently scarce.” But what is “inherent” about any one percentage of the population being doctors? In other words, why aren’t the free marketism types complaining about the way the current supply of doctors is a result of artificial manipulation of the market for medical education? In still other words, isn’t there a strong sense of “rationing” at work in the AMA control of medical education, restricting the supply of doctors? (Am I correct in assuming the AMA works to control the supply of doctors?)

Lichen said: ‘But what is wrong (if all things are otherwise equal) that a private (or let’s call it premium insured) patient getting moved to the head of the que over the public option insured patient?’

What’s wrong with it is that it’s unjust: money should not get one faster access to a basic good like healthcare; nor should it be able to buy better healthcare. Rich people’s lives and quality of life are not more valuable than poor people’s.

If you were just making the pragmatic point that there’s no prospect, today, of the US becoming just to this extent, you’re right. But it’s worth having the basic moral point in mind: even the best possible outcomes of reform now will still be a long way short of justice.

sg and engels — during the run up to the establishment of the NHS, the option of banning private care was considered quite seriously, even by Bevan, and was rejected on several grounds, including that any proposal including it would get smashed by the doctors. The BMA was obviously a key force to making the NHS work, and its acquiesence had to be bought. Bevan famously responded to someone who asked how he was going to silence to opposition of doctors: “We’re going to stuff their mouths with money”.

This (stuffing their mouths with money) is not an option here and now. Nor, obviously, is preventing people from buying private care. (I’m in favour, for various reasons, of allowing people to buy private care, but agree with engels that there are reasons to prohibit it; John is wrong to imply that there is nothing wrong with rich people buying care for themselves — indeed, one thing that is wrong is that they could be buying it, instead, for people who are less well off). What worries me, though, about John’s response to engels, is that his repsonse may prove too much. I don’t think there is a cost-saving and moderately fair option that is consistent with the prevailing US political consensus. All the good options are too foreign, and that is one of the reasons that reasonable reform is almost certainly out of reach.

In other words, why aren’t the free marketism types complaining about the way the current supply of doctors is a result of artificial manipulation of the market for medical education? In still other words, isn’t there a strong sense of “rationing” at work in the AMA control of medical education, restricting the supply of doctors? (Am I correct in assuming the AMA works to control the supply of doctors?)

Indignant “why aren’t the free market types complaining about X, Y, or Z” questions seem to stem from ignorance 99% of the time, in my experience, because the chances are that we are, it’s just you don’t realize it. For this particular example, you might be interested in this article by Milton Friedman (http://www.fff.org/freedom/0194e.asp) , or the first part of this Will Wilkinson post (http://www.willwilkinson.net/flybottle/2006/03/19/health-care-fantasia/), or this piece from Lew Rockwell (http://www.lewrockwell.com/archives/fm/08-90.html), or any of the other hundreds of diatribes against occupational licensure you could find by taking 30 seconds to type “occupational licensure libertarian” into Google.

“Call this the substantive sense of ‘rationing’.”

I’ve got to say I disagree. There’s a third sense of rationing which means to articifically restrict the supply of something. Credit rationing is a good example, it doesn’t mean “allocate inherently scarce goods” or “securing for everyone a minimum share by ensuring that no one gets more than than a certain maximum share” it means to make sure an artificially low amount of credit offered.

What’s the connection to health care? Well, one of the inspirations for reformers in the US and NHS proponents in the UK is to substantially reduce the amount of health expenditure. I completely support affordable, universal health care – but this this is advocated alongside a crazy desire to reduce healthcare insurance and expenditure which should be rejected. Healthcare and insurance are really good things for people to spend money, they’re undersupplied and the industries should be encouraged to expand; the wish to spend less on them so we have more cash to buy useful things like fast cars, alcohol and widescreen TVs is mad and largely comes from the healthy – who do most the paying – having a warped sense of priorities.

Agree strongly with Martin (#17), Barry (#24), and Michael (#34). As an Atlantic reader and US citizen continually pummelled by smug, shallow libertarian arguments, I feel you’re doing God’s work here.

Dan @ 32: “why aren’t the free marketism types *in the current debate about health care reform in the US, as exemplified by, e.g., the subject of the post, Megan McArdle, and her ilk, that is, high profile MSM pundits* mentioning the AMA control of the supply of doctors?”

Is that better?

McArdle is not engaging reality. Sure, if she was thinking it through, she is indifferent to the fate of the poor, but what she is doing (if she is not simply a lying propagandist) is avoiding thinking, and trying to get other people to do so, too.

“[…] people who are proposing single payer in the US […] do seem to believe that it would allow everyone to get the same level of healthcare that the well-insured currently do. And that […] is dreaming in technicolour.”

Yeesh, guy, didn’t anyone ever tell you about the dangers of adverbs? As to your point, probably not. People in the USA with good insurance actually get a level of care no better than poor Brits. My limited knowledge of the Mexican system suggests that rich Mexicans also get relatively poor care, despite being very wealthy. For some reason–and I don’t know if anyone knows why it is–it seems that when a health care system gives a large number of people poor care, the whole system delivers poor care, even to the high-status and very wealthy. This is entirely overlooked in US discussions of health care: most Americans can’t even hear it, as far as I can tell. McArdle certainly can’t hear it.

Also overlooked by the likes of McArdle, though sometimes mentioned, is that the US government spends much more per capita on health care than the British government, despite the US getting far less for its money.

(And no, I don’t have a blog.)

Healthcare and insurance are really good things for people to spend money, they’re undersupplied and the industries should be encouraged to expand; the wish to spend less on them so we have more cash to buy useful things like fast cars, alcohol and widescreen TVs is mad and largely comes from the healthy – who do most the paying – having a warped sense of priorities.

I’ve got to quibble with this, especially to the extent you mean spending on actual health care, rather than spending on health care research.

One of the genuinely dazzling insights, that only occasionally gets pointed out in this debate, is that health care as such has only a relatively limited ability to affect health. The best that it can do, after all, is make you better if you’re already unhealthy. (And often not even that, as there are plenty of conditions where treatment is extremely expensive but not very effective, or which have no real treatment at all.)

That is to say, in most circumstances spending an extra 50% of your income on health care almost certainly isn’t going to make you 50% healthier. In fact, if you already had halfway decent health care at, say, 7% of your income, spending another 50% probably isn’t going to make you any healthier at all. You might have a hard time even figuring out how to do it. And that’s true at both a personal and social level.

Beyond that optimal level (which is probably a lot closer to what the NHS spends than what the US does) if we want to be healthier, there are lots of other interventions and things to spend money on that will do much more to make us healthier. Reorganizing our build environment to encourage more walking and exercise. Making various modifications to food policy to encourage healthier eating. Spending fewer stressful hours at work and more hours with your family and friends (and/or outdoors). Research and investment to reduce the use of toxic chemicals and their presence in our environment. Etc.

but not because it is written anywhere – in any law or private contract – that legally, or contractually, this person is obliged to get poor healthcare, or to be crushed by the burden of paying for healthcare

Hm. Maybe we should be prohibited morally if not legally from having more healthcare than those who have least–if I were required to refuse anything above the minimum, I might be more motivated to join a political campaign to increase the minimum–or something? At least, I would increase the chances that somebody might feel sorry for people in the same bad conditions, and they might try to help us out (as John’s trying to help out McArdle’s apparent prohibition against having a plausible argument–obviously not a perfect analogy, though, for at least two reasons)?

Should be more like “for all people there exists some pony such that that person won’t get that pony”.

If we are arguing in abstract terms, that is logically false, as it fails in the possible worlds in which I own all ponies, or in which there are people, but no ponies.

I think you want something like ‘for all pony-ownership-allocation methods involving finite numbers of ponies, there exists some person who would have more ponies under a non-identical pony-ownership-allocation method’.

Maybe we should be prohibited morally if not legally from having more healthcare than those who have least

I think conceding that personal add-ons to a universal system might provide more (or better) healthcare is already conceding too much. Here in the UK, for money to buy better or more appropriate treatment is very rare – “big story in the local news” levels of rarity. Generally, the quality of the care – and the surgeons, and the drugs – is the same either way. What private patients do quite routinely buy is better odds of a good outcome, by eliminating waiting time and reducing extraneous stress. And they do this essentially by loading increased waiting times and stress levels on everyone else – i.e. by introducing price rationing as a distortion, within a scarcity-rationed system. Which is perhaps why, for those of us in countries with universal healthcare, McArdle’s argument seems to come from Planet Illogic. “Paid-for healthcare gives me better outcomes!” Yes, better than the rest of us.

Philosophically, there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

I would rephrase it as “no one is entitled to treat you, no has the right to stop your pursuit of treatment”. You aren’t entitled to treatment, if no one wishes to provide it. Conversely, you have the right to seek any sort of treatment you desire. The former attacks state provision of healthcare; the latter attacks state barriers against it (doctor licensing, FDA drug licensing, prescription requirements, etc.).

Or if you want me to be polemical about it, when are “pure, real, genuine, intellectual, etc. libertarians” going to be held responsible for “actually existing libertarianism”?

Milton Friedman, the most prominent libertarian in American history, doesn’t count as “actually existing libertarianism”? Lew Rockwell, who runs the world’s most prominent libertarian website, doesn’t count as AEL?

But I reject the premise generally: libertarians who ignore parts of their ideology to be more politically relevant are no different from any other group, part of whom gives up consistency for political relevance. Should I blame MoveOn for Obama’s escalation of Afghanistan? I don’t, and I hardly see how an anarchist like Rockwell has to answer for the thought crimes of McArdle.

On the question of private vs. public coverage, given that the private coverage is profit-maximizing,it will also seek to deny coverage. What will keep it from denying coverage in all cases? Two things: the government and reputation effects. Libertarians put grear emphasis on reputation effects, but if reputation effects were sufficient to keep businesses honest, we would not have seen old, reputable ratings agencies rating junk AAA. So largely those who have no faith that government has the competence and integrity to live up to its commitments largely have faith nonetheless that the government can and will compel the private sector to do so. Is this faith specific to the Court system? Well, no. There are plenty of libertarian grievances about that too.

Holbo –

I know a tiny (but larger-than-a-lecture) nonacademic audience is gratifying for PhD’s in unsexy fields, but there are more interesting, and indeed more popular, noses to swat than this imbecile McArdle’s.

I think the real flaw in libertarianism is that libertarians conceive liberty and rationality as being in full and cosmic supply, if only we would get out of the way and allow it to happen.

In reality, liberty is consumed and rationality is a scarce good.

Liberty is consumed because time is limited: you only get twenty-four hours in a day. Over at Marginal Revolution I got into arguments with commenters who were excoriating Tyler Cowen for his defense of the recent bailouts as being the most expedient thing, given the enormity of the collateral damage that could have occurred. (Cowen didn’t write it that way and I hope not to put words in his mouth.) But the libertarians just think the whole system should have been allowed to crash, then sorted-out in bankruptcy court. This would still be going on, of course. In the meantime, without payrolls or viable mortgages, people would be living on the street.

And rationality is scarce. It doesn’t cover complexity fully. You could let the whole financial system crash, and it still wouldn’t make people do things better the next time. The system is getting too complicated for that. Even bounded rationality doesn’t always suffice — this is an unexamined pretense not only of libertarianism but of economics.

In fact the libertarians’ misunderstanding of complex systems is a recurring theme. They jumped to automatic suspicion of the global warming scenarios, for example. In Capitalism and Freedom, Milton Friedman advocated privatizing the U.S. national park system — a major reason that wildlife ecologists believe him to have been a dangerous fool. You can imagine the hue and cry if an ecologist held forth on economics without any study of the subject.

Libertarians seem to have misconstrued Hayek’s argument about knowledge. Markets don’t pick up the slack in rationality — and Hayek didn’t argue this. His point was that markets transfer “supply” and “demand” information better than central systems. That’s all he wrote about it — and that is not enough.

We all want liberty and choice, but if we keep having repeated problems in a certain area, the solutions are institutions — as I believe Hayek himself indicated. The incapacity of individual rationality can be overcome by public institutions that refer to experts on policy, and that reduce transaction costs of individual searching, bargaining and enforcement . That saves time, and in turn results in greater quality of life or greater labor productivity, or both.

Government institutions are naturally dangerous both to freedom of choice and to economic efficiency, (just like any private monopoly and just like the “monopolistic competition” defended by the growth theorists,) so the thing to do is make them organizationally simple, tightly targeted on the addressed problems, transparent to inspection, and responsible to democracy. It’s just innovation at a different social level than the growth theorists usually frame it.

We have had about 10 financial bailouts in the 20 years up to this latest debacle, and strengthening the regulatory institutions is in order, using very simple rules.

On healthcare the U.S. needs to do two things, to remain a moral society and to remain competitive: (1) get everybody covered, and (2) bring down long-term costs. The only way to keep that SIMPLE is a public insurance choice.

Joshua Holmes @ 52: no, Friedman and Rockwell don’t count as “actually existing libertarianism.” Maybe you missed the allusion to the Cold War practice of claiming that all leftist theory was utopian nonsense, and in practice did nothing more than provide rhetorical cover for the USSR, which was “actually existing socia!ism.” So to be just as unfair as that old practice, I get to claim that Friedman and Rockwell spout utopian nonsense that in practice does nothing more than provide rhetorical cover for stupid corporatists like Megan McArdle, who is the embodiment of “actually existing libertarianism.” See why I said it was a polemical move?

In fact, #38 is a better, more productive response to Dan @ 32.

Shorter Lee A. Arnold @45, pt. (1).

Health care rationing? This is America. We will fix this.

Lee’s right that it will fix itself. We just need the sound byte.

Shorter Protevi @ 3:10 am:

“I’m going to keep moving these goalposts until I get the field goal I want.”

Martin James:

Libertarians view taxes or laws as the product of “gangs” — aberrations — and believe that humans are naturally self-reliant and independent. They do not seem to recognize that the natural state of a human is in a social group, and that concepts like “property” are functions of particular social relationships, not Platonic ideals.

Either way, I still don’t understand how corporations fit into the libertarian world-view. They talk a *lot* about individuals versus the Big Government, but don’t seem to notice the actions of Big Corporations.

Shorter Joshua Holmes @ 63: why, yes, I was ignorant of a common allusion, but if I accuse my interlocutor of something he wasn’t doing, maybe no one will notice.

Martin James @60 got it right; Libertarians lack empathy.

They also lack any ability to appreciate the advantage they’ve gained from government; and so would deny those same benefits to anyone else, deluding themselves that they defied gravity and pulled themselves up by their own bootstraps. As a result, they promote social welfare for corporations but not people, since it’s through corporations that people support themselves, alleviating the need for a libetarian’s precious money to be “lifted” via taxes for others. And this leads to a sorry result: the inability to see that investing in people can, and often does, pay a significant return.

As Martin James said, a lack of empathy.

Dan, please point to any prominent libertarian voices audible outside the small circles of the elect that are calling for the abolition of corporations. Meanwhile, essentially ALL mainstream “libertarian” commentary comes from corporate shills who, to add to the irony, are themselves employed by tax-exempt corporations which get much of their funding from for-profit corporations (funny you should mention the Cato Foundation). Guess we’re back to that ‘actually existing libertarianism” thing, eh?

I’m not sure that being against corporations necessarily suggests a greater appreciation of economic and social necessity than the reverse anyway.

please point to any prominent libertarian voices audible outside the small circles of the elect that are calling for the abolition of corporations

Ah, I get it. Any libertarians I do point to as opposing corporations somehow don’t count, because they are in “the small circles of the elect.” Oh, don’t let the fact that the world’s biggest and most influential libertarian think-tank and the world’s most popular libertarian web-site both link approvingly to arguments advocating the abolition of limited liability corporations fool you – everyone knows that Megan McArdle (who is apparently supposed to be the USSR in what is certainly the most tortured analogy I’ve seen today) is really our official spokesman here.

And just by the way, if you’re going to make a snarky point, it helps to get the facts right – something like 80% of Cato’s funding comes from individuals, not corporations.

Oh, don’t let the fact that the world’s biggest and most influential libertarian think-tank

A non-profit COPRPORATION which gets its money by shilling for for-profit COPORATIONS. Can you say “hypocrisy”? I knew you could! Oh and by the way, could you point us to the public campaigns it has mounted in favor of abolishing corporations? Because, you know, stuff that’s buried in pious lists of principles or obscure position papers hardly balances out all their massive publicity campaigns in favor of goodies desired by, well, corporations (the ones that paid them to mount those very campaigns).

I won’t even say “nice try”, because it wasn’t.

Dan #70

The majority of libertarians I’ve ever met, and I think it is a reasonable cross-section of the libertarian population, would be in favour of abolishing limited liability corporations altogether.

That will never happen.

So libertarians get to argue for the pony because they reject in principle the policy that prevents ponies, rendering their arguments internally consistent.

And the funniest part is, libertarians follow all that up by demanding to be taken “seriously.”

Steve, have you ever considered that Cato might not have run any high profile campaigns against the existence of limited liability corporations because time, money, and political capital is scarce, and as #70 eloquently put it, “that will never happen”? Or are you seriously saying that people don’t get to claim to believe in something unless they have run public campaigns promoting it? Much as I’d like them to make more of this issue, I don’t see that they are under any moral obligation to squander their resources; deride ‘position papers’ all you like, but it is still more than anyone else is doing – if you can point me to anything similar from a mainstream left think-tank, please do. (And again, at the risk of repetition, you’re talking pure BS about Cato’s funding – 80% of it comes from individuals.)

John, I was mainly responding to the ignorance of comments like What most libertarians do seem to believe in is corporations (#55) and Either way, I still don’t understand how corporations fit into the libertarian world-view. They talk a lot about individuals versus the Big Government, but don’t seem to notice the actions of Big Corporations.(#65) and The way corporations fit into the libertarian ideology is simply that HEY LOOK AT THAT SHINY OBJECT OVER THERE! (#66) and they promote social welfare for corporations but not people (#69). But hey, I must have missed the part where you were bitching at them for being off topic or shifting the goalposts.

Cato’s funding – 80% of it comes from individuals.

I don’t suppose you happen to know how many of those individuals derive most of their income from their status as part owners and/or high-ranking officers of LLCs? (I’m sure partners of law firms, for example, would be eager to embrace a libertarian argument for why their firm should not enjoy limited liability status. And a pony.)

80% of it comes from individuals

Indeed, I believe much of it came from Charles Koch, its co-founder, who was, as you so perspicuously note, an individual and not a corporation, and therefore can not possibly be suspected of wanting to pursue any pro-corporate agenda.

(But nowadways ‘most of its financial support from entrepreneurs, securities and commodities traders, and corporations such as oil and gas companies, Federal Express, and Philip Morris that abhor government regulation,’ according to Jean Stefancic and Richard Delgado of the University of Colorado Law School.)

#8 – “Why don’t we call it “rationing by price”?”

Because the hallmark of rationing is that it is a mechanism to allocate a scarce resource that DOES NOT USE PRICE. A certain amount of the resource is allocated to each person, and no more, regardless of ability to pay. If you allow the market to allocate a resource, you’re not rationing.

McArdle would never claim that food is rationed, or air travel, or big houses in the suburbs, or shoes, or gasoline. Why let her get away with saying that health care is rationed?

Steve, to answer your questions: a) is silly given the primary problem libertarians have with corporations is that they are granted limited liability and other special state privileges which other forms of organization are not; (you may have not have noticed or you may have chosen to ignore that I have been reasonably careful to make this qualification throughout). If you think you have a solid libertarian case against non-profit corporations I’d love to hear it, but my guess is you think this is a gotcha moment simply because you don’t understand the position we’re coming from. As for b), from the link that engels so helpfully provided we can see that in 2006 Cato received a massive 3% of its funding from corporations (whether this counts as “much of the other 25% of its funding” I will let you make up your own mind). In addition, and I quote: “Cato’s corporate fund raising may be hampered by its staffs’ tendency to take positions that are at odds with some of the interests of some large corporations. Cato has published numerous studies criticizing what it calls “corporate welfare,” the practice of funneling taxpayer money to politically well-connected corporate interests.”

Just seconding what Dr Science @90 said re David Wright – if that’s what you believe, it’s pretty disgusting.

I think the generous interpretation of libertarians here is that they want at all costs to preserve the private market in healthcare, but have utterly failed to convince any non-libertarian of why this should be the case. As a Brit, I fail to see how having the NHS – not even proposed for the US – crowd out the private market has led to some kind of substantially worse standard of healthcare for people here. Sorry.

Dan, precisely why would you distinguish between for-profit and non-profit corporations? Both have EXACTLY the same problems within your ideology- they’re both creatures of the state with special legal status and privileges as artificial quasi-persons, and they both shield individuals from the responsibility you say you want them to have. Remember these are YOUR proclaimed principles (and CATO’s), not mine.

Mart @ 91 & Doctor Science @ 90:

Interesting that while your posts express the same sentiment about my moral failings, your take-aways are precisely opposite. Doctor Science claims that a system that denies the most expensive procedures to those over a certain age would be so unthinkably horrific that it would be unacceptable even as a safety net for the indigent. Mart lives under such a system, and thinks it’s so fine that he can’t imagine why a society wouldn’t want to apply such a system to everyone.

No, I think Mart’s point is that the unthinkably horrific consequence of having a public plan that extends beyond ‘so bad’ / ‘1980 standard of care’ has not led to a general deterioration in healthcare for the individual (in Britain).

He’s not just saying your position is a morally bankrupt, he’s saying that your argument-from-unintended-consequences is invalid. Healthcare under the NHS isn’t any worse than healthcare under the current system in the US, and it serves more people well.

Why exactly should it be such a bad thing that a public plan give MRIs or provide for cancer and heart treatments? What exactly do you stand to lose by having such a plan? I’m not seeing where this ‘middle-class entitlement that eats the market’ comes from, nor how it is in-itself a bad thing.

Sorry, that was in response to David @ 94.

“For those who don’t care whether the public provision eats the market, I would ask whether you would have any objection to living under the housing system I sketched above.”

Why should I have an objection to such a housing system?

Not to mention the trifling fact that people don’t die (at least directly) from a sub-optimal way of housing allocation.

(and what is the sense of “nicer health care” in your analogy – if it’s “better hospital food” then, by all means there will remain a market for it)

Unfortunately, your whole argument rests on factual misstatement. Private health care is available in the United Kingdom; this is not a controversial statement. Companies exist that provide it and make a profit from doing so. Therefore, the private market has not been “eaten”. If you want to spend money to avoid having your treatment with the riffraff, you can.

The NHS buys, in terms of dollars spent per capita, about a 1990 level of care…It most certainly does operate by denying expensive treatments to old people that it grants to younger people…

Life expectancy is higher in the UK today, in 2009, than it is in the US. Perhaps we’re just genetically superior and will eventually crush you?

The situation is exactly analogous to, say, public housing … For those who don’t care whether the public provision eats the market, I would ask whether you would have any objection to living under the housing system I sketched …

But surely the fact that you can draw an analogue isn’t in itself a good reason to treat two things in the same way. Universal public health care provision, where it exists, is usually justified on the grounds that it seems that just about everyone wants to be in good health (and free from fear of poor health). Also of significance is the fact that we also have near-consensus as to the best methods for practicing medicine. Preferences with respect to other things are often much less clear cut, as are the best ways of going about them. Hence markets.

Conceptual symmetry – often attractive but not necessarily your friend?

It most certainly does operate by denying expensive treatments to old people that it grants to younger people.

No it does not. Perhaps it operates by refusing to pay for expensive treatments to old people that it grants payment for to younger people. It does not “deny” those treatments to those people, in the sense that those people are certainly welcome to buy private insurance which covers those treatments, or pay for the treatments out of pocket. The NHS does not make these treatments illegal for older people to obtain.

I don’t want to do that even though such a system would theoretically increase average quality-adjusted square footage enjoyed by my society, because I value the capability to work hard and buy a nicer house

Again, if the comparison is to be apt, you’re welcome to spend your own money to “top up” your house, build a mansion, etc. The HousingNHS does not make it illegal for you to buy additional property.

(You might argue that property, unlike health care, is a finite good that is impossible to expand: if we take all the land in the UK and divy it up, there would be no land to buy, at any price. This is unlike health care, in that we can just train and employ a few more doctors to provide the additional services to private buyers. This is one reason why your analogy doesn’t apply terribly well.)

David Wright:

John Holbo was talking about a solid package of basic health care for everybody. You are talking about explicitly setting the baseline at substandard for the poor, a level of care which will mean they live *decades* less than the wealthy. That’ll solve those pesky Social Security and Medicare funding problems, all right — people won’t live to use them. It’s not just old people’s treatments that your plan would deny, you’re also saying “no neo-natal ICU for the poor” — that is, after all, extremely expensive post-1980 technology, for the most part.

It may be that you don’t realize that the average lifespan at birth in the US is already 78, and in a number of countries with “socialized medicine” it’s over 80. It’s even more likely that you don’t know how much the profit motive seems to be the driving force for our outrageously high medical costs.

The US medical system is the worst of both worlds: quality is low *and* cost is high. Lowering the overall quality yet further will not improve this dynamic. What you call “eating the private market” at least has a track record of *working*.

David Wright 09.01.09 at 1:12 pm

“I’m not sure what’s unclear about that argument. If you need to get a good job in order to get advanced treatment, you are more likely to work hard to get a good job. If your lot in life depends less on how hard you work, you are likely to work less hard.”

Said of a country which is becoming *less* meritocratic than Western Europe.

There is an even stronger consensus on how to make good LCD televisions than there is on medical practice, and nearly everyone wants a good LCD television.

That’s not obvious to me, at least. I don’t have an LCD TV, although I can afford one. But for argument, lets imagine a society with a constant near-universal preference for a certain design of LCD TV, no matter what substitute goods might be in prospect. Why shouldn’t such a society just hand out TVs to everyone?

Dan, I think everything depends on how you define “libertarian”. My guess is that you have a pretty purist definition (as indicated by your website) on which hardly any public figures and participants in public debate in the US count as libertarian. That’s fine, but on that purist definition, libertarians are as irrelevant as socialists to US public debate. And, indeed, almost all public figures in the US who have “libertarian” attitudes (broadly, minmise government intervention in the economy, especially when it comes to distributing income or basic goods) have beliefs that are not so libertarian regarding other issues (eg, they strongly support government involvement in marriage and discrimination against same-sex couples; support government involvement in reporductive decisionmaking, though not parenting; etc). But that libertarian attitude to the economy has enormous influence in public debate, and is often underpinned by highly unsophisticated “libertarian-ish” justifications. Organisations like Cato, whatever their funding sources, have played a very conscious and deliberate role in promoting these attitudes (and the half-baked justifications underlying them). Its very hard to defend the good faith of those organisations — the extent of their coporate funding is irrelevant. Of course, some individuals (I think of Rick Hess at AEI, for example) do outstanding and intellectually honest work; but as a whole there is a deep dishonesty. This is no reflection on serious. purist, libertarians — but I think it is ok to use “libertarian” in this much broader, inclusive, sense that people have been using here. You must be familiar with this broader use, no?

As for the fact that the UK has better average health and longevity outcomes than the US, and better outcomes even within different demographic groups; it is very hard to disentangle the effects of having a private and non-universal health care system from that of having a highly unequal society which imposes enormous stress on the losers and creates considerable stress even for the winners. So its not a slam dunk. Its just that it would deprive defenders of the status quo of one major argument if they were honest. But….

So David thinks his plan is worse, that the counter-arguments to his plan are ‘merely moral’ and that his plan is superior because everybody will know they have to work really hard to have the chance to retire and sit in front of a good LCD screen (the latter being an economical argument, because as we all know the state of the economy is directly proportional to the hard work done by those that aspire to have an LCD television).

Thanks to everyone for their engagement. I’m sure you’re all as flabbergasted to see that there are people who think like me as I am to see that there are people who think like Salient and Iowerth.

Job, I particluarly enjoyed your comment @ 116. It’s a barb, but one that indicates you have read carefully, and I appreciate that.

Harry @ 114, a quibble: U.K. and U.S. life expectancy are equal within a few months. The U.S. may even be up by a few months right now. (Which is not deny that the U.S. spends more on health care, or that there are other countries with average life expectancies greater than the U.S. by a few years.)

The more your standard of living is disconnected from the value you add, the less value you will add.

Insofar as this is a societal fact, it’s sad and worth dwelling on. What kind of sociopath only contributes to the health and well-being of society only because they stand to gain more in standard-of-living than they contribute? That’s the kind of person with no inherent sense of community whatsoever. :(

If you get your good LCD television regardless of whether you have earned enough to buy it, then you will work that much less hard.

Possibly. After all, LCD TV is the kind of luxury good that people might work in order to obtain, like a luxury car. Except, how does that answer Charlie’s point in 112, in which he says he doesn’t want an LCD TV? I don’t either.

Maybe we should distinguish “want” from “need” in some reasonable sense that defines health care as a need. Would you agree to that distinction?

I’m sure you’re all as flabbergasted to see that there are people who think like me

Actually, no. After several years of reading this blog I mostly just feel numb.

However, this state of affairs isn’t one without various other (non-punitive) incentives I have for trying to be (very?) good at what I do. As with many people, self respect is at or near the top of that list.

One of the many problems with libertarianism is that (perforce, given its commitment to extreme individualism) its only model of human psychology is the most extreme caricature version of Homo economicus. Mainstream economists have long since realized that basing theories of society on such a completely unrealistic model of human behavior guarantees massively erroneous results, but libertarian ideologues not only didn’t get the memo, but wouldn’t read it if they did, because taking it on board would void their ideology of all substance.

Has anyone else here read Cohen’s Why Not Socialism?

His argument — that comprehensive socialism is presently infeasible because we don’t have good designs for institutionalizing generosity-based incentives, not necessarily because that generosity is unharnessable — obtain here. Maybe designs for institutionalizing generosity as a motivating force in the health care system can be later refined and generalized.

David, I’d love to convince you to read that book (it’s short and inexpensive and would leave you substantially less flabbergasted at the existence of little ol’ me, though I’d doubtless still seem awfully impractical).

David – I share the objections above to the “people should work harder to get good health care” argument. I think there’s just very little evidence for the proposition. In addition to the dubious question of whether hard work actually guarantees getting ahead, and whether people are even primarily motivated to work hard and accomplish things by material gain alone, I’d suggest that if everyone is guaranteed a decent level of health care, the arena of competition and status will simply shift to something else. My guess is various results from cognitive economics tend to back that up – human beings are very good at resetting their level of expectations, and turning just about anything into a status good.

And I would suggest that to dismiss the moral argument – that health care is a need and, unlike flat panel televisions, should not be a status good – is to dismiss something very important. Both to the debate, and to understanding the behaviour of people and societies generally.

At the minimum, I’d ask that you actually quantify the benefits of insisting that people “work hard” for their health care. In particular, note that the US objectively wastes something on the order of 5-7% of GDP on health care compared to the UK. Is the “working hard” incentive worth more than that? Do people in the US work anywhere near that much harder or more productively than people in the UK? (Indeed, harder at all?)

(I also suggest that this business of referring to “1980” or “1990” levels of care is confusing at best, and very possibly subtly misleading . I think I understand you to be using those years to refer to the corresponding per capita spending level, but if so, why not just use per capita spending levels? The use of a year subtly suggests that “1980” health care is inferior to “2010” health care – but as you know, since they refer only to spending levels, that’s not necessarily true at all. Beyond a certain level, per capita spending and actual outcomes are obviously only very minimally connected.)

It’s worth noting that this whole “1980” thing, which I’ve seen in various forms from a bunch of libertarians and conservatives, is just wrong. Really, really wrong.

The advance of medicine is partly in newer, more expensive gadgetry and chemistry, yes. But a lot of it is also in improved understanding that leads to treatment that is cheaper, different, or both. Take ulcers. Turns out that microbial infections make them, though stress does weaken immune systems generally. A relative of mine got an ulcer while on a trip to Africa in the early ’90s, just as awareness of the microbial causation was spreading, and got prompt relief with suitable treatment. I would like to think that people advocating anachronistic care standards wouldn’t want to see people continue to get ineffective treatment just because in year X we didn’t know as much, but I’m not confident.

Then there’s the matter of changing technology and decisions about its use that reduce costs. I take two medications which are pretty pricey in brand-name versions but are available via Fred Meyers’ program of $4 for a 30-day generic supply. Would a year-X-oriented program simply not let people have newer, cheaper, more effective medication, or settle for charging them unnecessarily high prices?

The basic criterion is stupid. If you really must have a cut-rate program, the right way to look at it would be cost-effectiveness without worry for whether a development is new or old or whatever.

Deontological libertarianism is dismayingly common, in my experience. You can’t really argue with a deontologist – their commandments are their commandments come hell or high water.

Bringing the thread full circle, as it were:

You seem to be under the mistaken impression that I have a workable political program. I’m a libertarian.

—Megan McArdle

But there is a point. Philosophically, there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

First, there’s a difference between ‘a case against reform’ and ‘a case against the house bill that Obama backs.’

For instance, lets say you try and control costs, as is currently done, by mandating what can be billed for certain procedures. And this allowed fee is less than what the procedure costs, as it sometimes currently is. This creates problems.

Lets say you mandate certain coverage for anyone with insurance, as New York has done. This leads to a skyrocketing in the price of insurance and an increase in those uninsured, which then leads to an increase in externalities as emergency rooms take the balance.

It also assumes that noone wants tort reform.

This is a little different than saying ‘if you don’t have the money, you shouldn’t have any medicine.’

All public healthcare plans have ended up costing vastly more than they were expected to. ‘Obamacare’ is no different. The taxes are phased in immediately and the benefits slowly, meaning that once people have come to rely on Obamacare the price will skyrocket.

Saying “this is a slippery slope which will eventually cost far more than it is supposed to, as all public healthcare plans have done” is another argument against universal healthcare, even if we accept, arguendo, the benefit of a public option.

Saying “public healthcare reallocates wealth by taking people’s money and using it to purchase ‘free’ healthcare that they might not otherwise have bought” is another argument against it.

Also, it’s worth considering how having to pay for other people’s health effects peoples’ moral decisions. I don’t think ‘Obamacare’ requires death panels. I’m in support of end of life counseling and even rationing of end of life care by the government.

On the other hand, I note that in Brittan if you go outside the gov’t healthcare plan you’re removed from it. Privtate providers have become competition to the government. Innovation is far slower in Europe and drug development depends on the American market (note: I don’t think we should allow Europe to free ride) and if you compare those who are exposed to the American vs. those exposed to the European healthcare system by looking at things like cancer survival rates, you see that the American system does a far better job.

Salutations, gentlefolk,

During the years 2001-2004 – the last years of my parents’ lives – I spent more time than I like to remember in hospitals and medical facilities. And if I may give my views on ‘rationing’…

Does the USA have enough hospital beds and medical facilities. Perhaps not, but putting up the bricks and mortar, and filling buildings with the high-tech gear of modern medicine, is not a major problem. Like computer chips and hybrid cars, the first dialysis machine or replacement hip joint that comes off the assembly line costs millions, the second a trivial amount. Mass production brings costs down.

Can we train the people to staff the new system ? Paramedics and LPNs and RNs relatively quickly, primary-care MDs have a longer lead-time. Top surgeons and specialists take still longer – endocrinologists will probably be overworked for the next two decades.

But if you tell the freshpeople entering college this week, that there will be significantly more places in medical school waiting when they get their BS’s, and financial incentives to make the grind worthwhile, it should be possible to double the number of medical school graduates within ten years.

There will still be only so many beds in the Mayo Clinic or Massachusetts General, and ‘the top three doctors in the speciality’ will retain their status. But may I ask: First, how often they can cure what no other physician can ? And second, how often, today, do they choose their patients for ‘ability to pay’, alone ?

Medicine is still partly an art dependent on the unique skill of the healer, but also a science, with results replicable by any competent practicioner. And it is becoming more of a science – think of the ‘extraordinary breakthroughs’ of a few years back that are reenacted at your local hospital every day.

Are medical professionals likely to see any decrease in income or status in a reformed system ? Highly unlikely. Indeed, increasing the share of their energies that goes to ‘curing the sick’ instead of ‘hassling with the insurance companies’ will likely raise their self-esteem.

So, I don’t see talk of ‘rationing’ as being anything but a red herring. If Americans are willing to continue paying the current share of GNP for health care, and the ‘administrative costs and overhead’ portion of that is reduced, the quality of US healthcare – for everyone – should increase in a reformed system.

McArdle:

We [the US] also pay more for inputs, because no one player has the bargaining power of a government, which has the power of a single buyer, and also the power of an institution that can, if it so chooses, break your patents

So, this libertarian admits that Governments can buy and distribute goods more cheaply than the free market!

Helen: As Chuck points out, wait till she’s a bit older and up against a medical complaint or three. She may feel differently about the ability to Work Hard and Earn Better Care.

Megan has had some pretty serious medical problems, including severe asthma.

I do start from the moral proposition that countries of moderate wealth and above should see that everyone has healthcare. However, it makes sense in other ways. One doesn’t know what future healthcare one is actually going to need, and it’s likely to cost more then, so it’s essentially impossible (except for the very wealthy) to save for. It’s impossible to shop for the price when you’re dying, and it’s nearly impossible to do anyway, since prices are rarely quoted, and when quoted never include all the inevitable bill padding. An individual has no ability to negotiate on equal terms with providers, insurance companies, or drug companies. It’s not a status item (we’d all rather be healthy than need healthcare), it’s not something we could use in infinite amounts (just the minimum that will make us healthy again, thank you very much). It’s just not a good good for markets to handle well for most people, as mainstream US economist Arrow wrote in 1963.

And if all that weren’t bad enough, stress causes illness, and worry about keeping your insurance, or whether insurance will actually pay, etc., cause everyone in the US enormous stress, keep people locked in corporate deadwood jobs, keep people from complaining too much about their corporate deadwood jobs, or taking risky actions like trying to form a union which might cause them to loose their job and insurance (after they run out of credit to keep their COBRA going, or if the insurance company finds some way to slip out of their COBRA obligation, such as your payment arriving a day late). And on top of all that, there’s the fear of bankruptcy, losing everything, etc.

I believe Marxists say that FEAR is the whole point of why US healthcare is the way it is, and why other countries were that way too before they won social democracy. If this isn’t serfdom I don’t know what is.

And then there’s the complexity of all the paperwork you may get strewn with obscure codes and astronomical prices, or, if you don’t like that, you can get an HMO (such as Medicare Advantage policies, which get extra subsidy from the government) where the providers and administrators (not just distant bureaucrats) have profit (or network membership) loss incentives to convince you that you don’t need or want the most costly care, or they will just deny it outright, which in my experience they will usually do or at least try. (I had to argue with administrators and doctors constantly during the last 3 years of my mother’s life, she wanted every possible treatment, and her Medicare Advantage providers never seemed to think that was a good idea, and I live in a Red State, so I see all this hollering about rationing to be completely hypocritical in this and other ways.)

Add to that the already astronomical and still exponentially growing costs, costs which seem to have been more or less contained in other countries, but in the US are projected to bankrupt existing public healthcare, and possibly everything else in the distant horizon.

This comment thread is the strongest argument, in a strong field, I have ever seen against progressive health-care reform. In theory, I (as a libertarian Democrat) have supported both universal health care and a public plan for reasons too long to detail here (not that they would receive a fair hearing). I have done so largely on the belief that over the 80’s, 90’s, and 00’s, that progressives have come to an understanding of economics, markets, and libertarian ideas such that the institutions they create in the coming decade will be both progressive and market-friendly. In other words, I took it for granted that progressives had come to take libertarian ideas seriously (not that they agreed with them all the time), rather than responding to them with straw persons, ignorance, and vitriol. But, no, in this, as in so many other things, Bush has poisoned the well. It seems many of you view politics as catharsis. It would be simpler to put up a digitized photo of McArdle for a daily Two Minutes Hate. Props to Holbo and the minority of commenters here who are actually trying to engage a differing point of view.

I note that in Brittan if you go outside the gov’t healthcare plan you’re removed from it

Alex has dealt with this already, but for anyone else planning to repeat what’s unhappily becoming a piece of received wisdom: could you give us a few cites? Two, maybe three examples of this happening to actual British human beings? Because if (as I suspect) you can only think of one case – which was highly unusual and led directly to a change in the policy in question – then I suggest you haven’t actually ‘noted’ anything of consequence.

Megan has had some pretty serious medical problems, including severe asthma.

She has said this – and that she has in the past gone without health insurance and still opposed government healthcare – but for me that doesn’t really strengthen her case. As I commented earlier,

Anyone prepared to sacrifice their own health to their politics is out of the discussion, as far as I’m concerned.

“No, not the government lifebelt! Somebody else throw me a lifebelt! I’ll pay you later!”

@149: Some libertarians don’t seem to consider their lack of good arguments a reason to change their position, so they repeat the same bad arguments for lack of anything better to do. (See also #145, deliberately conflating taxation with *total destruction* of the taxed entity. And apparently not even realizing that a “patent” is something *given by the government*.)

Of course, they hotly deny that this behavior is in any way doctrinaire or unreasonable.

I have a problem with the concept expressed above that there will suddenly be a demand for a huge number of new healthcare workers if there is universal coverage. What happens now is more like this: people without coverage just do not go for treatment until they have a real problem. But they still get the treatment, and not just emergency treatment but things like courses of chemotherapy or operations for breast tumors. Although there are stories, generally you do not get tossed out on the street no matter what.

Then the hospital tries to get compensation from Medicaid (not Medicare) for the services rendered–at a loss and not in all cases, but better than nothing. This I know from doctors who have treated me and deal with this daily. So the services performed under the current screwed up USA health insurance scenario are being performed generally for all. It is just that the costs are hidden in the foregone income to hospitals and the like. And preventative care is consequently a joke for the uninsured.

The problem of course is the waste and extra expense to treat people at later stages. So Megan McCardle, if she were between insurance coverages, could still have an sever medical problem. go to emergency, and be treated and she may never see even the bill. It’s the people with some insurance who have the problem here if their coverage is found retroactively to be deficient by their insurance companies.

Disclaimer: I’m Canadian.

…there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

Why does this argument always miss the obvious? Libertarians must wear blinders when they encounter… well, science? facts? the real world?

Universal healthcare is a public good. This is fully demonstrated in the real world. The glaringly obvious example is an epidemic. Would you care to read some history of epidemic diseases? Check out J.N. Hays, a professor emeritus of history at Loyola. (Note: I make no claims as to whether his science is accurate, as I haven’t checked.)

If you really want an epidemic across North America, let those without the money go without any care. The official figure for illegal immigrants in the US is 12 million (correct me if I’m wrong). I blink a little when I read that people are seriously proposing to cut off all healthcare to illegal immigrants, and limit what is available to legal immigrants. Take that 12 million and add the homeless, and the vulnerable population that has no healthcare. Add to that the population of twits who think all vaccinations should be optional. (I’d like to crack the numbers, but not now. Feel free if you have the stats at hand.) That should add up to a fairly substantial slice of the population of the US — enough to be vulnerable to an epidemic. For those who want to argue about population density of this group, limit the numbers to New York or Chicago.

The middle class and above, defined as “those who can pay for their health-care”, do not live in a bubble. Your health is dependent upon the population you interact with. The CDC is funded by the government for a reason, no? And it is widely acknowledged that preventive medicine is much cheaper than emergency care.

So, pay for universal healthcare of people you don’t like, or suffer the consequences — in higher health care costs, in overwhelmed emergency medical care, in epidemics and the costs of treating a national health-care emergency. And, well, you’ll probably contract the epidemic disease, spend a small fortune getting the best of care — and you might die anyway. To me, this seems a high cost for hanging onto libertarian principles. (I’ve never met anyone who did practice those principles, other than principle number one of whinging about their taxes.)

And Canadians interact with the Americans enough to qualify as part of the geographic population. Take care of your problems, please.

You’re welcome. I’m glad someone was reading.

if the owners of Lehman Brothers were ultimately responsible for all the debts incurred by the company, do you think it would have behaved the way it did?

I think that’s a difficult question to answer because the owners of Lehman Brothers weren’t actually making the decisions that caused Lehman Brothers to behave the way it did. So basically it hinges on whether or not professional business managers would be able to take over governance of non-limited-liability companies in the way that they actually have taken over limited-liability ones, which I don’t think I can predict with any reliability. If the officer qua officer isn’t on the hook for the excess liability, then his incentives haven’t changed; the owner has a stronger motive to scrutinize his actions more closely, but no enhanced capability to do so effectively, compared to the status quo.

And that’s even under the assumption that Lehman’s management’s risk-taking was intentional rather than delusional. I don’t have specific knowledge either way on that, but obviously both kinds of problems occur regularly with corporations.

I think your point about the externalities of corporate bankruptcy is a good one, but couldn’t it also be solved in practice by imposing a Pigovian tax on limited liability corporations and using it to establish a fund that fills the gap in bankruptcy so that all creditors are made whole? (Or possibly all non-bond creditors, declaring bonds junior to all other non-equity obligations in bankruptcy, and then bond buyers can decide how much their risk is worth.) This would allow the individual investor to still be protected from losing more than all of his investment, and thereby prevent Martin’s doomsday scenario in comment 157, while also protecting the counterparty/creditor/tort victim from losses imposed by a shortfall of assets in bankruptcy. Such an “insured corporation” (with the government acting as insurer) would provide the investor with the security of limited liability and the creditor with the security of guaranteed full satisfaction. Since TANSTAAFL, the tax is necessary to achieve this goal. But it seems obviously worth it compared to the status quo, if the capture of our political system by corporate managers didn’t make it politically impossible.

Dan, as a True Libertarian who hates corporations every bit as much as Naomi Klein, could I ask if you have any opinons on the topic at hand, which happens to be American health care reform? I expect you’re highly critical of everything the corporate drug and insurance lobbies have to say but what kind of approach would a true anti-corporate crusader like yourself by in favour of?