Thursday, March 30, 2017

Fixed Prices, Central Control, and Inevitable Black Markets

Think of an attempt at total control of a market. Prohibition in the 1920s or the War on Drugs more recently. There is no stopping the rise of black markets for the prohibited goods. It is as pure a capitalist system as you will see. Freed from any regulation, prices rise and fall on supply and demand.

Even cigarettes today, subject to artificially high prices in some northern states, are traded on black markets. Taxes are used in this case as a limited control on a market and create a limited black market. Cigarettes are either purchased legally in states with lower taxes or hijacked from trucks and sold illegally in the higher priced markets.

In the Soviet Union, if you had 10 calves one year, and you could report that you had 8, you were taking a risk, but it had high potential benefits. The 8 you reported were going to be taken by the collective and you were going to get some pittance for each one. The other two, raised in secrecy and butchered, could be sold for a high markup, either in cash or goods. This meat was delivered to customers who knew someone and had the resources to pay. It could also be applied to a few bushels of wheat, potatoes, or any farm product. The diverted products were the only ones that returned a profit free of the fixed prices and central control.

Collectivize  Nationalize the health care system, set prices for the reimbursement for various services, and see a black market appear overnight. For those that can pay, by one means or another, a doctor or surgeon who has had their income fixed by the government will meet patients off hours, people will be moved to the front of waiting list for payment, larger groups will perform surgeries for people who have been denied a procedure and are willing to pay. Equipment will be run by technicians outside of normal bookkeeping and records. There will be resources siphoned off as soon as the limits are put in place.

Don't think so? The lovely single payer system in Canada already has the problem. Faced with wait time approaching 10 years for gastric bypass surgery, people are paying $10,000 to be moved up the list. Some doctors only show up for surgeries and births if they get a direct payment in cash. More than 50,000 Canadians gave up, traveled abroad, and paid out of pocket for surgeries in 2014

I picked Canada as an example but the former Soviet system, Cuba, Great Britain's NHS, even North Korea, have the same issues. Government limits result in shortages, denial of service, long wait times, and those thing inevitably give rise to black markets.

And to close, a quote from The Guardian, in a June 2014 article where they proudly report that the British healthcare system has been been ranked as best in the world. You can't make this stuff up, folks.
The NHS has been declared the best healthcare system by an international panel of experts who rated its care superior to countries which spend far more on health. The same study also castigated healthcare provision in the US as the worst of the 11 countries it looked at....The only serious black mark against the NHS was its poor record on keeping people alive. On a composite "healthy lives" score, which includes deaths among infants and patients who would have survived had they received timely and effective healthcare, the UK came 10th.


neal said...

In glorious republic, if one dies from crappy healthcare and is a registered Democrat, then the right to vote remains.

Borepatch said...

There's a whole blog category here for the horrors of nationalized health care. Killed by socialized medicine.

SiGraybeard said...

We have Canadians who come down here in the winter and get hip replacements. Beats being on a waiting list for years. From the socialist's perspective, if you're the one being bribed, it's not necessarily a bug. That's the most immoral thing about a socialized health care system: it turns health into political favors. Since there's never enough money for everything imaginable, the distribution of that money depends on who lobbies congress the hardest. It depends on who distributes the most campaign funding.

What's that? You don't have the fashionable disease? Too bad, no research on curing that.

Right now under Obamacare, women don't pay a deductible for a PAP smear. I just saw a urologist for an annual, including a "DRE"; I paid full deductible for that. Seems to me, I always have to pay my deductible for my PSA test. Women's cancers matters, men's don't.

Goober said...

Rates best of all, unless you count all the people we've killed by neglect. But if you forget that, we look great!

I've said for years. You can have a healthcare system that promises care for all, but does not deliver that at all, or one that provides the best care possible for those who can pay for it.

I have my opinion on which is best, but the problem is laid bare by the paragraph above.

Proponents of "universal" care aren't arguing the same argument as the rest of us because they believe, in spite of all the evidence to the contrary, that you can have all three: good, fast, and cheap/free.

You cant have all three, you can only pick any two. Want good and fast? Then it won't be cheap. Want cheap\ and fast? Then it won't be good.

They think they can get all three despite the fact that is impossible and so they aren't arguing from a place of reality.

From the paragraph above, I'd guess the NHS is good and cheap\free, but it isn't fast, so people die waiting in line. Reality will not be denied