If you are angered by the recent passage of the US health-care bill as an undue expansion of the government into the market system, turning American into a socialist state then you must not know what socialism is, what liberalism is, or what capitalism is. Indeed, it was F.A. Hayek, the arch-defender of the free market that actually supported the logic of the bill fifty years before its passage:
"Furthermore, Hayek (1960, p. 287) is careful to distinguish between ‘compulsory insurance’ and ‘compulsory membership in a unitary organization controlled by the state’, and at least one of the drawbacks of such an organization, he contends, would be that it would thwart the process by which ever more effective insurance regimes could be devised. ‘If we commit ourselves to a single comprehensive organization because its immediate coverage is greater’, Hayek writes, ‘we may well prevent the evolution of other organizations whose eventual contribution to welfare might have been greater’ (1960, pp. 288, 291–292). Indeed, in The constitution of liberty (1960, chapter 19, pp. 287–305) he is at pains to reject a direct role for the state in provision of welfare services in general. Rather, and in order to secure the epistemological benefits of the market mechanism, he defends a system ‘under which individuals pay for benefits offered by competing institutions’ (Hayek, 1960, p. 304, emphasis added) with the role of the state being merely to temporarily expend public monies to stimulate the growth of a market for this kind of insurance (1960, p. 287). " (Tebble, 597)
First thing is first, the last sentence of the aforementioned quote is basically the US health-care in a nutshell.
Secondly, the health-care bill does not nationalize any private insurance company--lemon socialism--, and it does not subordinate the profit-motive to humanitarian motives--socialism. Rather the health-care bill is subordinate to the profit-motive by shaping the contours of the bill in such a way that would guarantee super-profits for the health-care companies, mostly by adding 35 million young and healthy customers, often supported by government subsidizes--which, in my opinion is another government bail-out to corporate America. So the first hurdle has been passed according Hayek, the private market remains.
Thirdly, Hayek supports the notion of 'compulsory insurance', he certainly does not see this as an infringement on an individual's freedom, but as a condition of it. To Hayek, the infringement would be if the consumer did not have a choice buy to use a government insurance plan--the horror! Indeed, the current health-care bill includes a mandate in order to allow all Americans to be covered since, if you expand the base of clients to include the young and healthy, individual costs go down--or the rate of inflation decreases--and profits can be retained as those with illnesses can still be covered. There is no compulsion, since one can still choose where to buy insurance.
Fourthly, this jives with the 'American as apple pie' notion that competition works. The bill does not rid the system of private insurance, and implicitly assumes some form of competition; indeed, the logic of the bill is that competition would increase from these regulations in terms of better terms of insurance contracts or cost reductions for individuals. Thus, private insurance in health-care is better than state owned insurance, because "competition" leads to better results, as Hayek argues. In order to believe this you have to ignore the tendency of capital to aggregate, thereby rendering the free market inherently unable to remain a "free market" system and thus destroying its own through its own "rationality"--that is to say, as one firm gains differential advantage over others, it uses its leverage in the credit markets to gain the capital necessary to merge and acquire other firms increasing its market power and undermining the whole framework. Secondly, you have to ignore that branding, advertising, goodwill create mini-monopolies--Sraffa, Nitzan, etc.--that undermine the whole notion of easy substitution, the inability of firms to determine prices--they clearly do and can--, and thus, equilibrium.
But all in all, Hayek supports Obama...
"Furthermore, Hayek (1960, p. 287) is careful to distinguish between ‘compulsory insurance’ and ‘compulsory membership in a unitary organization controlled by the state’, and at least one of the drawbacks of such an organization, he contends, would be that it would thwart the process by which ever more effective insurance regimes could be devised. ‘If we commit ourselves to a single comprehensive organization because its immediate coverage is greater’, Hayek writes, ‘we may well prevent the evolution of other organizations whose eventual contribution to welfare might have been greater’ (1960, pp. 288, 291–292). Indeed, in The constitution of liberty (1960, chapter 19, pp. 287–305) he is at pains to reject a direct role for the state in provision of welfare services in general. Rather, and in order to secure the epistemological benefits of the market mechanism, he defends a system ‘under which individuals pay for benefits offered by competing institutions’ (Hayek, 1960, p. 304, emphasis added) with the role of the state being merely to temporarily expend public monies to stimulate the growth of a market for this kind of insurance (1960, p. 287). " (Tebble, 597)
First thing is first, the last sentence of the aforementioned quote is basically the US health-care in a nutshell.
Secondly, the health-care bill does not nationalize any private insurance company--lemon socialism--, and it does not subordinate the profit-motive to humanitarian motives--socialism. Rather the health-care bill is subordinate to the profit-motive by shaping the contours of the bill in such a way that would guarantee super-profits for the health-care companies, mostly by adding 35 million young and healthy customers, often supported by government subsidizes--which, in my opinion is another government bail-out to corporate America. So the first hurdle has been passed according Hayek, the private market remains.
Thirdly, Hayek supports the notion of 'compulsory insurance', he certainly does not see this as an infringement on an individual's freedom, but as a condition of it. To Hayek, the infringement would be if the consumer did not have a choice buy to use a government insurance plan--the horror! Indeed, the current health-care bill includes a mandate in order to allow all Americans to be covered since, if you expand the base of clients to include the young and healthy, individual costs go down--or the rate of inflation decreases--and profits can be retained as those with illnesses can still be covered. There is no compulsion, since one can still choose where to buy insurance.
Fourthly, this jives with the 'American as apple pie' notion that competition works. The bill does not rid the system of private insurance, and implicitly assumes some form of competition; indeed, the logic of the bill is that competition would increase from these regulations in terms of better terms of insurance contracts or cost reductions for individuals. Thus, private insurance in health-care is better than state owned insurance, because "competition" leads to better results, as Hayek argues. In order to believe this you have to ignore the tendency of capital to aggregate, thereby rendering the free market inherently unable to remain a "free market" system and thus destroying its own through its own "rationality"--that is to say, as one firm gains differential advantage over others, it uses its leverage in the credit markets to gain the capital necessary to merge and acquire other firms increasing its market power and undermining the whole framework. Secondly, you have to ignore that branding, advertising, goodwill create mini-monopolies--Sraffa, Nitzan, etc.--that undermine the whole notion of easy substitution, the inability of firms to determine prices--they clearly do and can--, and thus, equilibrium.
But all in all, Hayek supports Obama...
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