Health Care & The Pit Falls of Democracy

In light of the recent upheaval of public opinion about health care, it’s difficult to pin point what exactly the problem is with the system in all of this.  One could say that it’s Palin’s fault for stirring up Auschwitz-like images into the heads of the American people, or maybe we can just blame private insurance companies like AETNA.  Or we could just blame it all on the President.

But I’m not going to do that.  Rather, the problem isn’t with the President but with many of those good ol’ boys in Congress (especially on the Republican side) who scream and holler that America needs free markets, good competition, et cetera, et cetera.  The arguments now seem redundant, tired, and frankly, stretched thin over too many power lunchs.

And even more to the point, they sound stupid.

Therein lies the problem with Democracy.  Although it brings us many wonderful things, such as free speech, consumer power and a host of things, its problem is that it readily turns into a popularity contest.  The obvious pitfalls of a popularity contest is that popular people don’t always know what they’re talking about.  Rather, they have an auspicious tendency to shoot their mouths off, hoping to further please the people who put them there by hunkering down and shouting about defending freedom, a catch which, unfortunately, nearly always works in America.

This is especially true with the health care issue.  Take for example a introduction level economics class at any community college or university in North America.  Get all those students in there and start off with Adam Smith’s theories on free markets, explaining along the way things like “human capital”, and by the time they pass the test on Keynesian theory, well, the only logical conclusion that that intro class could come to when asked if they need public health care is an unsurprisingly resounding “yes”.

Because of course, due to Keynesian theory we know that markets are not always self regulating, the result of which is the stock market crash of 1938 (which propelled John Maynard Keynes from soothsayer status to superstar).  Nor also do markets, such as insurance companies, even provide the proper incentives or economic safety nets necessary for their clients to remain productive contributors to society.

Now, although an entire class of first year economics students can come to this sane and rational decision fairly unanimously, the popularity contest of Democracy does not permit this happen.  And this is especially true when the people voting have little or no knowledge of what they’re actually debating, and hence attempt to cover it up with popular catch phrases.

Keynes and subsequent economists, like Douglas North, would probably say, at this point in the article, and rightly so, that good governance does not mean the existence of perfect free markets.  And governance, mature governments, are often coerced by those who have most at stake in the outcome of the market, so that the rules governing the market are skewed to their favor.

Which of course gets back to the whole concept of Democracy as one big high school popularity in which our sharp son-of-a-gun Congressman allow themselves to be led around by the nose by their coercers, leaving us wondering how such simple decisions got so damn complicated.