Economic Science Fiction

Uwe Reinhardt, one of my favorite economists, provides part of a conversation between William Shatner (Captain James Tiberius Kirk of Star Trek fame) and Rush Limbaugh on the moral equivalence of a beach house and health care.

Shatner: “Here’s my premise, and you agree with it or not. If you have money, you are going to get health care. If you don’t have money, it’s more difficult.”

Limbaugh: “If you have money you’re going to get a house on the beach. If you don’t have money, you’re going to live in a bungalow somewhere.”

Shatner: “Right, but we’re talking about health care.”

Limbaugh: “What’s the difference?”

Shatner: “The difference is we’re talking about health care, not a house or a bungalow.”

Limbaugh: “No. No. You’re assuming that there is some morally superior aspect to health care than there is to a house. …”

Shatner: “No, I’m not moral at all. I want to keep the subject, for the moment, on the health care thing.”

Is it any wonder his ship was named the Enterprise?

Uwe, being a far better economist and, no doubt, with much more refined taste in his choice of casual entertainment than I, provides us with a really important and insightful beginning of a response to the question: Is health care special? I suggest that you read it and join me in eagerly awaiting the next installment.

Your blogger, however, was struck once more by the ways in which science fiction resembles real life. Confrontation between William Shatner and Rush Limbaugh? What does that remind me of? Of course, Captain Kirk engaging the nasty lizard-like Gorn. 

 

Or maybe Captain Jean-Luc Picard confronting the unbridled, unethical commercial exchange of the Ferengi.

 

But more often than not, at least lately, the SciFi movie that keeps coming to mind is Five Million Years to Earth (released in the UK as Quatermass and the Pit). (Original trailer here.)

The plot in a nutshell: 5 million years ago, evil insect-like Martians, facing their own extinction because of their predilection for staring fights with other Martians, began altering primates on earth that would eventually evolve into humans who would one day be receptive to the Martians' preferences for intra-species conflict. (Think Independence Day, but with some of the human survivors receptive to the invaders and doing their bidding to eliminate other human survivors.) The movie unfolds as the monkeying about with our ancestors is discovered and some humans begin to respond to the Martians' "call" to become more Martian-like. This produces a clash between humans who for some reason are immune to the "call" and humans who heed it. And to assure that viewers don't miss the point that this is a cataclysmic confrontation between good and evil, the original insect-like Martians have horns.

For years this movie has come to mind every time I have a conversation with another human that involves an exchange like that reported above between Shatner and Limbaugh. Naturally, I always imagine that I'm on the side of truth, justice, and the American way, i.e., I'm opposing the Martians. I've no doubt the other "side" sees it much the same way, except that I am cast in the role of the (horned) Martian.

And that's why we make no progress in these types of discourse. I personally don't know what to say to people for whom rationing health care based on price and ability to pay is no different from rationing housing based on price and ability to pay. Aside from all the aspects of health care markets that make them nearly impossible to ration in the same way that we ration cars and shoes and houses (where we have some hope of an approximately efficient and equitable distribution), there are important moral and economic aspects to health care that simplistic, naive ideas about markets and economic principles tend to miss. 

Unfortunately, my own side of the discourse deteriorates, mainly because I inevitably find myself imagining a world that is one possible logical endpoint of the beach house-health care moral equivalence.

In this fictional (I hope) world, the hard-working, justifiably entitled beach house owner departs the beach house, now in a gated community, surrounded by high walls with glass shards embedded in them. She takes her body guard because someone attempted to kidnap the neighbor's kid last week. Fortunately, the neighbor's bodyguard prevented it, but the neighbor's chauffeur was killed. No biggie though. With unemployment at 50%, chauffeurs are a dime a dozen.

As they exit the gated community, they're forced to drive around beggars and the occasional body in the street to get to the polo match on time. Occasionally she wonders why "someone" doesn't do something about the human detritus that seems to be accumulating on the roads and under bridges (at least under the few remaining bridges...many have fallen into disrepair and collapsed since there's no (private) need for all of them now), but that would mean paying higher taxes so she accepts that some people are just less fortunate or less productive than she and her family.

Sure the beach house owner could have paid higher taxes in order to provide health care, a safety net, infrastructure that might have produced higher gains in productivity to the larger society and jobs to those less fortunate. But why should he or she? She may be a turtle on a fencepost, but she knows she got there all by herself and only through her own efforts. And what about her neighbor? He's not at the top because he lucked out in the intelligence lottery or because he lucked out in the my-parents-made-me-do-my-math-homework-before-I-could-watch-TV lottery or because he lucked out in the I-grew-up-in-a-culture-that-taught-me-that-hard-work-would-be-rewarded-and-I-happened-not-to-be-among the-ethnic-minorities-for-whom-no-matter-how-hard-they-work-it-will- seldom-if-ever-be-rewarded. Actually, he's on top because he ran his bank and his country into a ditch and (lucky banker! lucky shareholder!) his fellow Americans bailed him out. And that tax-sheltered trust fund she inherited was of no help whatsoever in her own life struggle. Nosirree. She earned it. She did it all herself. He did it all himself. They added value to the economy and they're going to keep it. All of it.

Of course, they don't actually get to keep all of it. They spend between 35% and 50% of their (now larger) after tax income on private trash removal, a private water supply and sewer system, the 24/7 private guards that patrol the perimeter of their compound, the bodyguards for the times they have to leave the compound. And the private fire department now costs an arm and a leg, as does the kidnapping response team, especially as the kidnappings have increased. And there have been a few recent cases in which it looks like the private security firms have colluded with the kidnappers for a share of the ransom. It's a problem when wealth is very unequally distributed. You end up spending a lot of money just to keep it. And you can't trust anyone.

Needless to say, they're still paying taxes to maintain a legal system and their property rights. Mercifully, legal costs have dropped ever since trespass and property right infringement were made capital crimes. And they save money because they don't go out as much as they used to. It's too dangerous.

It's funny. When you include all of what they pay for private guard labor and the other services that used to be provided publicly, they have less disposable income than when taxes were higher. And now their kids get kidnapped. Talk about infringements on personal liberty. They're afraid to leave the house. They live on a beach, but they're afraid to walk on it without the body guard. No wonder so many second, third, and fourth husbands are former bodyguards.

Of course, there's still a servant class in the beach house-health care equivalent world. They style hair, wait on beach house owners in stores and restaurants, drive cabs, polish silver, cook and clean. But who cares if they can't buy health insurance? So what if they make $15K per year and end up in the hospital from an untreated respiratory infection that turns into pneumonia and runs up a $30K bill. They'll just have to do the right thing and pay it off over time. That's what the beach house owners would do if they ever lost their health insurance and got sick. They'd do the Right Thing. If the poor and uninsured were more like people with beach houses, if they had the same values, they wouldn't be in hock to a hospital and the beach house people would feel a whole lot more sympathy for them. They're so different. It's really proof they're less deserving.

At any rate, that is always the reasoning that I imagine is taking place in (Martian-controlled) minds that think beach houses and health care are morally equivalent. And that is the scenario that I imagine will result if the view that they are equivalent prevails.

To be fair, it's more likely that the reasoning isn't quite as Ferengi-like as my imagination makes it. It's more likely that someone somewhere said that "free markets" make everyone better off, but didn't bother to explain that markets fail for a variety of reasons that are rampant in health care. Believers in beach house-health care equivalence are really just trying to make everyone better off. Someone somewhere said that people at the top are more productive and therefore deserve more. Believers in beach house-health care equivalence are often at the top, they know in their hearts that they are way more productive, so it's obvious that this is true and fair. Someone somewhere told them about moral hazard and unanticipated side-effects. As a result, believers in beach house-health care equivalence have developed a morbid terror that someone somewhere will free ride or, worse, distort resources away from the beach houses that would otherwise be built. This "inefficiency" will make everyone...well, everyone that "counts"...worse off. Or someone told them that guvmint is the problem so even though they would like to help out, they can't allow the government to get involved because...well, you know...it's a problem. Or someone somewhere conflated race with poverty and some of them (and these are Martian-controlled brains) believe that safety net programs benefit only people with brown skin, which causes them to feel distressed. (See here and note the race/ethnicity of the majority of TANF recipients is white in "heartland" or "real American" states like Iowa, Indiana, Kentucky, and West Virginia.)

I grew up in Appalachia, where a lot of people don't have health insurance, at least not private or employer provided health insurance. It's anecdotal, but I have heard every one of the above offered as a reason why health care is like beach houses or cars or any other commercially exchanged good. I've heard it from people who could own a beach house and I've heard it from people who will be lucky to own a double-wide before they die. (Question: why is it not a socialist plot for the federal government to provide flood insurance for beach house owners, but when it's health insurance for the rest of us then we're on the slippery slope to communism/socialism/nazism?)

Most people would give up their beach house in exchange for better health and a longer life. Few people would knowingly give up better health or a longer life for a beach house. That alone tells you they are not equivalent, morally or otherwise.

Health care is special because humans are special. Most humans concede this. (Martians, Ferengi, and Gorn, most likely would not). Health producing goods and services have a special status in their roles as inputs to human health and wealth and human capital that is different from a beach house. Health is different because it enables humans to be productive, which benefits all of us. Health care is different because in some necessary amount and mix it is a necessary prerequisite to human individual flourishing, to the pursuit of life, liberty and some semblance of happiness.

If you don't think humans, all humans, are special and that is what makes health and health care special, then it's going to be hard to have a meaningful discussion about the best way to achieve the greater productivity that benefits us all and the greater individual liberty and flourishing that benefits us as individuals and as a society.

Comments

[The Raven]

"I personally don't know what to say to people for whom rationing health care based on price and ability to pay is no different from rationing housing based on price and ability to pay."

Get out of the way.

Croak!

[The Barefoot Bum]

It's interesting to criticize and deconstruct the moral rationalizations that people of privilege use to comfort themselves: the more arbitrary the privilege, the more elaborate and unrealistic the rationalizations. It's interesting to note that those with a little bit of privilege are often the most hard-core and extreme adherents of these rationalizations.

But I've come to the conclusion that it's the privilege that causes the rationalizations, not the other way around.

I've seen much the same thing in my ten or so years as a "militant" atheist. There are a few people who are really persuaded by argument, but the increase in atheism and other form of non-theism (and theism-lite) has come not from the arguments, but from the general erosion of social religious privilege. Nonreligious people are no longer economically and socially selected against, and natural variation is taking care of the rest. Indeed the task of the "militant" atheists is not really to rationally convince people (although we do want to be rationally convincing for other reasons) but rather to make religious superstition unfashionable and disreputable.

Unfortunately, it seems like most of the "natural" individual-level selection forces under capitalism select against mutualism, leaving the more selfish "I've got mine, Jack" types standing, especially in the middle and ruling classes. No one, not even Bill Gates or Warren Buffet, has enough that they don't have to worry that if they're not selfish, someone else will come along and steal their power and influence. "Uneasy lies the head that wears the crown" has a more sinister connotation than just responsibility: the more power you have, the more you have to worry about keeping it, and the more constrained you are about using it.

(Similarly, when the US just had a big economy, we could pretty much take over the world militarily (in the Second Imperialist War); now that we have a boatload of nukes, we're much more limited.)

I'm a revolutionary communist not because I think a revolution would be tons of fun, but rather because I see a repeat of the 1930s: Short term selection pressures make the ruling and middle classes narrower-minded and more bound to a fantasy ideology, until they are selected against as a group. I want to be on the right side of that group selection process.

The capitalist ruling class really is working hard to "turn off the lights of New York," but not out of any real moral principle. They're doing so, I think, in a desperate internecine struggle against their peers. The first to act will definitely lose; even those forced to act first know they will lose and won't do anything actually productive.

The ruling class is still complacent; they think they can survive chaos and catastrophe (they do really think they are privileged by nature, not by circumstance). But if we know anything from history, once the lights go out, all bets are off.

[The Raven]

Perhaps one argument that would persuade is that places which do not have good health care for all also turn out not to have the best health care for anyone, however rich. I don't think anyone knows why this is so, but it does seem to be true.

[Tim Worstall]

"but didn't bother to explain that markets fail for a variety of reasons that are rampant in health care. "

Indeed....but that's sadly not the end of the story. Government, bureaucracy, legislation, also fail for a variety of reasons....reasons that are rampant in US health care at present.

That there needs to be intervention into the health care market is not the same as saying that there needs to be this intervention into the health care market after all.

[Mike Lawlor, Economics, Wake Forest University]

Dear Maxine,

1) I enjoyed your comments in "Economic Science Fiction." I regularly teach "The Economics of Health and Medicine," and so agree with everything you say on the demonstration therein of numerous health market imperfections (when compared to the platonic ideal that economists often compare real markets to). But, also in that class, I regularly observe as well the frustrating inability of students to really see how that makes any difference to knee-jerk reactionary views on how mysterious "market" forces would obviously improve health care markets, if only those markets were exposed to these magical forces. Additionally, I know what you mean when you say that if one does not see a difference between "health care and beach houses," there seems to be little room for further rational argument. Then I, like you, am at a loss over how to argue against this viewpoint. I personally, do not want to resort to the lack of reason implied by such suggested replies as "get our of the way" or "Croak!." Am I just being too polite?

More importantly, have you got any ideas on how to overcome this frustrating tendency?

2) I think that the link is broken that you give in the reply to my comment on last week's post "Protecting Our Grandchildren: The High Price of Motherhood," I tried clicking on it and it goes to an error message.

Thanks for the enjoyable post,

Mike Lawlor

[T Briggs]

So, if healthcare is a right, why not food, water and shelter. Most people will live longer without healthcare than they will without water, food or even shelter.

Your mindless argument is baseless because most Americans, including rich Americans, believe in a social safety net for those truly unable to take care of themselves. The problem is we have too many people riding in the wagon and not enough pulling the wagon.

The real question is why do more than 40 percent of Americans pay no income tax and in many cases receive income tax payments. Everyone needs to pull their weight and even if we had a flat tax, the rich would always pay more.

[Kristine]

Again, I just love your posts. Seems like someone has taken the time to download and organize the random thoughts that float through my own brain.
Have you ever read Neal Stephenson? I highly recommend "The Diamond Age" - seems to be right down your alley of sci-fi futures that incorporate plausible socio-economic structures based on our current society.

[DCA]

There is a nice parallel (unfortunately I forget where I read this) between health care and national defense. Both are economically useless (nobody wants them, in the sense of wanting most things they purchase), yet both are essential to having an economy. And in neither is there a natural upper bound to cost, especially if you ask the providers "How much money do you need to do this right?"