Economic Arguments Against Public Education and Medicare

I've barely received any comments far. For shame. C'mon people. Even if your comment is one sentence, I want to see it and will appreciate it.

I've been writing a lot of e-mails lately. What follows is from another e-mail where I am explaining why public education and medicare are economically harfmul. I pretty much covered my moral arguments against them in my first post, and most of you who know me are pretty familiar with them anyway. (However if you are curious, please ask).

It would take a much more extensive argument than the one that follows to fully demonstrate the economic harm of government-subsidized industry, particularly in education and healthcare. But, I think what follows is a pretty good summary.

I want people to be educated, healthy, and not suffering. But as I've said, the ends do not justify the means. The benefit of society NEVER outweighs the rights of the individual.

Economically speaking, there is no reason to assume that effective social programs could not be created on a private basis. Take your assumptions about public and private school specifically. Why is private school often so expensive? Is there something about the very nature of education that will always make it expensive, or is there something currently in the nature of the market that makes it expensive? Private school is so expensive because it cannot compete in a free market. Since education is not thought of as a for-profit business, but rather this right that everyone has, no one is really thinking much about the quality of education. There is very little or no economic competition between schools.

What is a major reason for decrease in price in a highly-valued product or service? Profit. As demand for the good or service increases and profit increases, price is reduced to make it more available to a larger quantity of people, thus yielding more profit. When competition is introduced, the company that can sell the best product at the lowest price often wins out. Other companies must either match the quality or price or go out of business.

There's another analogy that helps: the introduction of new technology. When a new technology first comes on the market, it is incredibly expensive - and only the select few can purchase it. Over time, as knolwedge of how to produce the product/service grows, it becomes cheaper to manufacture. That is, companies can create the product more efficiently and thus at cheaper cost. New companies emerge that have discovered how to make the product/service cheaper and can get more profits by beating out their competitors with lower prices. This continues as a cycle until a piece of technology that once seemed incredibly expensive and available only to the elite is now a commonplace item. There are countless examples of this that it is not necessary to make a list.

Now, what is one of the most highly demanded and needed services in the country? Education. If schools were run as for-profit businesses, I guarantee you that the price of education would plummet. Education treated as a for-profit business would have the same effect as in any free industry, but to an even large degree given how much of a demand there is for good education. By artificially subsidising education through government, this process is completely wrecked. In a market, businesses are rewarded directly by market success - it is a completely objective measure. In a government industry, "success" is measured and rewarded by less objective, more artificial means. For one thing, there is a lot of back-scratching based solely on political pull, and not the reflection of any actual merit. A state politician wants to gain popularity, so he pledges more money to education. This does not reward any specific merit, in fact it only encourages lethargy and inefficiency. Actual merit is not the key - knowing the right politicians is.

Is it any surprise that our public schools are failing? In any normal business environment, if we hire someone to do a job, and they fail miserably, we fire them. In the realm of public education, if a school fails miserably, we throw more money at them! What does this accomplish? Does this address the cause of that school's failure in any substantial way? Some schools may fail because they lack funds, most schools fail because of more important problems like bad teachers or bad educational philosophy. Furthermore, there is no possibility for the financiers of public education to remove their funds if they think that a school is doing a terrible job! The money that finances public school is taken forcibly from taxpayers, and they have no say in the educational philosophy of the school, the curriculum, or the teachers. And even worse, teachers are given tenure for no reason other than simply having been at one school for a designated period of time! This is not a reward based on merit or effective results but rather just simple patronage!

Are you starting to get the point? Everything about our educational system encourages not competition, ambition, and merit but rather the exact opposite. To the extent that some schools are able to muster these qualities is a testament to the merit of certain teachers and certain schools fighting against an educational system that encourages anything but. It is for the very reason that education is so incredibly valuable to every individual that it must be completely private! If we really want to give the best education, it must be one that is based on merit and competition, not political patronage.

This is only a portion of my economic argument against public education. I'm sure that you can imagine what my moral argument against it would be. I believe that I have partially mentioned it before, but I will summarize again here. The individual who's money is forcibly seized (which is a crime in itself) has absolutely no say over how that money is to be used. Specifically, he is forced to support ideas that he may loathe, or even find to be evil. That is an utter perversion of morality and justice.

A similar economic argument must be made for healthcare. Most people do not want to think of hospitals as for-profit businesses, but that is exactly what they must be. Any good or service cannot be created out of thin air, no matter how much we would wish them to be. If it were up to my whim right now, not a single person in the world would be sick, and all would be healthy. But this is obviously not the case. The goods and services needed to treat the sick and ailing cost money.

Specifically, as the quality of life in this country has improved so drastically, we are now able to live much longer than we ever could. But, this creates an unintended problem, it now costs much more to live, because in order to extend our lives in the way that we have, we must use all sorts of technologies and medicines. As our life expectancy continues to get older, and as we have more people who are old, overall medical costs become higher and higher.

So what is the most important thing needed to get prices to come down? Greater efficiency. Like with any other industry, we have to become more efficient in our production of medical goods and services. How do we do this? We do it through research, innovation, and ultimately implementation into the market. But, we have to be pushed hard to become more efficient. That is, if market forces dictate that prices are going to skyrocket and we're going to lose profits and be unable to continue our business, we must become more efficient. The facts of the medical market are in fact telling us this.

But on the whole, the medical industry is not trying to become more efficient. What has been the primary solution offered to solve this problem of increasing healthcare costs? Government subsidy. Government has increasingly stepped in to foot the bill for the increase in healthcare costs. In other words, hospitals do not have to worry about becoming more efficient, because the government bails them out. Are you starting to see the problem here? Now, hospitals don't have to act based on market conditions - they can do whatever the hell they want. All of a sudden, hospitals are ordering a lot of really expensive surgeries for patients with good medical insurance because hey, the government is footing the bill. You see...medical costs, instead of decreasing, begin to skyrocket. What incentive do they have to become more efficient in their service? They are making hand over fist and don't have to put a damn bit of effort into it - because the government has deemed that healthcare is a needed service and will foot the bill. While before, struggling hopsitals were doing everything they could to keep costs down because they needed to stay in business, now the nature of their market encourages them to spend as much as possible.

What has happened when healthcare costs increase even more as a result? There are calls for more government intervention! As I think you can clearly see by now, this only worsens the problem.

It's true that healthcare costs are increasing - but this is the result of natural market forces. Demand has been increasing with supply slow to catch up, thus, increased prices. The solution is not to throw money at the problem. As I've shown, this leads to disaster. The only real solution is to actually get supply to outproduce demand - which requires an actual increase in productive efficiency. This will never happen under government-subsidized medicine.

Thus, we must remove government subsidy from education and healthcare. Let's get them out of the rest of the market while we're at it...but that is another post.