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A Petition from Producers of Everything Connected with Healthcare

Tags Big GovernmentHealthU.S. EconomyInterventionism

11/09/2009D.W. MacKenzie

A Petition from the Producers of Health Insurance, Medical Equipment, Drugs, Diagnostic and Surgical Procedures, Physical Therapy, and, Generally, of Everything Connected with Healthcare.

To the Members of the US Congress and Senate.

Ladies and Gentlemen:

You are on the wrong road. You embrace defective theories in which government produces abundance and low prices. You concern yourselves mainly with the fate of the consumer, but without knowledge as to how we in the private sector can attend to his needs. You wish to free him from lack of private competition, that is, to create a competitive market for healthcare through government intervention.

We come to offer you an admirable opportunity, because our — what shall we call it? — our theory? No, nothing is more offensive to those in power than the idea that theoretical laws might supersede state legislation. To put it in terms you can understand, we shall say, then, our personal interests — our personal interests, along with those of the consumer, are at stake.

We face the intolerable competition of a rival, placed, it would seem, in a condition so far superior to ours that our future is questionable. This rival can flood the healthcare market with health services at an incredibly low marginal cost. The moment he shows himself, our trade leaves us — all consumers are compelled to pay for his services, even those who still buy from us.

Given that consumers must pay this rival even if they reject his services, our industry faces potential stagnation. This rival, whose influence on the industry is already as broad as sunlight, is waging war mercilessly against us, and we suspect he is being stirred up by perfidious ex-Soviets, particularly because socialists have always sought our destruction.

You are this rival.

What we pray for is that you may decline passing additional laws requiring consumers to pay for healthcare through taxation. We trust that you will not regard our request as a satire, or refuse it without at least first hearing the reasons that we have to urge in its support.

First, if you impose taxpayer-funded healthcare, this will place consumers in a position where they must choose between paying for our services and opting for your "free" healthcare. As we have already noted, you have the power to tax. Citizens pay for your services whether they want them or not.

"We cannot compete against you in markets because you exert control over our entry into markets."

Second, the sad irony is that your so-called free public services are not only costly, they typically cost more than what could be provided privately. We in the private sector must survive by keeping costs low relative to revenue. You do not face this burden.

The power to tax enables you to bear high costs, or rather to shift such costs onto citizen taxpayers. Your bureaucracies are bloated and inflexible. You waste money on special-interest payoffs. You have failed to adequately fund existing entitlements, like Social Security and Medicare.

There are also serious issues with the quality of many of your services. Consumers are forced to pay direct and indirect taxes to fund public schools, even those schools that are dismal failures. Many consumers struggle to pay both taxes and private tuition.

Can you offer assurance that your proposed "competition" against our industry will not be equally ruinous? Why should we expect to survive competition against a rival with the power to tax? Why should our customers expect to remain sovereign as consumers in a government-dominated healthcare industry?

We foresee your objections, but there is not a single one of the things you object to that you have not caused yourself. Healthcare costs are rising, but you have imposed greater costs: through regulations that increase administrative costs, through licensing laws and other restrictions on private competition, and through frivolous and fraudulent malpractice lawsuits.

You may respond that we do not have much to lose at all, because the consumer will bear the expense. We have our answer ready:

It is true that you have often sacrificed the interests of the consumer when they are opposed to those of the producer. Many of us contribute to your campaigns specifically to gain influence over policies that affect us. Your power can work to our advantage. But the expense of lobbying for political privileges in our deeply politicized industry is itself a burden. Despite all there is to gain in winning your favor, we as an industry can easily expend as much in lobbying costs as there is for any of us to gain.[1]

To put it simply, your proposal to act as a mere rival lacks plausibility. We cannot compete against you in markets because you exert control over our entry into markets. Furthermore, you possess market-independent funding sources — the power to tax.

Contains Bastiat's Famous
"Candlemakers' Petition"

Your past record of sacrificing the consumer's interests casts doubt upon your stated goal of reducing costs for him. Many of us have benefited from a partnership with you in the past, but rivalry against you is futile. Given that you seem to be engaged in deceit, we cannot trust you.

You are on the wrong track. You may believe yourselves to be in a position of limitless power to reshape society, but this is not true. Economic laws exist, and we, as producers, want to use them for profit.

Your stated goal of assuming greater control over the economy for the purpose of improving consumer welfare is not credible or even logical. It is impossible to define the economic interests of consumers collectively.[2] You generally do not try to serve consumers in the first place. We do not trust you, and neither should anyone else.


[1] See Tullock, Gordon, 1967. "The Welfare Costs of Tariffs, Monopolies, and Theft." Western Economic Journal 5 (3): pp. 224–232.

[2] See Arrow, Kenneth. 1955. Social Choice and Individual Values. New York: Wiley.


Contact D.W. MacKenzie

D.W. MacKenzie is an assistant professor at Carroll College.