Government is Just a Hammer

[rowyn]

I think the thing that I disliked the most about the game NationStates was its implicit assumption that government was the controlling force to society. That is to say, everything that happens in a society: the economy, the divorce rate, the family structure, technological achievements, etc., was the direct result of government policies. There is an assumption that if the government doesn't do something, nothing will happen. If the government doesn't save the rainforest, then it will inevitably be cut down. If the government doesn't outlaw public indecency, everyone will walk the streets naked. If the government doesn't provide social security, then all elderly people will go homeless.

I think it's this fundamental assumption that leads people to think of Libertarians as hard-hearted conservatives indifferent to human suffering. You look at someone who says "we should do away with food stamps" and it's hard not to think "Don't you care?"

Of course I care. Of course I think people should help one another. Of course I believe in charity, in compassion, in decency.

What I don't believe is that the State is any good at charity or compassion. The State is good -- really good -- at just one thing: the use of force. By golly, if you need guns or jails or manpower to kick people around, the State is the place to go. It can bully, harass, and coerce like nobody's business.

And that's a good thing. There will always be powers in the world that will use force against you, and force will always be necessary to defend you from it. The State, ideally, is that good guy using its considerable force in defense of its people.

But force is not the solution to every problem -- at the very least, not the best solution to every problem. When the State tries to do other things, that don't really involve the use of force, it tends to botch them up. It has unintended consequences. It's so big and impersonal that it lends itself to corruption and abuse.

It's not that I'm a pessimist and think people are so pathetic they don't deserve help and should be left to die if they can't take care of themselves. It's that I'm a hopeless optimist, and I think that smaller organizations will step in to fill the void, and to do it better, if the State stops trying.

The State is a hammer. It's a big hammer. It's a really good hammer. But not every problem in the world is a nail.

Comments

Canada does not exist in a vacuum and other points ...

[telnar.livejournal.com]

When we look at the question of whether the Canadian health care system is sustainable, there are at least two questions that might matter:

1) Does this system make Canadians better off and by how much?
2) Does this system make humans better off and by how much?

It's easy (if perhaps wrong) for Canadians to dismiss the second question since relatively little of the world's medical research happens in Canada (even if more might happen there if incentives were different), so the effect on Canadians of anything that they alone could do to change the pace of medical innovation is fairly small.

Incidentally, economists call this type of situation a free rider problem. Canadians will get the benefits from medical research in other countries whether they contribute towards medical advances or not. In fact, because the lion's share of the cost associated with producing a new drug comes prior to approval for widespread use, drug companies have an economic incentive to offer price breaks to countries with socialized medical systems (any revenue is good since the marginal cost of tablets is so low) as long as doing this doesn't jeopardize the prices that they can charge in the world's few relatively free markets.

In contrast, the US faces a far different problem. I don't have exact statistics (sorry -- too lazy to get current ones), but the majority of the world's medical research happens here. If we were to adopt an incentive system that substantially reduced the level of medical research done in the US (e.g. by capping drug prices), the harm to the world would be large enough to probably make us worse off in the long run even though we would stop subsidizing other countries socialized medical care policies.

One option that I've toyed with as a way for the US to share the burden of medical research more fairly with the world would be for Medicare to adopt a policy loosely analogous to the way that most favored nation status works in GATT. Under this plan, Medicare would pay the lowest price for a given drug that the seller had accepted from the government of any industrialized country (chances are that private insures wouldn't be willing to pay more than Medicare). Because the US accounts for over 40% of the world's spending on health care and Americans regularly pay more than double the prices for drugs which prevail in single payer health care systems, I would expect that the short run effect of this would be for US drug companies to be unwilling to sell to European and Canadian governments without radically renegotiating the pricing. In the longer term, it would probably eliminate the cost advantage non-American governments have in health care. The only thing that worries me is that when prices found an equilibrium somewhere between US and European prices, US drug research would be reduced. Perhaps, though, European research would increase to compensate for it.

Incidentally, many of the same arguments apply to medical devices which permit new tests. I focused on drugs because they have an almost software-like cost curve (i.e. 1,000,000 units cost only slightly more than 1 unit). Advances in areas like magnetic resonance imaging can be more complicated to analyze since there are several places where costs occur as opposed to the much simpler model for drugs (where there are generally only 1-3 middlemen).

Thank you...

[rowyn]

This is a point that I wanted to make but didn't feel comfortable trying to without some research to back me up.