Misconstruing the Cause of Waste

The ramifications to waste are threefold. First, by prohibiting certain activities, government eliminates competition. For example, private companies like FedEx are legally barred from competing with the Postal Service -- creating that paragon of efficiency, the USPS. Next, because it can confiscate our money to pay its bills, government has little incentive to control costs. Should it overpay for services, salaries, or pensions, government simply takes more from helpless taxpayers. Finally, because the government has usurped their prerogatives, individuals no longer decide what is worthwhile and what isn’t. Government forcibly disconnects the decision of what’s valuable from the people who actually pay for the values.

For instance, many parents are unhappy with their public schools and would prefer to spend their hard-earned dollars on private alternatives. Yet the government makes their values and choices irrelevant by forcibly taking their tax dollars to support public schools. This “crowds out” potentially competitive private schools. It allows teachers’ unions to extract above-market wages and benefits. And it makes the customers’ (parents) evaluation of the product (education) irrelevant. The poor quality and inefficacy of public education is no accident -- it is the product of government force.

And it’s generally true: government is the source of waste -- not its solution.

Indeed, in areas where government claims to be able to cut waste, it’s only because previous government interference has created it. The field of medicine, for example, is far from free. Medicare and Medicaid, which dwarf all private players, are coercively funded and thus immune to cost discipline or customer feedback. Government’s arbitrary rules and regulations control much of the industry, and its insistence that intermediaries (i.e., insurers) cover any medical need has all but broken the direct relationship between patients and health care providers.

Socializing medicine won’t fix any of this. It will infinitely worsen it.

No, the solution in medicine, or any area of the economy, isn’t more collectivism. Rather, the solution is a return to individualism, including its political implementation: a government focused exclusively on protecting individual rights.