Friday
(0)“This is really the destruction of the National Health Service."
- Professor Vincent Marks of the University of Surrey on the Today programme this morning discussing the modest government announcement to allow more private involvement in the National Health Service.
Dump this horrible, horrible, brutal, bureaucracy-strangled, Stalinesque, money-eating organisation and, if you must have socialised healthcare, follow the excellent French system.
If Britain would just dump the NHS and the BBC, that would be a giant psychological yoke off the necks of the British.
Posted by Verity at May 13, 2005 03:36 PM
Er, my post related to Prof. Marks' blimpish comment, rather than the eminently sensible remark of Verity
Posted by Edward Lud at May 13, 2005 03:43 PM
Doesn't the French model, whilst being very good - perhaps the best healthcare in the world - cost something like 10& of GDP?
Posted by I'm suffering for my art at May 13, 2005 03:58 PM
"This is really the destruction of the National Health ServiceDestruction? Or a half-hearted tug at the mains plug of its obsolete life-support system?
Posted by Neil R at May 13, 2005 04:06 PM
It's OK, Edward Lud. I understood your post.
Suffering - I don't know. But I have experience of the French system and it is so far in advance of Britain that it could be on a different planet. For one thing, your doctor will give you a prescription for an ex-ray, a mammogram or whatever, and you take the prescription to the diagnostic clinic of your choice. So they're all clean and they're all staffed by pleasant people, because you are a customer, not a supplicant. You'll get an appointment, probably on the same day. If not, the following day.
You'll have your xray, and while you get dressed and wait for a few minutes, it will be developed. The radiologist then takes you into his office and shows it to you on the screen and explains it to you. He diagnoses it right there. He then pops it into an envelop and you take your xray home with you. You make an appointment with your doctor, or if you choose, a completely different doctor, and take your xray along. Just one example of the civilised recognition of the patient as a customer.
Hospitals are clean and efficient (they're private and the state is a customer).
I have an older friend with arthritis in her shoulder and the damp weather made it impossible for her to drive to the clinic for her treatment. So the doctor wrote a prescription for a taxi. So the taxi ride to and from the clinic was free.
OTOH, it is so excellent that the state is running out of funds. I have a friend whose husband is a doctor, and the government really does breathe down their necks wanting justification for every prescription. If their computer alerts them that a particular doctor has been prescribing any particular medication in unusual quantities (it could be simply because the doctor believes it is the best medication for that particular ailment) he/she gets a visit from the state. Or worse, is called in.
Posted by Verity at May 13, 2005 04:24 PM
It seems to me the optimal solution is privately owned hospitals with private health insurance, but where the cost of the health insurance premium is shared between individual and state - for example, take out any insurance cover you like, you pay 50% of the premium and the state pays the other 50%. It would be necessary to ensure that all insurance schemes were accepted by all hospitals, of course. It seems also sensible to have casualty treatment non-chargeable, but all other costs including prescriptions, etc., should come from either cash payment or insurance claim.
In such a system you would avoid the bureaucratic inefficiency of state management, would increase competition between hospitals and between insurers, would subsidise the cost of insurance for the chronically ill (who are least able to afford private insurance), and would have pressure to keep costs down both from the state and from the individual subscriber. At the same time, no person would be denied emergency treatment on the grounds of inability to pay.
If the proposals are the beginning of the end for the NHS - and I think they are - then they should be boradly welcomed and the government should be encouraged to proceed as fast and as far as possible. When Blair goes, it seems probable that his socialist successor will not favour such essentially Tory reforms, so encourage it now. This would also help to encourage a cross-party consensus that serious reform of the NHS is necessary and possible.
EG
Posted by Euan Gray at May 13, 2005 04:34 PM
EG, very sound. However the problem is that no private medicare company such as BUPA, is going to want to get involved with the bureaucratic nightmare that comprises of the NHS administrators, people who have no concern for their jobs, since they will get paid regardless of their performance and can not be removed from their position of employment.
If we are going to either supplement or replace the NHS with quality private healthcare we really must start from the very top and work down. By separating the Department of Health from its control of the hospital trusts it should follow that it would be easier for established private medical enterprises to then be able to deal with those individual trusts as though handling the takeover or merger of a private company. Also with the removal of central or local government from the equation it then eases the incoming buyers' task of stripping out the massive staff surplus that a typical modern NHS hospital enjoys.
Regarding a 50/50 share of premium vs government subsidy how long do you think it would take before some foul creep like John Reid decided that it should be changed to 60/40 and so on?
Posted by Julian Taylor at May 13, 2005 05:14 PM
“This is really the destruction of the National Health Service."
We can only hope that is true. The NHS hasn't moved on from 1947, the rest of the world has healthcare wise.
Perhaps after another 5 years of more and more money being pumped into it, and with precious little improvement to show, the British people will wake up to the fact that private or a mix of private & public is the only way to guarantee quality healthcare.
You would have thought that the statistic that the NHS trails only the Chinese Army and The Indian National Army in terms of numbers employed would have set off alarm bells in the public.
Posted by MichaelCadwallader at May 13, 2005 05:18 PM
Australia also has a socialised health system, and it is also so far ahead of the British system that it appears to be on a different planet. (Part of the issue is that a great deal more is actually done in the private sector in Australia, and the government pays for it rather than tries to actually run everything).
Britain doesn't just have all the disadvantages of a state health care system, but it manages to have a really really bad system even as state healthcare systems go. It's quite an achievement.
Posted by Michael Jennings at May 13, 2005 05:43 PM
The best healthcare solution would subsidise insurance at the cost of healthy person at your age and sex.
The individual should then fund the unhealthy fraction of their health insurance.
Any other scheme subsidises poor health choices.
The current NHS is the worst system funded in the worst way!
Posted by Rob"Sir Chasm" Read at May 13, 2005 05:54 PM
The answer is not a mere reconfiguration of the current state monopoly (as in the UK) nor a quasi-state corporatist cartel (as in Australia, France etc) but a free market in health care services and commodities.
Posted by David Carr at May 13, 2005 06:03 PM
What David said. France and Australia are a vast advance on Britain's foul system, but the most efficient solution is always the free market.
Posted by Verity at May 13, 2005 06:11 PM
I too think that the NHS deserves to be doomed.
In a free-market system, how do we protect ourselves from monopolistic abuse by the professional bodies (i.e. Trade Unions) of doctors and others? When I asked on an American website for examples of monopolistic abuse by the A.M.A. I got no replies, but it is surely inconceivable that there are none? Mind you, that's an issue relevant to designing the replacement system; it's not an excuse for the survival of the NHS.
Posted by dearieme at May 13, 2005 06:25 PM
NHS v Private healthcare is apples v oranges. Much NHS money is absorbed in the bureaucratic inefficiency of state management as opposed to the bureaucratic inefficiency of ordinary management. The more you try to manage resources by adding bean-counters and paperwork, the less efficient the system becomes.
The much lauded BUPA cover 'that is less than I fork out for the bloody NHS' doesn't have to pay for the treatment of non-contributors. Stop NHS treatment of peasants and its costs will plunge below that of private healthcare .
Posted by zmollusc at May 13, 2005 07:44 PM
The BBC wheeled several people in who were clearly much more concerned about whether the NHS lives than they were about whether the patients live. They seem to have missed the point.
Hear Hear Verity - scrap both.
Posted by Steve at May 13, 2005 08:59 PM
This is really the destruction of the National Health Service.
He says that like its a bad thing.
I tend to think that for the two great positive rights that society seems to insist on at taxpayer expense (education and healthcare), there will be no free market in our lifetime. The least bad alternative, I tend to think, would be a voucher system, where the government gives you the money to spend on education and health insurance as you wish.
Posted by R C Dean at May 13, 2005 10:04 PM
R C Dean - where the government gives you the money to spend on education and health insurance as you wish.
Well, it's a start.
Posted by Verity at May 13, 2005 10:19 PM
You ain't seen nothin' yet. Just imagine the expense involved in maintaining millions of seniors into their 90's and 100's, as is perfectly possible for the tail end of the boomers, and even probable for the next few generations. I seem to have read somewhere that the great bulk of medical expenses in the US are consumed by seniors in the last 2-3 years of life, way out of proportion to their numbers.
What will happen when their numbers are way out of proportion to everything else?
Posted by veryretired at May 13, 2005 11:17 PM
dearime
In a free-market system, how do we protect ourselves from monopolistic abuse by the professional bodies (i.e. Trade Unions) of doctors and others?
Professional or trade bodies can only establish and maintain their monopolies and/or cartels by relying on central government authority to pass and enforce the required laws that will e.g. make it a crime not to use their services or create high regulatory barriers that prevent competitors entering the market (or often both).
Monopolies and restrictive practices cannot survive (or even get off the ground) in a free and open market.
Posted by David Carr at May 14, 2005 12:49 AM
The AMA is hardly an example mof some kind of free market monopoly. It exists in its state thanks to heavy government intervention in its favour. Its backed by legal power. So are many of the doctors and trades unions you speak of dearieme. The AMA is something like the legal equivalant of the American Bar association, which itself is at fault for Americans skyrocketing legal costs.
Posted by Stephan at May 14, 2005 02:41 AM
but the most efficient solution is always the free market
True enough, but the question is not merely one of economic efficiency. It would be more economically efficient to liquidate the chronically sick and the indigent, but we don't do that.
The question is how best to provide a generally acceptable level of emergency and routine healthcare to the whole population at a reasonable cost. To do this you need a mixture of competitive private sector management running the system and taxpayer subsidy for those who cannot afford the full cost of private sector insurance.
BUPA is good, efficient, cheap - and not for profit. However, it doesn't provide emergency cover and the list of exclusions and restrictions is pretty long. It is not realistically possible to require fully private cover for emergency and chronic illness cover, since the first is almost uninsurable and the second is unaffordable by the people who actually need it. Some degree of subsidy is inescapably necessary for this, BUT that doesn't mean the state needs to own and operate the medical facilities or the insurer, and it is this state ownership that is the issue.
Monopolies and restrictive practices cannot survive (or even get off the ground) in a free and open market
That's simply untrue. The private sector is full of cartels, oligopolies, restrictive practices and artificial barriers to market entry that have nothing whatever to do with state involvement, support or regulation. In my job, I have to deal with them every day - there are wholly private sector cartels in cement, plastics, steel, and so on, none of which have anything to do with the state.
It is a mistake to assume that only state regulation can create artificial barriers to the market. Private companies are quite capable of doing this themselves and indeed do so on a regular basis.
EG
Posted by Euan Gray at May 14, 2005 06:57 AM
Euan Grey,
It would be more economically efficient to liquidate the chronically sick and the indigent
This is not quite true. In a state run economy, perhaps. But in a free market it would be distinctly inefficient: Their cost for existing is entirely private, and thus, not of issue to national "efficiency", furthermore, the managerial costs of rooting out and constantly killing off successive generations of such people would be quite high for the state and its taxpayers.
The private sector is full of cartels, oligopolies, restrictive practices and artificial barriers to market entry that have nothing whatever to do with state involvement
You must be careful to distinguish between an actual monopoly and a very succesful company that is ahead of its competition. A true monopoly could continue with whatever it does with little or no regard to customer satisfaction, I wonder how long these cement and steel "monopolies" of yours could survive if they delivered steel as brittle as clay and cement as soft as butter?
Posted by Stephan at May 14, 2005 11:06 AM
This is not quite true
It is, because resources otherwise devoted to the ultimately non-productive support of such people could instead be diverted to more productive ends.
the managerial costs of rooting out and constantly killing off successive generations of such people would be quite high
Not so. It would be cheaper to eliminate the handicapped at birth than to subsidise their lives. It would be cheaper to kill cancer patients than treat them. It would be cheaper to "put down" the non-productive elderly than subsidise them. And so on.
All of that is repugnant to almost every human being, so we don't do it - even though it is more expensive and inefficient to do what we actually do.
You must be careful to distinguish between an actual monopoly and a very succesful company that is ahead of its competition
I have to deal with the companies in question (which I will not, of course, name) and they DO form cartels. Cement company X will not, for example, delivery cement in bulk tankers because company Y does that. In return, company Y won't supply bagged cement because that's what company X does. Companies X and Y between them set the price of cement artificially high.
Why are they able to do this? For one thing, it costs a great deal of money to build a cement plant - it can cost a couple of hundred million dollars. There's a straightforward natural barrier to market entry, thus reducing significantly the possibility of honest competition. For another, the cement company needs to buy raw materials in order to make the cement, and of course the suppliers of raw materials have very nice and profitable arrangements with the cartel players, and won't want to lose their business just to supply some upstart who would upset the whole arrangement. For yet another reason, people NEED cement - much of modern civilisation would suffer greatly if cement supply was interrupted or disturbed. Even if the price is set artificially high, people will still buy it because it is an essential material. Therefore, it is quite possible to set the price high and protect the rigged market because the cartel will not lose business, they will do very well indeed out of it, and their suppliers will have cosy deals too. This actually happens, and in fact it happens pretty much all over the world - there are regional cement cartels in almost every area.
The mistake in assuming cartel and oligopoly can only arise with state support lies in assuming all business is relatively easy to get in to and all products are entirely optional. Where a market is naturally easy to enter and where one does not actually need the product - say, for example, televisions, bicycles, hi-fi equipment - then this holds true. The ease of market entry cannot readily be challenged by restrictive practice without state assistance. However, where the product is essential AND the natural cost of market entry is very high - e.g. cement, plastics, steel manufacture - then it is much easier to restrict entry to the market and inflate prices. Companies don't like free markets, because the opportunity to make higher and easier profits from cartel and restriction is tempting. Where it is possible to form cartels, cartels form - it's easier and more profitable for the companies involved.
I wonder how long these cement and steel "monopolies" of yours could survive if they delivered steel as brittle as clay and cement as soft as butter?
For one thing, I said cartel and oligopoly, not monopoly. For another, the existence of a cartel or oligopoly - or even monopoly - does not necessarily mean the quality of the product will reduce. There's nothing wrong with the quality of the cement or plastics the cartel players provide - but the price is fixed and fixed high and whoever you go to the price will be pretty much the same.
EG
Posted by Euan Gray at May 14, 2005 12:16 PM
Euan
It would be cheaper to "put down" the non-productive elderly than subsidise them. And so on.
All of that is repugnant to almost every human being, so we don't do it ...
It may be reality sooner than you think.
Posted by Pete_London at May 14, 2005 01:25 PM
Euan,
The private sector is full of cartels, oligopolies, restrictive practices and artificial barriers to market entry that have nothing whatever to do with state involvement, support or regulation.
I am aware that private actors may try to rig the market and, certainly, that there is no shortage of desire to do so but ultimately the only way they can shut out the threat of competition is with force of law.
Posted by David Carr at May 14, 2005 02:27 PM
Pete London,
Horrific.It would not be cheaper to put all the infirm elderly down like sick animals,simply because they were once young and productive,if, in our productive years we know that as soon as we are judged a burden,we are going to take steps to protect ourselves.
Why work and save for the future when you know what that future is,if you have one of the chronic conditions that we frail humans are subject to? The pensions industry would take a dive,those who could would release the equity from their homes and move abroad at a greater rate than now.Why wait until one retires,why be sensible,why build for the future when you haven't got one.
Secondly this finally removes one of the great motivating factors of human existance,that of generational interdepedence.
Posted by Peter at May 14, 2005 03:03 PM
I am aware that private actors may try to rig the market and, certainly, that there is no shortage of desire to do so but ultimately the only way they can shut out the threat of competition is with force of law
Again, this just isn't true. As I said, I actually have to deal with these organisations and they really do do this WITHOUT assistance from the law. In fact, the law is used to break up the cartels - witness recent punitive action by the EU against a German (I think) cement cartel. It happens, believe me, and it happens a lot. It does NOT need state assistance.
Where the good is essential, and where the barrier to market entry is naturally fairly high, you tend to find cartel. It's a fact of business life, and it just doesn't need state assistance. In fact, without anti-trust law, it would probably be more common than it is.
Not all business is easy-to-enter corner shop stuff, and thus the ideal of the unregulated competitive free market simply does not always apply.
EG
Posted by Euan Gray at May 14, 2005 03:03 PM
Euan,
Do you have a link to that EU case against the German cement 'cartel'? If so, I would be very interested to read it.
Barriers to entry are only 'naturally' high where participation in any particular market requires a high level of capitalisation and/or specially acquired knowledge. The fact that these things may be hard to acquire does not, per se, prevent participation. Nor does a market which is dominated by a few successful players mean that those players are a 'cartel'.
The ill-conceived 'anti-trust' laws (or 'competition laws' as they are referred to in the UK and Europe) are merely another tool of political control. A good example of this are the various government campaigns against Microsoft. For all his wealth and success, Bill Gates cannot force anyone to use his operating system, nor can he prevent anyone from downloading and using a competing operating sytem (witness the number of people who use Linux).
A monopoly or cartel can only exist where competitors are prevented from offering an alternative by threat of enforceable sanction.
Posted by David Carr at May 14, 2005 04:22 PM
Do you have a link to that EU case against the German cement 'cartel'? If so, I would be very interested to read it.
Sure. The EU imposed fines on a cement cartel in 2000. I'm not familiar with the Curia website as a means of finding the judgements, but I think this is it here. My apologies if that link doesn't work. The case reference is T25/95 in the European Court of First Instance.
The German Federal Cartel Office (Bundeskartellamt) raised another cement cartel case in 2002. Here is there news release on the matter.
There's an Economist article from 2003 which gives some idea of the scale of the problem and just how often cartels actually form.
EG
Posted by Euan Gray at May 14, 2005 08:22 PM
Oooh, I think that we may have something here! If we liquidate the sick on cost grounds then nobody will go to the doctor's in case they get terminated. Thus the figures for illness will fall massively, and since statistics are all that matter to the brainless beancounting bureaucrats we will have eliminated illness! Imagine that! No more cancer. No more aids!
Surely it is worth eliminating a small section of the populace to eradicate cancer?
Posted by zmollusc at May 14, 2005 09:27 PM
I'm surprised that people are so favourable to the French system. From my experience of the French, German, Austrian and Swiss systems the French would certainly not be at the top of the list.
But I think the French system is interesting if only to illustrate how other systems work, that they aren't just profit making systems for dodgy companies.
Posted by s at May 14, 2005 10:28 PM
Euan,
Thanks for the link. I shall try to make time to read through the case (heavy going though).
As for the Economist article, the fact that they (and various governments) take the same line as you does not make that line correct. Companies may try to fix prices but, by doing so, they provide an immediate incentive to any party to break the agreement and clean up on the extra business it brings.
Also, how do 2 or more companies who agree to fix prices prevent other companies from entering the market to undercut them?
The 'price-fixing' phantom is, at worst, a short-term problem which the market itself will soon solve.
Posted by David Carr at May 15, 2005 05:26 AM
As for the Economist article, the fact that they (and various governments) take the same line as you does not make that line correct
Perfectly true, but it does show that price fixing may well be more common than many think.
Also, how do 2 or more companies who agree to fix prices prevent other companies from entering the market to undercut them?
Ultimately, they cannot. But are you not overlooking the point I was making about when this kind of thing can and cannot happen?
Cement is pretty much essential to modern civilisation. So is bread, since we all must eat - but it's easy to set up a bakery, much cheaper than a cement plant, so the barrier to market entry is low and thus it is very easy for competition to undercut any cartel.
It seems to me that the impetus to cartel is something all companies feel, simply because it makes life easier and richer for them. When you have the coincidence of an essential good AND high natural barriers to market entry, then it is much easier to form a cartel. I don't think that means cartel is inevitable in such cases, just much more likely. Also, you can still get competition - not every cement company joins the cartel. But if the cartel is made up of a few big companies who together dominate the market, it can work because the cartel will supply the large orders which the smaller honest companies just cannot meet. Where the small companies can meet the orders, the big companies may not be interested in such piddling business. Thus, you can get competition for small orders but cartel and inflated prices for the large orders which affect more people - roads, bridges, office blocks, housing projects, etc.
EG
Posted by Euan Gray at May 15, 2005 08:45 AM
All it takes is for one small company to realise there's a gap in the market - the ability to provide cement more cheaply because they're ex-cartel, get some finance, and go big. Suddenly the cartel is obsolete.
Cartels are more easily maintained when a labour force is heavily unionised. Often, if a union boss is in the pocket of a building company or material supplier, they'll trade off peaceful labour relations for cash/contracts. This was the norm in the Australian building industry. Actually, it still happens, though it's not so widespread now. Only certain unionised companies got certain jobs. If those companies weren't awarded those jobs, industrial chaos on the sites in question reigned.
And in the States - I believe the WTC was built utilising steel girders and struts to sidestep the mafia's concrete monopoly? Ostensibly not so important, however the buildings wouldn't have collapsed if they were built using concrete supports instead of steel, because concrete doesn't melt like steel. Sorry - I'm sure there are more technical terms a more expert commentator could have used.
Posted by I'm suffering for my art at May 15, 2005 09:34 AM
All it takes is for one small company to realise there's a gap in the market - the ability to provide cement more cheaply because they're ex-cartel, get some finance, and go big
And all that takes is finding a quarter of a billion to invest (big cement plants are seriously expensive), plus you need to be able to buy raw materials in sufficient quantity, which is not always a given since high-proice cartels can pay the suppliers more. Alternatively, you can just keep your smaller outfit's prices lower than cartel prices but higher than a true market price, which is the easiest way.
Cartels are more easily maintained when a labour force is heavily unionised
That would surely depend on all or most of the cartel players recognising the same union and that union having a strategic view of the overall picture, otherwise it's just one company with labour problems. Unless, of course, the union boss, the contractor's management and the buyer's management were all in the same fiddle, I suppose. I can't speak for Australia, but British unions seldom think/thought that big.
EG
Posted by Euan Gray at May 15, 2005 11:06 AM
And all that takes is finding a quarter of a billion to invest (big cement plants are seriously expensive)I really don't think this is such a big ask. A developed market has heaps of investors willing stump up that kind of cash for a proposal of merit.
In Australia, the construction union was, and I believe still is (though far less productively), in league with one of our biggest multinational construction companies. If the aforementioned construction company wanted a particular job, it would just tip the nod to the union, and the client would be made aware that if a particular company didn't win the contract, a union go-slow would be implemented, or worse. All it took was a couple of upstart construction firms (who only hired non-union labour) to bust this cozy arrangement open, and a stronger policing and prevention of illegal union activities like picketing non-union worksites and standover tactics.
Posted by I'm suffering for my art at May 15, 2005 11:25 AM
A developed market has heaps of investors willing stump up that kind of cash for a proposal of merit
True enough ... but ...
Any politico-economic philosophy which says "X will happen readily" needs to explain why, in the real world, X doesn't actually happen very often. I understand the theoretical arguments which say that cartel can't work in anything but the shortest possible terms and that it needs state support. All well and good, but this bears little relation to economic reality. Cartels do form, they do last (in the European cement case, up to 25 years) and they don't need state enforcement.
Now, why is that? It's not enough to rely on theory, it has to be explained why theoretical expectations don't materialise in the real world.
As for the Australian thing, thank you, I now understand the situation. However, that is nothing to do with cartel. It's simply overmighty unions and spineless management.
EG
Posted by Euan Gray at May 15, 2005 12:40 PM
The question is how best to provide a generally acceptable level of emergency and routine healthcare to the whole population at a reasonable cost.Hey Euan, you're being ideological again!!
Posted by Winzeler at May 15, 2005 02:02 PM
Maybe you're right, it mightn't have been a cartel as such, although I'm not totally sure how many companies were involved in the scam. I know for sure that there was one high profile player, but I believe there were others - that particular union had/s its fingers in a lot of pies - and they may well have colluded.
And I agree, cartels can hang around for years. However, they can be broken quickly and easily. I suppose the reason they aren't is due to entrepreneurial apathy. For example, you have an ostensibly imposing, obstructionist cement cartel. The flipside is that you also have an opportunity to undercut the entire market in one fell swoop and grow big very, very quickly. I wonder how many people would be willing to step in and start up a cement business, een if they could get financing. Maybe in some markets, lots. In markets where there isn't such a culture of entrepreneurialism, or where capital is harder to come by, not so many.
Posted by I'm suffering for my art at May 15, 2005 02:32 PM
Hey Euan, you're being ideological again!!
What's ideological about examining methods of providing health care at the least cost to the maximum number of people?
Ideological is saying it can only be done in a certain specified way (e.g. it must be all private, it must be state owned and operated, it must be private but heavily regulated, etc, etc). Pragmatic is saying let's consider all the different ways and mixtures of ways it can be done, institute something that seems to work and if necessary change it later as circumstances change IRRESPECTIVE of what some theory says would be the best way.
I suppose the reason they aren't is due to entrepreneurial apathy
Quite possibly. But doesn't that somewhat undermine the proposal that leaving it to the entrepreneur in a self-regulating free market will solve the problem?
EG
Posted by Euan Gray at May 15, 2005 03:34 PM
What's ideological about examining methods of providing health care at the least cost to the maximum number of people?Because it's idealogical, to presume that a.) society should do something about health care and b.) society can do something about health care.
Posted by Winzeler at May 15, 2005 03:59 PM
Euan - haha, nice try. The last two sentences should go some way to answering your question.
Posted by I'm suffering for my art at May 15, 2005 06:36 PM
Because it's idealogical, to presume that a.) society should do something about health care and b.) society can do something about health care
But society always does something about healthcare - either by having a private healthcare system, or a state system, or a mixed system. Presumably by society you mean in this instance the government of that society.
Since you will always have people who cannot afford commercial healthcare - either because their chronic conditions are (for them) uninsurable, or because of poverty, or whatever - it seems not unreasonable to suggest some means of ensuring affordable provision for such people is available. One way is, of course, to rely on charity and the market, but it seems to me that the high cost of some types of care makes this less feasible today than it was, say, half a century ago when such systems were much more common.
It's not ideological at all to consider how best to do this. The answer does not necessarily involve the state or subsidy (although I think in practice it almost always would).
The last two sentences should go some way to answering your question
Not really. Cartels exist pretty much everywhere the capitalist market exists, in both entrepreneurial and non-entrepreneurial cultures. Why? What non-regulatory mechanism would prevent it?
EG
Posted by Euan Gray at May 15, 2005 09:36 PM
People whose ideologies do not include communal alleviation of chronic conditions, poverty, etc. will find it unreasonable. You just cannot fathom that not all people want to "fix" all these problems. Your desire to run around addressing all these things makes you more ideological than libertarians who are quite content to allow problems a berth.
Posted by Winzeler at May 15, 2005 11:04 PM
You just cannot fathom that not all people want to "fix" all these problems
Most people do. Most people aren't terribly comfortable with the idea of letting chronically sick or poor people suffer simply because the market cannot always provide a solution. However, fixing the problem does not necessarily require state involvement - it may be a wholly private fix, but it's still a fix. You assume that when I say the problem needs to be addressed I mean that it needs to be addressed by the state. I don't, although I recognise that in some cases the state is probably the least bad way of addressing a problem.
In the case of the UK, we have a largely state controlled healthcare system. Any change to improve the situation - even a wholly private one - necessarily requires state involvement simply because the state already is involved.
EG
Posted by Euan Gray at May 16, 2005 08:57 AM
What non-regulatory mechanism would prevent it?Willing entrepreneurs who want to make money by busting cartels or other shady business arrangements like the situation I described above. There was one man in particular whose company broke the union stronghold and he's now a very very wealthy individual. Oh, and the aforementioned entrepreneurs need access to liquid capital markets. That should pretty much do it...
Posted by I'm suffering for my art at May 16, 2005 09:18 AM
That should pretty much do it...
So why does it not happen very often?
EG
Posted by Euan Gray at May 16, 2005 09:32 AM
Euan - it happens innummerable times a day, every day. There are many, many, many more wrecked cartels that barely got off the ground than long term successful cartels, which I would think is a relatively rare beast considering the amount of economic activity that takes place in the world marketplace.
Posted by I'm suffering for my art at May 16, 2005 03:09 PM
it happens innummerable times a day, every day
But it doesn't prevent cartels arising, nor does it prevent them lasting a long time. In key essential materials where it is naturally relatively hard to enter the market - oil, plastics, iron ore, cement, etc. - there are large and long lasting cartels all around the world.
What proportion of the global economy does trade in these materials and their derivatives form? Why, despite theory saying it can't happen or if it does it can't last, does it nevertheless happen and last? Is it reasonable to assume that in the absence of regulation to prevent and prosecute cartel - a self-regulating market, for example - such things would happen less or not at all? If so, why?
EG
Posted by Euan Gray at May 16, 2005 04:05 PM
Euan, the more important question is if these things exist (and even thrive) despite heavy regulation, why encumber the market with said ineffective regulation?
Posted by Winzeler at May 16, 2005 04:41 PM
the more important question is if these things exist (and even thrive) despite heavy regulation, why encumber the market with said ineffective regulation?
Because without the regulation it would likely be even worse. Companies don't want free markets, remember. The capitalist market is the creation of the state and it would not long remain free without coercion to prevent companies colluding.
EG
Posted by Euan Gray at May 16, 2005 04:47 PM
I didn't say cartels never arise, nor did I say that the market will prevent their occurrence, however entrepreneurs and ready access to capital make cartels a lot easier to thwart. Therefore less government interference in private enterprise, especially at inception, means it's easier to bust cartels. Some cartels are more durable than others, it's true. However, the market is constantly eroding even the strongest cartel, as a stream of water will eventually erode granite.
Posted by I'm suffering for my art at May 16, 2005 05:58 PM
Yes, but my point is that they aren't being thwarted by the entrepreneurs and the capital market. It is rather state action compelling people to compete rather than collude which does a lot of this. So I cannot see why forbidding this state action would in any way improve the situation.
EG
Posted by Euan Gray at May 17, 2005 09:21 AM
Yes, they are. These forces are constantly breaking cartels before they've had a chance to take root. A schlerotic entreprenerial class makes for a great many cartels forming. The best way the state can assist in preventing cartel is by making it as easy (imposing as few regulations) as possible on people starting up new businesses.
Posted by I'm suffering for my art at May 17, 2005 08:10 PM
Yes, they are. These forces are constantly breaking cartels before they've had a chance to take root.
So why are there so many cartels in essential materials?
Remember, cartel in making optional goods is next to impossible because of the ease of competition in the market. However, market mechanisms are not infallible and they do not apply in every circumstance. Cartels are likely to form where the good is essential AND there is a high natural barrier to market entry, and indeed this is where they DO form and they DO last. The market mechanisms do not seem to work in breaking up these cartels, so what non-regulatory mechanism can do it? Essentially, my question is: how does libertarian economic theory successfully deal with the natural tendency to cartel and - in the circumstances where cartel is most likely - the lack of success of market mechanisms in preventing the formation of cartel?
How does reduced regulation for startup business particularly help one raise the cash to build an oil refinery, steel smelter or cement plant? If you're looking for hundreds of millions to invest in a startup, a few petty regulations are, frankly, the least of your problems.
EG
Posted by Euan Gray at May 18, 2005 08:51 AM
Are there "so many"? You've named one - in cement. Yes, that's essential, but it's one of many essential materials.
Posted by I'm suffering for my art at May 18, 2005 03:25 PM
You've named one - in cement
I also named oil, plastics, iron ore and steel. All essential materials. All with cartels in various regions (and sometimes globally).
And how does libertarian theory say the rise of cartel will be prevented without coercive regulation? And if it is not prevented, is that a good thing?
EG
Posted by Euan Gray at May 19, 2005 08:31 AM
