Quantum Pranx


Healthcare and Economic Realities

with one comment

by Dr. Ron Paul
Originally posted March 30, 2010

WITH PASSAGE OF LAST WEEK’S BILL, THE AMERICAN PEOPLE are now the unhappy recipients of Washington’s disastrous prescription for healthcare “reform.” Congressional leaders relied on highly dubious budget predictions, faulty market assumptions, and outright fantasy to convince a slim majority that this major expansion of government somehow will reduce federal spending. This legislation is just the next step towards universal, single payer healthcare, which many see as a human right. Of course, this “right” must be produced by the labor of other people, meaning theft and coercion by government is necessary to produce and distribute it.

Those who understand Austrian economic theory know that this new model of healthcare will cause major problems down the road, as it has in every nation that ignores economic realities. The more government involves itself in medicine, the worse healthcare will get: quality of care will diminish as the system struggles to contain rising costs, while shortages and long waiting times for treatment will become more and more commonplace.

Consider what would happen if car insurance worked the way health insurance does. What if it was determined that gasoline was a right, and should be covered by your car insurance policy? Perhaps every gas station would have to hire a small army of bureaucrats to file reimbursement claims to insurance companies for every tank of gas sold! What would that kind of system do to the costs of running a gas station? How would that affect the prices of both gasoline and car insurance? Yet this is exactly the type of system Congress is now expanding in health insurance. In a free market system, health insurance would serve as true insurance against serious injuries or illness, not as a convoluted system of third party payments for routine doctor visits and every minor illness.

While proponents of this reform continue to defy all logic and reason by claiming it will save money, I worry about cataclysmic economic events. Already investors are more reluctant to buy US Treasuries, fearing that the healthcare bill, along with other spending, will cause government debt to explode to default levels. I had the opportunity last week to address my concerns with both Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, especially about the potential for the coming serious inflation. I am not optimistic that these important decision makers truly understand what is coming, why it is coming, and how best to deal with it.

The Federal Reserve finds itself in an unprecedented and unenviable position. To keep up with government spending and corporate irresponsibility, it has increased the monetary base by nearly $1.5 trillion since September of 2008. Excess bank reserves remain at historically high levels, and the Fed’s balance sheet has ballooned to over $2 trillion. If the Fed pulls this excess liquidity out of the system, it risks collapsing banks that rely on the newly created money. However, if the Fed fails to pull this excess liquidity out of the system we risk tipping into hyperinflation. This is where central banking inevitably has led us.

The idea that a handful of brilliant minds can somehow steer an economy is fatal to economic growth and stability. The Soviet Union’s economy failed because of its central economic planning, and the U.S. economy will suffer the same fate if we continue down the path toward more centralized control. We need to bring back sound money and free markets – yes, even in healthcare – if we hope to soften the economic blows coming our way.


One Response

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  1. It is unfortunate that Ron Paul can only see through the telescope the wrong way. Essentially Obama in trying to reform the healthcare system in the US could only do one thing – and that is make the whole thing more bureaucratic and more expensive. Remember Thatcher’s “Smaller Government”? It turned out to be 25% bigger by the end of her attempts.

    You simply cannot turn around a system that is so in-growing and so doggedly anti-restriction as that of the US.

    I live in a country where things are quite strictly controlled, despite all the best efforts of the likes of the US through “freeing up the economy” by giving “choice” in such things as which company’s busses are in the locality, or what colour your electricity is*. It is this sort of rubbish that the American style of thinking imagines gives democracy its innate freedom. But what freedom is it that they have? The choice between a red bus … or a red bus, as there are no others driving around past your door. Democracy is more than just skin deep.

    There are strong controls here in the Netherlands, and rightly so: it means that wealth distribution remains relatively well balanced. I live in a small village of 6,000 residents. We have two banks and amongst other things a bakery and a bookshop. And a school. We have a bus service. where we lived in the UK, we had three busses … a week.

    More important than that there is a health service which not only works, is considered one of the better ones worldwide. Why? Because it has not been allowed to grow, cancer-like, along lines it should not have, through the lack of central authority. Ours remained steady and faithful to its cause – perhaps too much so – but at least it is relatively efficient and its workers relatively well paid.

    What is it that I am driving at here? It is that the Americans have what they think of as feedom, yet it is not, because the average American does not think in the way that a free person does. You need people to recognize their part in society, and society’s part in them – not allow the odd one or two to rip and tear away at the very fabric of what supports them in some wild hair-raising experiment to prove once and for all that Darwin was wrong.

    *We had a client in Gloucester who on having their home re-furbished wanted to have two electricity systems laid in so that they could choose between providers. No joke. Did these clients of ours really believe that they would have a “choice” with the option to choose their provider?


    01/04/2010 at 12:09 am

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