There are times that John Tamny is right, times when he’s wrong, and times when he’s spectacularly wrong. He’s spectacularly wrong about highways and the Internet. In his most recent column he writes:
Rather than getting into the policy weeds as it were, it seems the majority of libertarians and conservatives have given up on the idea of privatizing roads, highways and freeways. Whatever the proper response, readers can rest assured that this is not a column about privatization of transportation.
Still, and before moving on, it’s worth pointing out that governments don’t exactly build roads as much as they extract resources from the private sector in order to pay private industry to construct them. Just as the federal government was only able to create a crude and unmarketable version of the internet with resources taken from the private sector first, so did the same booming private sector similarly make it possible for governments to construct the roads on which we travel. If this is doubted, as in if some truly think governments have a magical ability with concrete, they might try getting to know Peru, Haiti and Zimbabwe by car.
I think the problem is that he’s imagining we’ve never tried to have a private transportation network but we have. It’s what we lived with for most of the country’s history so we know exactly what it would be like. Some people living in some places were able to get to some other places with reasonable comfort and ease. It was a patchwork system and some places were extremely difficult to reach by anyone. The most profitable routes were served well; less profitable ones weren’t served at all.
Similarly with the Internet. Private networks had been created regularly over a period of thirty years. As it turns out a private network that only reaches a handful of sites just isn’t that useful so none of these network every reached the sort of mass market today’s Internet does. I could elaborate on the details but you get the idea.
Markets simply don’t operate the way he imagines they do.
I think the situation is similar in healthcare. We had a purely private system for quite a long time and we know how such a system would operate very well. A handful of people in a handful of places would receive the best care that medical science could provide, some people would receive routine care. Lots of the care that people, even wealthy people, would receive was worse than no care at all and would kill them. The problems with our present system aren’t simply the government’s interference. They are that government interference has subsidized and allowed the market to self-regulate the supply end while reducing the cost of healthcare for a substantial segment of the market and letting the demand end otherwise on its own. The results are exactly what you’d expect.
Yeah, I think the history at least in this country is that the roads existed before the effective reach of government did. How else could it be? A person needed to get from Point A to Point B and took the path of least resistance. Often the path had been originally carved by Native Americans. Bridges and ferries were a bit different, as it was feasible to control access, but English common law required that these be open to “all comers.” The implicit requirement of monopoly power was to accept all customers at reasonable rates, though I think in some situations the monopoly power was express (ferryman granted a franchise), others it was situational (by virtue of having the only crossing in reasonable difference). Physicians were held to the same by virtue of recognition that their special educational certification reduced competition, and if they were the nearest physician they could charge exploitive rates.
What should an internist be paid? How about a neuro? An M&A lawyer. An ambulance chaser? Private equity guy? Second rate shortstop? A plumber. How about a rapper? Hillary Clinton, speech giver? Hillary Clinton, bought lock stock and barrel for future political considerations? How about Jennifer Aniston for bad acting but eye candy? I went to the Rolling Stones concert last week. Aging rockers still making it happen. Keith and Mick reportedly worth $400mm each. What is anything, public or private worth?
How do you know?
If there were a market, it would provide the pricing signals that would give you an answer to your question. We don’t have one so you can’t appeal to market forces for that determination.
What we have is a system in which the federal and state governments attempt to impose fiat prices based on estimates provided by the physicians’ guild and the various providers do their best to subvert the fiat system.
The Interstate Highway system came about from two sources. In the 1920’s (?), Eisenhower commanded a cross-country mechanical convoy for the Army. (I do not remember his rank.) The Army wanted to know the logistica – how long, what route, etc. It was a mess. The other was the Autobahn.
The private sector had 30 years to build a cross-country road, but they did not. The reason was nobody was travelling cross-country. One of the few customer for an interstate highway system was the military. The Internet is the same story with the addition of Universities.
Conservatives and libertarians assume that the basic infrastructure and government exists. In fact, they cannot imagine a world in which it does not exist. Zimbabwe has almost nothing in common with the US. This is mostly due to what most people take for granted.
If the private sector were to build private roads, why does Zimbabwe not have a world class highway system? They should have the finest of everything.
I have often asked why the civil courts are not privatized. For a contract to be eligible for action in Civil Court, a fee should be paid at the time the contract becomes valid, and if not, the contract is void. Shrink wrap agreements would need to include a court fee for the license to be enforceable. Each patent for each device sold would require a separate fee. Otherwise, it would enter into the public domain.
I doubt he would like my form of privatization. The airspace over my house is my property, and any water under my house is mine also. Any pollutants that enter my property are theft because they have affected the value of my property. I can play his little game all day.
Not exactly. Yes, the Autobahn was a direct inspiration for the system of interstate highways.
The original system of U. S. highways began in the nineteen teens with U. S. Route 1, running along the Atlantic coast from Maine to Jacksonville, Florida. It was designated in 1911. The road had pre-existed and it had been called the “Atlantic highway”. Nearly all of the old U. S. routes, including the famous Route 66, were just designations placed on pre-existing roads and it was a patchwork. I’ve actually driven Route 66 from St. Louis to Los Angeles. It was no picnic.
The Interstate Highway Act of 1956 began the system of interstate highways. It was also called the “Interstate Highway Defense Act” and Eisenhower was a major champion of the initiative, no doubt inspired by the cross-country convoy that Lt. Col. Dwight D. Eisenhower had commanded in 1919. The specifications for the new system of roads included provision for military transport and so that the roads could be used as landing strips.
“If there were a market, it would provide the pricing signals that would give you an answer to your question. We don’t have one so you can’t appeal to market forces for that determination.”
And there you have it. You can only assume that the “market” provides some sort of reasonable band around the “fair” price. It’s all we’ve got.
In case anyone hasn’t noticed, I have a “thing” for Jennifer Anniston. Biting my knuckles now………
I think there actually are some alternatives. We can look at comparables. That’s not perfect but it’s better than nothing.
The comparables I see come in three varieties: other professions with similar formal requirements in the U. S., healthcare providers forty years ago adjusted for inflation (before the massive market intervention), and healthcare outside the U. S. Each of those suggests that there’s plenty of room for doubt that what we’ve got is a “reasonable band”.
“If there were a market, it would provide the pricing signals that would give you an answer to your question. ”
You could always see if people were willing to work for a given salary, which is what we do. If the salary is not high enough, no one goes into that specialty or does not work in that state* or facility. Since the majority of money is paid from private funds (insurance or out of pocket) the guilds have limited ability to affect those payments. They have some ability to affect Medicare payments, but really those mostly have to be set high enough in relation to private insurance reimbursements to keep enough docs willing to accept Medicare. Control private insurance payments and you have a better shot at reducing Medicare fees.
* We have seen this in the past when states lost docs or could not bring them into the state when reimbursements were not high enough. See it all the time at the individual facility level. Of course the converse is true. If the salary is set too high, you have too many people and no one leaving. You then start to see salaries get ratcheted down.
(Neither of you done any hiring? I am looking for 5 people right now. Really 10, but i have someone else recruiting the other 5.)
Steve