Wednesday, July 7, 2010

Preview of Obama Care

Rather simple logic leads us to understand how it will all work out under Obama Care.  We don't really need a test case to understand it.  Anyone who survived an ECON 101 class somewhere in their past (and stayed awake at the same time) already understands.

But just in case you wanted empirical, historical evidence to confirm what economic theory predicts, just look to Massachusetts and the results of its implementation of BHO's dream health care plan.  You can read all about it here.

Wouldn't it be nice if health care were inexpensive or even free?  Yes, and it be even nicer if no one ever got sick or injured?  But neither will ever be the case, regardless of what BHO and the politicians in Massachusetts say.

As it is with all other economic goods and services, health care must be produced using scarce resources.  The owners of those scarce resources will require payment for their use.  After all, you don't work for free, do you?  Why would you expect health care providers to do so?

And as it is with all other prices, prices for health care cannot be capped by politicians without entirely predictable results.  As all students of economics understand, if prices are capped by law below voluntary exchange values, we get shortages, declining quality, underground markets, and rationing by some criteria other than willingness and ability to pay the voluntary exchange price.

Rationing scarcity by any method other than voluntary exchange prices also leads to predictable results.  As P.J. O'Rourke says, "when prices are set by legislation, the first thing to be bought and sold is legislators."  Of course, that's just the way legislators like it.

Here are ten more lessons from history about price controls and government fiat. One might think we would have learned by now, but one would be wrong.

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