Thursday, April 26, 2012

Free market insanity

I have been in a discussion today with someone who believes the biggest problem with America's health care system is too much government regulation. This person claims that before the government got heavily involved in the health care market health care was much more affordable. I have to say that he is correct. In the 1800's health care, along with pretty much everything else, was cheaper. The question is was it any good?

In the 1800's the health care industry wasn't run by scientists or doctors or even accountants. No, in the 1800's our more free market health care system was run by traveling snake oil salesmen who would pour whatever they could find into a bottle, put a label on it making all sorts of claims for what it could do, and then sell it without any concern about who it might hurt. Many people became addicted to cocaine and morphine which were sold freely as cure-alls. People were lucky if they lived past their 40's. Completely unsubstantiated and ineffective treatments gained great popularity, why? Because the market was free enough to allow all of this to happen.

I will freely admit that it is possible to over regulate markets, but over regulation is a lesser evil than under regulation. Sparse or non-existent regulations allowed markets to give us things like the 1929 stock market crash, credit default swap bubbles, housing bubbles, monopolies, baby cribs that allow children to become injured. A free market gave us Justin Beiber and Milli Vanilli.

Markets don't operate in our best interests. Removing regulations will not solve all of our problems. A free market doesn't lift us up, it reduces us all to the lowest common denominator because that is where the greatest profits are found. Regulations spur innovation faster than the market can. If the government tells you that you can't do something that has made you a lot of money you will find a way to change what you are doing much faster than you would if you were only motivated by market forces.

Market forces can provide us with great things, they can also be very destructive. If we ignore the bad and only see the good we will be destroyed by the negative impacts of relying strictly on the free market. We should be striving for balance when it comes to business regulation, instead it seems our nation has shifted to striving for insanity.

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