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Hayek Would Have Supported Obamacare

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Student Posted: Sat, Feb 16 2013 11:57 PM

Or at least he would have supported the health insurance mandate. So says Eric Angner--Hayek scholar and philosophy professor @ GMU. I really enjoyed this video @ Reason and Anger's oped.

http://reason.com/reasontv/2013/02/14/libertarian-philosopher-hayek-supported

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Neodoxy replied on Sun, Feb 17 2013 12:34 AM

It was quite an interesting little video, although I'm not sure exactly how it reconciles with this video I recently found:

I also thought that for once the questions asked by the "interviewer" in an interview were actually quite good and insightful.

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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Jargon replied on Sun, Feb 17 2013 9:02 AM

Hosannas on high to Eric Angner

Personally I doubt Hayek would have supported it considering that the bill was written to consolidate and confirm the insurance and pharmaceutical cartels and its effects will be to drive doctors and independent practitioners into the hospital system, eradicate confidentiality and price competition, and increase the cost and uncertainty factor in employing workers to the point that employers must perform mass layoffs.

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Neodoxy replied on Sun, Feb 17 2013 9:57 AM

Despite the provocative title, all that was being argued was that Hayek would have supported the individual mandate or some sort of cash transfers from the rich to the poor. It was made clear that Hayek would have despised almost everything else about the bill.

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Jargon replied on Sun, Feb 17 2013 11:51 AM

Except that the bill is a transfer from the poor to the rich. Those without a policy are required to buy one from oligopoly-insurance companies.

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Jargon replied on Sun, Feb 17 2013 12:09 PM

Some notes I've collected for reference on the subject of Healthcare:

 

Our system before Obamacare
 
-highly regulated service providers and insurance companies (advantages hospitals over clinics)
-illegal to buy insurance from across state lines
-insurance companies forced to cover certain treatments (less discrimination on consumers part, raises price of said service and insurance rate)
-licensure of physicians, clinics, hospitals, insurance companies
-mutual aid societies are prohibited through regulation (reserve requirements, capital minimums, etc.)
-unionism in medical profession (more people than are necessary required to be present)
-patents (effects machinery and pharmaceuticals most)
-FDA restricts alternatives, hampers developing drugs, and shuts down producers and gives away the property (corporate capture and favoritism)
-Medicare/Medicaid price fixing
-Hospitals granted aid for more expensive equipment and expensive treatments
-Paying via Insurance increases demand for all treatments, whereas paying out of pocket would force providers to cut costs
-Federal Gov pays the difference between patient's abilities and hospital bill (hospitals ratchet up the bill)
 
In sum
 
-subsidized demand
-restricted supply
-bureaucratic hospitals squeeze out clinics, gain a right of arbitrary increase
 
 
Obamacare
 
-gives waivers to big businesses enable them to offer cheaper plans, disadvantaging small business
-more payroll taxes
-employer mandate
-1099 clause: business must collect IRS tax forms from its vendors and if it doesn't must pay the form itself
-DH&HS determines what benefits are mandatory, leading to upward cost-of-plan creep
-increases costs/paperwork to all insurance companies, raising barrier to entry, cartelizes industry
-forces people to buy a product (basically a bailout and eliminating competition for those last customers)
-increases the healthcare bureaucracy
-imposes more costs on doctors, who are shying away from the profession, decreasing supply
-prohibiting discrimination will raise the rate for all people but the most sick
-prohibits consumers from buying generic options
-panels decide standardized care, deviating doctor's are fined or jailed
-contracts state medical services out to private companies
-providers lose money if they don't use electronic records
-buying Insurance via Federal Policy Exchanges, standardized policies and info goes to IRS and HHS
-Clawback - families climbing above poverty level must pay back their subsidized care as they are rising
-Patients will be sicker on paper, giving insurance companies a higher risk adjustment
 
in sum:
-cartelizes the industry further
-decreases the quality of care and drives doctors out
-hurts employment 
-raises barriers to entry across entire economy
-end of patient / doctor 
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Bogart replied on Sun, Feb 17 2013 12:29 PM

Is it any wonder that Hayek was more popular in the British, USA and other European circles of power than his mentor Mises?  And there was the even more freedom oriented Rothbard who not only was against the foolishness of the welfare state but the foolishness of monopoly government.  And the economics profession has never accepted the ideas of Rothbard.  And Hayek won the Nobel Prize putting him with the likes of Paul Krugman.  Did Mises ever win anything for the Theory of Money and Credit or Economic Calculation?  Of course not.

I can accept that both Hayek and Mises despite believing in emergent order and unretarded economic calculation respectively still remained not pro but accepting of government as Rothbard's position was extremely distant from the current day opinions at the time.  But I lost a lot of respect for Hayek for being pro-wellfare state as it was not only against his OWN theory of economics, but was becoming increasingly evident that the welfare state is not affordable.

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Hayeks writings reflect that he was somewhat muddled headed. I think he was also less willing to be labelled as a radical like Mises or Rothbard in order for him to be accepted. In a sense he was right - more people know who Hayek is. The problem is that he's still muddled headed. It doesn't take much to show that mandated health care AND redistributive wealth both distort the price system

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Student replied on Sun, Feb 17 2013 10:53 PM

Neodoxy, 

Thanks for posting that interview with Hayek. It was really interesting to watch. But it does seem that Hayek is contradicting earlier things he's written. So I am not sure what to make of it. 

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Clayton replied on Sun, Feb 17 2013 11:09 PM

I got 4 mins in and shut it off. Utter crap. "Some redistribution can make markets work more efficiently" because some participants don't have much of a voice in the market? Seriously? I haven't read enough Hayek to know if this is an accurate description of his views, but this is a total crap excuse for redistribution - what else are venture capitalists but individuals looking for the "voiceless who need to be given a voice" in the market?? So, if this problem of the voiceless is solvable without redistribution, and the reason for redistribution is to give the voiceless a voice, whence redistribution???

Just crap.

Clayton -

http://voluntaryistreader.wordpress.com
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Christopher:

Hayeks writings reflect that he was somewhat muddled headed. I think he was also less willing to be labelled as a radical like Mises or Rothbard in order for him to be accepted. In a sense he was right - more people know who Hayek is. The problem is that he's still muddled headed. It doesn't take much to show that mandated health care AND redistributive wealth both distort the price system

 

 

 

I don't think Hayek was unaware of that.

A major part of his thesis in "The road to serfdom" consisted in demonstrating how the noble ideals of wealth redistribution and welfare state can serve as trojan horses to a totalitarian take over.

But he also knew the distinction between "socialism" and "welfare state and wealth redistribution programs", a distinction that is much frequently blurred in political discourse.

Socialism is the notion that bureaucratic elites should have a major role as surrogate economic decision takers on behalf of everyone else.

That's what characterize socialism.

Large scale welfare programs, like the obamacare, are likely to spread socialism, since they create almighty bureaucracies that oversee large sectors of societies economic decision taking.

But that's not the case when welfare money is collected and spent locally, and no central bureaucracy is involved. Local welfare programs tend to be successful enterprises, because the local population can effectively survey the use of the money pooled by their local government.

This is not socialism. This is just local groups using local government as tool of collective problem solving.

What Hayek, in the tradition of Acton and Tocqueville observed, was this relation between concentration of power and corruption.

 

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@ToxicAssets , I agree that local welfare is better than fed welfare, but no matter how you slice it, government redistribution, local or federal, distorts prices because it allocates resources differently than citizens would. By that argument, Hayek is contradictory.

You're statement:

This is just local groups using local government as tool of collective problem solving.

is naive and should be reworded as, "This is just 51% of the local population forcing the 49% at gun-point to do whatever they want". Yeah, it's better that it's a smaller local citizenry, but now we're just arguing numbers.

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@ToxicAssets , I agree that local welfare is better than fed welfare, but no matter how you slice it, government redistribution, local or federal, distorts prices because it allocates resources differently than citizens would. By that argument, Hayek is contradictory.

What exactly is the contradiction?

Price distortion is a particularly sinister sin?

Every economic decision drives prices up or down, and most forms of human action are economic decisions.

There's nothing particularly wrong with impacting prices, they are expected to change.

Political decisions are just another category of economic decisions. Political parties and entities are engaged in mobilizing their resources in order to generate influence and thus gather more resources and power.

And the power of local political machines is very much based on the perception of their local constituents of their ability to solve the perceived collective problems of that community.

The more local, the more concrete and objective these evaluations can be.

And, conversely, when surrogate decision takers are occupied with the "problems" on the level of a big nation, things become much less objective. You can understand your mayor drilling holes in your property to allow for sewage disposal infrastructure, but you cannot really figure why NSA and NORTHCOM have armed drones patrolling your airspace "looking for terrorists".

There are lots of common denominators in a local community, but there are very few on the level of millions of individuals scattered all over the place. And most of those general common denominators are either artificially induced problems, or are simply non-problematic factoids that do not demand particular solutions.

So a large part of the job of federal level bureaucrats is to induce the perception of "federal level" problems that demand a "federal level" intervention.

is naive and should be reworded as, "This is just 51% of the local population forcing the 49% at gun-point to do whatever they want". Yeah, it's better that it's a smaller local citizenry, but now we're just arguing numbers.

The 51% against 49% is not entirely correct.

Actually, a very small fraction of the population can command a lot of political power, if they dispose of more sophisticated political technology than the majorities. Jewish minorities are frequently remembered for the instances they were oppressed, but much of these (unjustified) resentment came from a popular perception of jewish minorities commanding disproportionate political and economic power in certain places, which, albeit being frequently an exaggeration, was not entirely false either.

But the point is not that.

The point is that political mobilization can be an effective tool of problem solving on the local level.

That's why most people, at some level, think politicians are necessary, because they actually solve real world problems, like, say, sewage disposal.

You can perhaps argue that sewage disposal could be addressed by non-political business, which is probably true but it doesn't matter. The thing is that politics usually solves these kinds of local problems effectively and that's why people generally see politicians as a necessary evil.

And since local politicians seem necessary and useful, people are in a position to accept without much questioning that federal level politicians are useful as well, tackling with federal level problems, even though they themselves are not able to understand or even point out what are exactly those big problems.

Federal or national central bureaucracies are, to a large extent, self-fulfilling prophecies.

They arise from real large scale threats, like foreign threats of invasion and war, but they persist and expand by creating the perception of a class of problems that only them can address.

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On price distortion, look at it this way: when individuals act, they allocate resources as they the see fit, in order to ease their discomforts/satisfy their wants. When they do this, both buyer and seller benefit. The seeming paradox of this acting in one's best interest, is it produces the most satisfied, most advanced, peaceful society (emphasis on peaceful). This is civilisation - peaceful exchange. Any intervention by any government (local or otherwise) by it's nature must be done by force, altering the resource allocation, thus lowering level of satisfaction of society, therefore, less civilisation. This intervention reveals itself in many ways including price distortion, thereby causing individuals to behave diffierently.

But we are talking at high and nebulous levels of abstraction here, so let me ask you this: what materials have you read by Austrian writers? What economic school are you arguing here? No offense, but it doesn't sound like you have any theory to back up what you're saying.

You sound like an intelligent guy, and I think you would benefit from some good Austrian economic and philosophical theory. I would suggest Rothbard's Man, Economy, and State, as well as his "For a New Liberty". Both, free ebooks and/or audio here at mises.org, and they're on Itunes U as well. Once you have those under your belt, we would be much more productive discussing specific theory.

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I might not be a scholar on Austrian school, but I'm far from ignorant of its Economics.

None of what I've said is inconsistent with Austrian Economics, however foreign it might be to the expected libertarian ideology shared by many austrians.

But I recall Mises repeating on several occasions in his Human Action (and I might be paraphrasing considerably) that the goal of the economist is to try to forecast the consequences of a given set of actions and to determine if they correspond to the original intentions of the actors, and not to specify what the original intentions of the actors should be.

And he goes on showing that a lot of the economic interventions would likely induce unintended consequences that were opposite to what the interveners wanted.

I could look for the exact quote, but as I've said, I'm a lousy scholar, and anyone who have read Mises can relate to that anyway.

Well, I think that's spot on. In other words, you cannot use the science of Economics to justify a libertarian or whatever ideological vision of society.

What the science of economics can do is to pinpoint where the claims politicians make about the expected outcomes of certain economic policies are biased, shortsighted or altogether disconnected from reality.

That being said, I must say that I'm not a staunch libertarian. I used to be one, but no more. I still have some sympathy to many libertarian causes, but the whole ideology seems to demand a lot of youth naiveté and idealism, something that I've lost long ago.

The thing is that libertarians are too literal minded. They think politicians mean what they say, or at least that they should mean what they say. They want a world based on truth.

And they are not different from the utopian socialists.

But the reality is that, in a sense, the world "needs" some of the lies, deceit, bad faith and violence just to go around. And politics is just the name we give to the business organization of all these nasty methods of getting stuff done in the real world.

Of course, there are costs of getting things done through using political tactics, and as our perceptions of theses costs evolve, we might evolve alternative means of doing things, means that are more virtuous and less costly.

But insofar as theses means are not yet available, things will be done by dirty tactics and that's how life is.

When Rothbard writes a book on the "Ethics of Liberty", he seems to be ignoring the very consequential costs of being fully ethical in an unethical world, and that's just naive.

As I've said, I have a lot of respect for their economics (even though I have a lot of respect for other schools as well). I don't share entirely their ideology though. 

I don't think ideologies are useful guides to understanding how things unfold out there in the wilderness.

I think that might have clarified things.

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Eric replied on Thu, Feb 21 2013 9:10 AM

"But the reality is that, in a sense, the world "needs" some of the lies, deceit, bad faith and violence just to go around. And politics is just the name we give to the business organization of all these nasty methods of getting stuff done in the real world.

Of course, there are costs of getting things done through using political tactics, and as our perceptions of theses costs evolve, we might evolve alternative means of doing things, means that are more virtuous and less costly."

Huh?!

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ToxicAssets, I feel sorry for you. I used to be you. I was miserable. My lack of understanding made the world seem random and evil. You've let ignorance and irrationality wash over you. You're confused. You have tidbits of an argument - your retort using "means and ends" from Human Action is a great start - but then you lapse into series of "floating abstractions" - statements that you can't back up with any kind of epmiricism, theory, or logic.

You claim to be knowledgeable about Austrian economics and philosophy, yet your post betrays you. You really don't grasp it. Prove to me that I'm wrong.

It is you who is idealistic. You simply believe. Government is your religion. You believe in the dogma that has been inculcated into you by all the other propaganda-repeating droids, but you don't have any fundamental evidence or fact to support it. You simply say that you're beliefs are fact. News flash: anyone can do that! It doesn't mean they are right. Doesn't that bother you? Don't you crave the fundamentals that give you the confidence that your knowledge is grounded in reality and therefore defensible?!!!!! Right now you're living in a bubble and you're doing your best to keep reality out of it.

I'll repeat my challenge to you. Make a cogent argument about anything you'd like from your religious-like beliefs above. Take something you've learned out of Man, Economy, and State or For a New Liberty, or The Ethics of Liberty and let's debate. But posts like your last one are just a waste of space and time.

 

 

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Meistro replied on Sat, Feb 23 2013 3:28 PM

 

The thing is that libertarians are too literal minded. They think politicians mean what they say, or at least that they should mean what they say. 

 
A greater strawman I'm not sure has ever existed.  Anyway, it's not naive to oppose aggression and coercion.  It's naive to think that government has ever been or will ever be anything but a giant scam.  Well the latter part is true, yes, I believe in honesty.  How foolish of me.

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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Blargg replied on Sat, Feb 23 2013 7:23 PM

Jargon wrote:

Except that the bill is a transfer from the poor to the rich. Those without a policy are required to buy one from oligopoly-insurance companies.

Not true. They also have the option of giving the government even more money than the insurance would have cost.

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Jargon replied on Sun, Feb 24 2013 3:50 PM

Haha, oh yeah forgot about that!

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Huh?!

I hesitated to write "need", as if the world needed something.

The world itself needs nothing. The world has no problem and needs no solution.

But aggression is an effective tool that real people use to solve real problems..

That has been the case for aeons, much before the human race walked the earth. Violence perhaps is the oldest common denominator among living creatures

In the last tens of thousands of years, among the homo sapiens, there has been an unsteady trend called civilization. A particular trait of such trend is the specialization of military and political classes, which has gradually removed most forms of violence and aggression from the concerns of the everyday people.

Given the institutions of modern civilized society, it is expensive for the common man to solve his problems through violence. He is better served if he works on something else and let the brawls, bravados and so forth to the class of violence specialists. 

This specialization has come to such a point that almost nobody, except a few elite specialists, can understand or follow the modern patterns of warfare and large scale political violence anymore.

But that doesn't mean violent methods are necessarily going extinct. They are still there, whether people are aware or not.

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@Christophe,

You've hardly addressed anything I've said.

You've accused me of being religious but I'm not trying to sell any faith here.

On the contrary, my position is the most cynical and anti-ideologue possible.

Just to clarify things, I don't believe in government as a some necessary problem solving tool in a large scale social level.

And I do not rule as impossible a society based on voluntary contracts and market agreements where no governmental unit is discernible.

But I don't share anymore the libertarian ideology that seems to think that the only thing keeping this utopia from happening is the general misunderstanding and mistrust of free markets among people that have not yet read the gospels of Austrian Economics.

I used to think somewhat like that, I used to be you, but I got over that.

Now I see why politics really exist.

Politics is the byproduct of the economic use of violence.

Violence and aggression have economic uses for economic actors and insofar as the benefits of initiating aggression are greater than the costs of doing so for these very actors, there can be no NAP or anything of the sort.

If one sunny day, we arrive to a civilizational point where the present institutions make it extremely difficult to profit from any sort of aggression, that day politics will cease to exist and people will only operate on voluntary contracts.

We are obviously not there yet. And it is not just a matter of wishful thinking and libertarian good will.

There are trends in society and these trends make some ancient forms of violence obsolete.

One could argue that this could mean that the future is necessarily "less violent" than the past, but these trends are unsteady.

And even if ancient forms of violence disappears, new ones emerge so you cannot entirely predict the pattern of political violence in the future. Someone who looked at the beautiful developments of african colonies before and shortly after World War II could hardly predict the many horrors places like Algeria, Uganda or Nigeria would face after their independences.

And even the West is not out of harmsway. Maybe technology will evolve in a way that allow for large concentration of power in the hands of a small elite. And in that case, it is only natural to expect them to use this power to exploit others.

I'm not saying government is a solution for that concentration of power, government is one of the very patterns of power concentration. What I'm saying is that these things will not cease to exist just because some guy on youtube thinks Bastiat is really cool.

That's what I was trying to say. 

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@ Meistro,

 

Well, I didn't say it is naive to oppose aggression and coercion.

But it is very easy to say, in the abstract sense, that you oppose aggression and coercion, but what does it mean in practice?

Almost every government eventually discovers how much abuse its subjects are willing to suffer quietly, and when this level is reached, insurection start to spread.

But what I said is that the general attitude and expectations of libertarians are, indeed, very naive.

I mean, libertarians usually expect that their social vision will self-fulfill once enough people realize that politicians are more preocupied with their own power agendas than with the well being of the "general public".

But most people know that, and they always knew that. There's nothing not even remotely new about that.

That doesn't mean it makes sense pushing of the removal of the current political class. 

A group of people will organize and sustain a revolt against a government only when they perceive the prospective costs and risks of engaging in active disobedience and sabotage as being smaller than the costs and risks of accepting the status quo.

And that's because the real choice is not between the corrupted world we live in and the utopian vision of a society guided by the superior libertarian ideology where "aggression" and "coercion" no longer exist.

This is perhaps the case in the propaganda but that does not describe any real choice available to anyone.

The real choice is generally between political instability and widespread random violence or the status quo, where violence is being organized and rationed by government and or government-like operations.

And whereas it is true that sometimes insurrection does become an interesting idea (for instance, when government abuse is running amok), it is generally the opposite case that prevails.

So whereas it is not entirely impossible defend the position that government is this "giant scam" that self-perpetrates, it is also important to consider what concrete alternatives are out there.

And you can keep the whole "I believe in honesty" discourse to political junkies addicted to rhetorical cliches.

That kind of statement means nothing out of a context and could be stated with plain face by the most depraved candidate of any party.

In the real world people will act honest whenever they calculate that their gains by keeping their reputations safe overcome their foregone opportunities of profiting by misleading others.

Few people would care about their reputations if the stakes were high enough, say, if they had to lie and deceive to save their own lives or of their children, or if they had to fake some interest on something to get a really juicy reward.

The world is built upon small and big, black, white and grey lies and they play a very important role in keeping the social fabric together.

Other way of putting it, honesty has a price. And sometimes the price is too damn high.

Therefore you expect to observe dishonest behavior in the real world, and it will not change just because you decided to romantically engage in adolescent wishful thinking.

I suspect (and hope) you're already aware of most of that, so I'm not telling you anything really new, but I also want to point out how this very plain and obvious truth completely obliterates whatever point you tried to make with your objection.

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