The Mess of Modern Medicine

We live in an age in which personal accountability is a distant, unpracticed concept. It is taken for granted that every possible personal decision is open to socialization, and that any cost might be paid for by some distant other. People follow incentives, and when the incentives have been structured so as to eliminate the need for frugality, then waste and corruption inevitably follows. This is the rot that slays civilizations, and it will destroy the American empire just as surely as it did the British Empire and Rome.

We can see this corrosion underway most clearly in the centralized medical command and control infrastructures of the Western world. Unlike almost all other areas of technology, costs in medicine keep spiraling upward - and this should not be a surprise given the perverse incentives embedded in the system. Costs paid by other people. Services divorced from price considerations by the customer. Lack of competition. Use of regulators and the legalized bribery of lobbying to gain advantage in the marketplace, rather than research and development or price-cutting. And so forth.

But people know what they grew up with, and are exceedingly wary of change. Even when the long-established situation is terrible, as is the case for provision of medicine in most developed nations, the vast majority cannot see beyond its walls. So you'll find articles like this recent example, in which an presumably intelligent person argues that fixing the problems of socialized medicine requires the application of more socialism: more central command and control direction of economic behavior, more spending of other people's money, more separation between buyer, competition, and pricing.

There is a very simple solution to the problems of medicine. It's called freedom: freedom for providers to develop and compete as they see fit, and freedom for people to choose or reject their offerings with the money in their own pockets and savings accounts. For progress and efficiency to reign in an industry, people have to pay for goods with their own funds, and providers have to be free to innovate. Competition and the care with which people manage their own money keeps both sides as honest as any human culture is going to be.

Look at fashion. Shoes. Computers. DNA sequencing. Or any one of a thousand other important goods whose value has fallen over time and continues to do so. These are less regulated markets, not stifled and buried beneath chains like the provision of medicine. They are vibrant, constantly innovating and competing, and this is exactly because people pay for these products with the money they care about most.

If you want stagnation, terrible services, sanctioned cheating, and eventual collapse, then continue right on down the path forced on medical development and provision today: forcefully take people's money as taxes, throw it into a big pool, pay lip service to the proposed goals, and then watch the connected and the adept at bribery fight over claiming that loot for their own purposes. Every faction and individual is incentivized to take what they can grab, whilst trying to force other hands out of the purse. Pools of resources held in common are the death of charity: the sort of vicious infighting over a commons is anti-charity, the very polar opposite of charity in the spectrum of human behavior.

In short, government corrodes all it touches, and the rot has run deep in medical research, development, and commercialization. We all suffer for that, and will continue to do so until such time as revolution takes place to usher in a new age of honest competition and choice.


I found this a compelling argument and it resonated with me because I run my own business but I can't escape the conclusion that the American Health Care system has been such a miserable failure with a staggering price spiral. I realize it wasn't fully non-socialized (i.e. group insurance is available) but it is largely a private system. Given that, why did it end up being such a spectacular failure? Was the type of regulation wrong? For instance, the financial crisis has been such a spectacular failure because the financial industry was so unregulated and the major players were able to become rich with the burden having been passed on to the taxpayer instead of bearing it themselves.

My point is though, isn't it possible that it is the type of regulation that is the determining factor whether a system is a failure or not?

Posted by: Daver555 at June 29th, 2010 9:36 PM

Government corrodes all it touches?Well I counter with Enron BP Goldman Sacks and add Bernie Madoff.Yes I think the only way to dive innovation is trust the for profit US model.
After all,you do have the worlds best heath care don't you?
If Government is not to be trusted do you really expect us to trust the private sector?Please!
Government in truth only represents the people with the cash to pay for it.Plutocrats own and run all Governments. The reason it does not seem to work is because it is not designed to work,for us anyway.It works very well for the few with the money to pay for it as does the US heath care system.As your economy collapses dragging the world down with it please remember "I told you so".

Posted by: dave at June 29th, 2010 11:22 PM

Spot on.

Posted by: Paul at June 30th, 2010 12:30 AM

Oh, here goes Reason's quarterly ideology rampage! (It's as always well-written, of course.)

Sorry, I cannot resist to quote a recent post by David Brin:

"Why then, are most libertarians instead the most intransigent and obnoxious of fuming dogmatists, contemptuous of practicality or compromise [...] railing at the stupidity of their fellow citizens for having committed the unforgivable original sin known as Franklin Delano Roosevelt?"


Posted by: FrF at June 30th, 2010 4:06 AM

You realize, of course that a major portion of the research that you post here is government subsidized?
Libertarianism, like socialism, is a utopian delusion that sounds, at first, intellectually rigorous, but is actually pretty simple minded.

Posted by: William McNulty at June 30th, 2010 8:45 AM

@William McNulty: Government-sourced funding makes up about 30% of medical research spending in the US, as I recall. But it doesn't have any of the good incentives in its application: it's more in the way of a jobs program in its final operation. Progress is incidental, depending on those unreasonable few who are not following the immediate incentives:

Posted by: Reason at June 30th, 2010 9:26 AM

It's curious that Reason veers towards something he, an anti-Malthusian if there ever was one, would rightfully criticize when discussing non-political issues: Apocalypticism. I'm referring to sentences like "This is the rot that slays civilizations, and it will destroy the American empire..."

I'm only a layman but dare I question whether we can compare regulation in businesses like computer chips and shoes (!) to drug development? After all, the consequences of failure in the manufacturing of said products will hardly be as severe (meaning: directly lethal) as in medical research.

Posted by: FrF at June 30th, 2010 3:30 PM

"just as surely as it did the British Empire." As a British person, intimately acquainted with our history, I must correct this. The British Empire was sacrificed on the frontline of the greatest struggle humanity has ever seen - World War Two. It was sacrificed to fight the evil of Nazi Germany, and our resources were spent on that, so we couldn't maintain the empire. To suggest that decolonization - why is this a bad thing anyway - came through internal decay is wrong.

Posted by: Leon at July 8th, 2012 4:38 AM
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