#172 When the Government Owns it All

By D. Arnott | May 10, 2023
#172 When the Government Owns it All | The Christian Economist

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Government ownership produces monopolies that harm consumers.  This podcast looks at the threats of monopolies in health care, education, and religion.

 

In the United States, we’ve been blessed with freedom of choice, which has produced a two-part system: What the government offers, and what the free market offers.  Increasingly, we are being forced into a governmental system with only one supplier, taking away choice.

 

The Oldest Mistake in Economics

In economics, this looks attractive.  The next time you go through a traffic intersection and there are three gas stations on four of the corners, you’re welcome to observe that it’s not a good use of resources to oversupply the market in that way.   Yes, lots of resources are used in that supply scenario.  I often say in my class at Dallas Baptist University….On the other hand…. If there was only ONE gas station, which we call a mono-poly, or a monopoly if you say it fast.  Here’s where the fallen nature comes in.  If the suppliers were not fallen this would work fine.  But they are.  Mexico ran this experiment with their national oil company, Pemex and it produced lower production and higher prices.  This week, Chile announced they are nationalizing their lithium mines.  In an article titled “The Oldest Mistake in Economics” this week, Mary Anastasia O’Grady explains it this way, “It’s never a good idea to allow career politicians to manage the economy. They’re not a financially astute bunch and their incentives are all wrong. Yet developing countries rich in natural resources continually repeat the mistake.”  I wish only developing countries made this mistake.  We’re looking increasingly like that system in the US.  Ms. O’Grady’s conclusion is prescient, “The President of Chile is licking his chops at the prospect of a new state company whose patronage jobs and budgets will increase his power.”  Yep, it’s all about power. 

Powerful governmental bureaucrats start by providing innocent subsidies to an industry.  Their subsidies cause the industry to falter, so the governments increase their support.  Then, in industries from health care to education – even religion – they end up taking over the industry, and eventually “The Government Owns It All.”  Lord Acton was right, “Power corrupts, and absolute power corrupts absolutely.”  I like the Lord Acton book by Himmelfarb, but there are others.

Let’s return to our country, the richest country in the history of the world.  We got here by encouraging competition, and we will lose our position as the world’s greatest economy if we go down the Road to Serfdom to which we are currently being led.

 

The Rationing Mechanism

When a government-granted monopoly occurs, the quality and quantity of the supply is decreased.  It’s explained clearly by Gregory Mankiw in the Macroeconomics textbook I use at Dallas Baptist University.  He writes, “In response to the shortage, some mechanism for rationing the product will naturally develop.  The mechanism could be long lines: Or, sellers could ration the product according to their own personal biases, selling them only to friends, relatives, or members of their own racial or ethnic group.   Discrimination according to seller bias is both inefficient and often unfair.  By contrast, the rationing mechanism in a free, competitive market is both efficient and impersonal.  Free markets ration goods with prices.”

Okay, goods and services WILL get distributed.  We only have the power to determine HOW they get distributed.  And like all good economics questions, this one has two pretty clear answers: By market prices, or by fallen governmental bureaucrats.

Come with me on a random walk-through healthcare and education, and we’ll end at religion.

 

Healthcare

Our neighbors to the north have run this economics experiment for us.  The result is contained in a frightening report about Canadian healthcare in the Epoch Times titled, “There’s nothing fair about Canadian health care” by Susan Martinuk in the Epoch Times. 

“A court ruled that it was lawful for the government to prevent people from paying for their own medical care.”  That’s just stunning.  Okay, some products and services SHOULD be illegal: Hard drugs, prostitution, hiring a hitman.  But now in Canada, private health care violates the law.  When power corrupts, it leads to absolute power corruption.

From the article again, “Despite the harm to would-be patients, the Medicare system is a public good that must be protected even though people die everyday waiting for the medical service they need.”  Protected!?  They are protecting the public good, instead of the humans who consume the private good.

The law seems to apply, even though it denies patients the right to pay for private care when their health and well-being are threatened as a result of waiting in a stagnant and overburdened public system.

Citing Ms. Martinuk again, “Canada is the only nation in the developed world that exclusively relies on a publicly funded system and prevents its citizens from using their own money to pay for necessary medical care. Every other developed country has parallel public and private systems that ensure timely care for citizens. Notably, these countries do not have wait lists like the ones that are now standard in Canada.”

“Most provincial and territorial health ministers declared it a victory for universal health care, and many Canadians viewed the Supreme Court decision as a triumph for “regular” people because it signifies that Canadian health care ostensibly treats all people as equal and the so-called “rich” cannot use their money to “buy” medical treatment and receive faster service. 

I made many references to Animal Farm in last week’s podcast, and it looks like that will continue this week.  Canadian health care is not the great equalizer that it claims—some people are allowed to access medical care more quickly than others.

The list of the entitled people includes anyone covered by federal health insurance. Judges, members of Parliament, federal employees, senators, the RCMP, the military and federal prisoners have privileged access to health-care services, including access to private health care. In other words, the federal lawmakers who uphold the archaic laws that make private care illegal enjoy full access to private health care when they need it.

And as most of you know, many rich Canadians take their health-care dollars to the United States or other countries to buy immediate access to health care.

 

Education

In podcast #74 titled the Wall of Separation between Education and State, I pointed out that the government should allow consumers the choice of a state system or a private system.  What’s wrong with choice, by the way?  Why do these leaders always want to take away freedom from the populace?

In serving 30 years as a professor, I’ve seen the move in power from the regional accrediting bodies to the US Department of Education.  They participate in the funding of universities, so they want to use their power to tell us what to do.  Just about every institution of higher learning took the bait by accepting federally-subsidized scholarships some 50 years ago.  That was the camel’s nose in the tent.  Now, all universities, public and private, are trying to tiptoe around this huge beast that’s sitting in our living rooms.  Every semester, the requirements get more detailed and laborious. 

I have something of a view of where this will end, because I’ve been teaching in Eastern Europe just about every summer since 2014.  During my first trip, the institution was named Lithuania Christian College.  But because Eastern Europeans don’t know what a Christian college is, they renamed the place, LCC University.  That way of thinking is coming to a theater near you.  It’s not a movie you want to watch.

 

Religion

Eric Metaxes is one of the greatest Christian writers of our era.  I first read his book If you Can Keep It, after he spoke at Dallas Baptist University some years ago.  Then I read his biographies of Martin Luther and Dietrich Bonhoffer.  The Bonhoffer book answered a long-standing question of mine, namely, “Where was the German church during the holocaust?”  He applies that answer to the American church today, and the comparison is both accurate and horrifying.  He makes the point that the church is standing by while culture is changing around them.  They need a good dose of Abraham Kuyper shouting at them, “There is not one square inch of the world for which God doesn’t shout, Mine!”  The church has mostly said that politics is off-limits.  I challenge the church in must the same way as Metaxas did, in my podcast #35 titled Black Lives Matter. 

Metaxas and I are both concerned that America will lose what Benjamin Friedman called “The market for religion in America,” in his book titled Religion and the Rise of Capitalism.  That competition will be replaced by a one-church position, as happened to the Orthodox church in Russia during Soviet Communism. 

 The Christian Worldview provides excellent support for economics.  We believe God created a perfect world, fallen humans have messed it up, and redemption is available to us.  Economics starts with the fall.  Milton Friedman famously said, “Most economic fallacies grow out of the zero-sum myth.”  But he was an atheist and I’m a Christian, so my summary statement is, “Most economic fallacies grow out of a denial of the fallen nature.”  

 

FEAR GOD
TELL THE TRUTH
EARN A PROFIT

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