These notes are from the lecture Medical Economics: The Austrian point of view, given at the Mises University. Any errors are mine, feel free to point them out so that I can correct them. This lecture was given by Prof. Block.
Nestle’s Fiasco
- Nestle made a formula that, when mixed with water, produces milk.
- When mother’s used Nestle’s milk, babies got sick because of dirty water.
- Nestle got into trouble because the leftists hate the free market.
- Not fraud — Nestle’s powder milk was fine.
- Not “market failure” — it was a State-provided water-source.
- The answer is to privitize water.
Drug Legilization
- Leglization is not advocacy.
- Libertarians aren’t necessarily Libertines.
- Does selling or using drugs necessarily violate the non-aggression axiom? No.
- However, selling to children, or driving drunk, could be aggression.
- Economic argument: drugs are just a good like any other — both parties benefit ex anti.
- We must ignore third-party objections, because otherwise there could be no trade at all. To every conceivable trade, some third party could object.
- Libertarian argument: we are all self-owners of our bodies.
- Telling people they can’t use drugs is partial state.
- Victimless crime: two consenting parties (we aren’t talking about children, here).
- It’s drug-criminalization.
- Telling people they can’t use drugs is partial state.
- Objections and answers:
- Objection 1: Prohibition prevents people from hurting themselves.
Answer 1: But that’s paternalistic, and violates self-ownership. Reductio: what else should we criminalize? French fries?
- Objection 2: Drug-criminzliation protects the economic interest of society. Druggies impose costs on socialized health care.
Answer 2: Eliminate socialized health-care.
- Objection 3: Druggies can’t support their families.
Answer 3: The same is true for alcoholics, yet alcohol is and should be legal. Maybe not supporting your family is criminal
(the initiation of aggression), but using drugs is not.
- Objection 4: Drugs increase crime-rates.
Answer 4: This is wrong. The criminalization of drugs is what causes crime:
- Druggies have to steal to support their habit.
- There is crime in protecting drug-monopolies.
- Extremization — illegalizing drugs tends to push people to the most severe/extreme drugs.
- Druggies have to steal to support their habit.
- Objection 5: Elasticity of drug curve, worried that 50% of people would use drugs if they were legal.
Answer 5:
- If drugs were legal, no drug-dealer would be pushing drugs to kids.
- Right now, drug-dealer’s push drugs for free.
- In the Netherlands, drugs are partially legal, yet there are not high rates ther.
- If drugs were legal, no drug-dealer would be pushing drugs to kids.
- Objection 6: Needles/AIDS/HIV.
Answer 6: Legalization would reduce these problems.
- Objection 1: Prohibition prevents people from hurting themselves.
- Why can’t we win the drug war? It’s because every time we “succeed” and capture drugs, we reduce the supply, thus making drugs more expensive, and making the black market in drugs more lucrative.
Body Parts
- Many people die from needing body-parts.
- How many people would donate kidney’s if they were offered $1,000 to donate their kidney’s when they die in an accident — what about $2,000? $3,000?
- How many people’s lives would be saved if we had a market in organs?
Socialized Medicine
- Hillary almost gave us socialized mediciine. Do we really want to turn over such an important part of the economy to the State?
- Objections and answers:
- Objection 1: Making money off of sickness is evil.
Answer 1: But people make money off of food too, and that’s necessary to live. If we can trust the market with food, we can
trust it with health-care.
- Objection 2: Health is too important to leave to the free market.
Answer 2: This is wrong. It is Socialism and the State which we shouldn’t trust with the most important things.
- Objection 3: Doctor’s are working for greed, so we can’t trust them.
Answer 3: Non-sense.
- Objection 4: There are 40-million Americans without health insurance.
Answer 4:
- We don’t have carrot insurance either.
- Don’t have food insurance, but foot is important.
- The reason we want health insurance is because health-care is so expensive, which is caused by Socialized health-care.
- We don’t have carrot insurance either.
- Objection 1: Making money off of sickness is evil.
- Problems with socialized medicine:
- Don’t know how to allocate resources.
- In some situations, we’re like the USSR.
- The only reason we can allocate resources at all (in a less than completely arbitrary manner) in this Socialized system is because of
prices.
- 60% of the resources used are for the people in the last few months of their lives. In a free market, people wouldn’t do that — they
aren’t that selfish.
- Don’t know how to allocate resources.
- Free Makret Solutions to Health Care:
- Milton Friedman has noted that the American Medical Association (AMA) is a very powerful union, because they can shift the supply
curve even before you enter the market:
- The number of applicants to medical schools is very large.
- Doctors prevent people from being trained, so you can’t even get in the market to compete.
- From 1934-1939, doctors (through the AMA) prevented Jewish immigrants who were doctors from the University of Vienna, Austria,
from entering the field.
- You needed to be a citizen to practice.
- You needed to take an English exam. They argued it was necessary for communication. This is non-sense:
- Translators.
- Restrict practice to German-speaking population.
- Unconscious patients.
- Translators.
- You needed to be a citizen to practice.
- Quality? If the AMA was so worried about quality, why let interns work for 48 hours?
- Professors of Biology (pHDs) make about 49,000 per year. That would probably be the free-market salary for doctors.
- The number of applicants to medical schools is very large.
- The FDA causes the prices of drugs to skyrocket. In the free market, there wouldn’t be an FDA, but rather there would be competing
certification issues.
- Supply and Demand — demand side. What if milk was socialized? We’d be using it for baths — a very uneconomical waste of resource.
- There’s a shortage of service, so there are very long waiting lines.
- Malpractice: very expensive, result is that doctors order all kinds of tests and are practicing law, not medicine. Under a free
enterprise system:
- Contract A: The doctor does his or her best, and the patient cannot sue.
- Contract B: The patient can sue, but prices would necessarily be higher.
- Contract A: The doctor does his or her best, and the patient cannot sue.
- How is quality insured in a free market system?
- Competing certification agencies.
- Anyone could do such, but if some quack does it, no-one would take him seriously, and his “certificates” would be meaningless.
- Competing certification agencies.
- Milton Friedman has noted that the American Medical Association (AMA) is a very powerful union, because they can shift the supply
{ 2 comments }
A small correction: It’s Nestle, not Nesley.
I find the baby milk example interesting, because although Nestle was not at fault for the government’s contaminated water supply, artificial baby milk is, in fact, wholly inferior to human (breast) milk. The artificial baby milk industry is built largely on the self-delusion of a large part of the populace than artificial milk is equal or superior to human milk. Now, I don’t consider this a “market failure,” because the correct information is easily available to anyone who seeks it out. And there are numerous state interventions that help explain the popularity of artificial milk.
Also, regarding the AMA, physicians are enjoined by the Federal Trade Commission from joint contracting with insurers. The FTC actually voids existing contracts that pay what Commission lawyers consider “above market” price. This is, of course, nothing more than a government subsidy to the health insurers, who use the FTC to get out of contracts they voluntarily negotiated.
“Answer 2: This is wrong. It is Socialism and the State which we shouldn’t trust with the most important things.”
*facepalm*
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