Wed, 05 May 2004

Better Health Care

It should be clear that Health Care is an economic good. That is, it is a scarce good, in short supply. I noticed something interesting about Health Care today. I heard a story about the women's march on Washington on NPR. Some women were reported to be asking for "Better Health Care". Google says that that phrase appears about 65,900 times on the web. The very existance of that phrase points to an effort to turn Health Care from an economic good into a political good. That is, one which cannot be purchased, but which is available (at some level of quality and supply) to everyone.

Ponder this: have you ever heard of a Campaign for Better Hot Dogs? Or the Better Blue Jeans Taskforce? No, of course not, because those are economic goods are supplied via markets. There are many different amounts, kinds, and prices of these goods available to purchasers. Some of these are markedly poor quality, yet they are purchased anyway.

There are a set of people who do not understand economics. I will call them "Good Hearts", because they are generally good-hearted people who mean well. Good Hearts do not understand that everyone has a fixed amount of resources at any point in their life. Everyone has to make decisions about how to allocate those resources. Everyone has choices, and an opinion about those choices. There is in essence no way for anyone to make someone else's choices for them, because you would have to know the person's opinions as well as the choices. I mean, everyone can tell a funny story about an inappropriate gift that they received, right?

Some people, who are usually called poor people, have to choose from mostly unattractive choices. This really bothers the Good Hearts. Unfortunately, rather than try to make more choices available to poor people, they seek to eliminate all of the unattractive choices. This is done on the assumption that if poor people have no unattractive choices left to them, all their choices will be attractive ones.

This assumption is wrong.

Instead of having only attractive choices, poor people are left with fewer choices, or even no choices. This has the unfortunate problem of interfering with their ability to maximize the utility of their total set of choices. In other words, life sucks, then you die. For example, the Good Hearts don't like it when poor people have to live in poor quality housing. So, to make sure that poor people don't have to live in (say) a house with only one or two outlets per rooom, building codes specify that outlets must be every six feet, or eight feet, or ten feet of linear wall. What this does, though, is not to ensure that poor people have high quality homes, but instead to ensure that poor people have no homes at all.

There are many instances of regulations like this, which force a minimum level of quality upon people. There are no circumstances under which this makes people's lives better. All of these regulations should be repealed. Not for the sake of the rich, or the sake of the middle class, but for the sake of the poor, so they have more choices in how to allocate their very limited resources.

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