{"id":152,"date":"2009-09-24T22:25:39","date_gmt":"2009-09-25T02:25:39","guid":{"rendered":"http:\/\/civilsocietytrust.org\/blog\/?p=152"},"modified":"2009-10-25T15:46:55","modified_gmt":"2009-10-25T19:46:55","slug":"economic-illiteracy-on-display","status":"publish","type":"post","link":"https:\/\/civilsocietytrust.org\/blog\/2009\/09\/24\/economic-illiteracy-on-display\/","title":{"rendered":"Economic Illiteracy on Display"},"content":{"rendered":"

Perhaps you’ve caught MoveOn.org’s recent satirical ad<\/a> that goes after the health care insurance companies, staring none other than Will Ferrell.\u00a0\u00a0 I’ve loved Mr. Ferrell’s movies, but man, as Laura Inghram might say, “Shut Up & Sing!”<\/a> Let’s examine a few quotes…<\/p>\n

“So why is Obama trying to reform health care when insurance companies are doing just fine making billions of dollars of profit?”<\/em><\/p>\n

I’d like to know exactly how MoveOn.org would like to see the health insurance industry operate in the absence of profits.\u00a0\u00a0 Of course, this is not a theme unique to MoveOn.org and their (sadly) many supporters.\u00a0\u00a0\u00a0 The briefest time spent with Google will reveal numerous people and organizations decrying “profit-driven health care”.<\/p>\n

The most elementary Economics 101 (albeit, not of the Karl Marx variety) stresses that profits provide the all important signaling mechanism to potential suppliers as to where the demand is, or equally importantly, where it is not<\/em>. Without the profit mechanism, some other telegraphing mechanism would have to be substituted instead. \u00a0\u00a0 MoveOn.org’s implied solution is that that mechanism should be politically rooted. \u00a0 It’s back to the question of “who decides<\/em>?”\u00a0\u00a0 Should individuals decide what product\/price offering works best for them, or should a bunch of government bureaucrats do it for them?<\/p>\n

But if MoveOn.org feels so confident that the profits within the health care industry are too large, it’s a glaring admission that they could either provide a similar service for a lower price and are choosing not to do so<\/em>, or that competition within the industry is lacking.\u00a0 Again, Economics 101 says that in the presence of a robust free market, no competitor will sit back and watch other market participants enjoy outsized profits.<\/p>\n

Don’t we already have a robust free market in health care?\u00a0\u00a0 A simple example will prove the negative:\u00a0 In search of a good deal, I am free to cross my state border and purchase a car, no small purchase at that, and then drive the car back to my home and register it.\u00a0\u00a0 No one cares, and similar transactions happen across the country every day. \u00a0 One could even say, to use a frequently used phrase in the health care space, that the cheaper out-of-state dealers help keep other dealers in my state “honest”.<\/p>\n

Will someone in the MoveOn.org camp tell me why I can’t do this with health insurance, and what the rationale is behind that policy?<\/strong><\/p>\n

Yes, I know that each state has its own laws mandating the particulars of policies sold in their state, so each state couldn’t possibly regulate the offerings of the companies serving all of the other states according to their own mandates. \u00a0 But who asked for this mess?\u00a0\u00a0 Why shouldn’t I just go shopping for a policy that fits my needs, as dictated by me<\/em>, from whoever wants to sell it to me, wherever they exist?\u00a0\u00a0 Isn’t that exactly how we buy every other product?<\/em><\/p>\n

Making just this one change would unleash a torrent of price and product competition that would vaporize the supposed outsized profits almost overnight.\u00a0 I’d also welcome the education as to why this wouldn’t cost almost nothing, in stark contrast to the other wildly expensive plans out there. \u00a0 Furthermore, any group of people from MoveOn.org would always be free to join into that market competition with their own lower-cost\/lower-profit company.<\/p>\n

If anyone’s angry with insurance companies, letting them truly compete with each other would seem to be a great way to vent that anger.\u00a0\u00a0\u00a0 Let them beat each other up as you watch!\u00a0\u00a0 Great theater!\u00a0\u00a0\u00a0 America’s a country that hasn’t yet outlawed boxing (where the stated goal is to render your opponent unconscious — talk about a need for medical care), so why not let the companies really duke it out?<\/p>\n

“Eighty percent of the American public support the public plan…”<\/em><\/p>\n

Wow.\u00a0\u00a0 If that were true, wouldn’t that overwhelming majority have forced its will on the other twenty percent of us by now? \u00a0\u00a0 Wouldn’t all these crazy town hall meetings and such indicate that statement’s a little off?\u00a0\u00a0 Last I checked, big government had only a 60 seat majority in the Senate, not 80.<\/p>\n

But this is the crux of MoveOn.org’s ad.\u00a0\u00a0 They want viewers to lobby congress<\/a> for a strong public insurance option.\u00a0\u00a0\u00a0 So where are their ads decrying the profits<\/a> of internet service providers, or railroads, or software companies, or household and personal products, which on average make higher rates of return than insurance companies? \u00a0 Should Congress authorize the creation of public companies to keep Cablevision or Procter & Gamble honest?\u00a0\u00a0 Just who does Amtrak keep honest?<\/p>\n

“What’s so American about competition?”<\/em><\/p>\n

Exactly.\u00a0 Anyone can play this game.\u00a0 Go for it MoveOn.org.\u00a0\u00a0 Forget the public option.\u00a0\u00a0\u00a0 There’s a huge hole in the marketplace right now that you can fill. \u00a0\u00a0 Between George and your 5 million members, you should have a lot of resources at your disposal to create a great company that by your figuring would attract a ton of customers.\u00a0 \u00a0 And it would be free to ignore typos.<\/p>\n","protected":false},"excerpt":{"rendered":"

Perhaps you’ve caught MoveOn.org’s recent satirical ad that goes after the health care insurance companies, staring none other than Will Ferrell.\u00a0\u00a0 I’ve loved Mr. Ferrell’s movies, but man, as Laura Inghram might say, “Shut Up & Sing!” Let’s examine a few quotes… “So why is Obama trying to reform health care when insurance companies are […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,3],"tags":[],"_links":{"self":[{"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/posts\/152"}],"collection":[{"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/comments?post=152"}],"version-history":[{"count":18,"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/posts\/152\/revisions"}],"predecessor-version":[{"id":163,"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/posts\/152\/revisions\/163"}],"wp:attachment":[{"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/media?parent=152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/categories?post=152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/civilsocietytrust.org\/blog\/wp-json\/wp\/v2\/tags?post=152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}