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Health care policy libertarians go for
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Is President Barack Obama’s health care law compatible with free-market capitalism? “Obamacare” seeks to achieve universal health coverage by mandating that people not already covered must purchase health insurance — and makes it possible for all to do so by redistributing resources from the relatively affluent to the relatively poor. For critics like Rep. Louie Gohmert (R-Texas), this stinks of socialism. But is he right? For an authoritative answer, we can turn to Austrian economist Friedrich Hayek. This Nobel laureate is celebrated for his impassioned defense of capitalism and sharp criticism of socialism. Margaret Thatcher, for one, lauded Hayek’s book “The Constitution of Liberty,” announcing: “This is what we believe!” President Ronald Reagan was a fan; so is Rep. Paul Ryan (R-Wis.). Hayek’s writings are cited as a key inspiration for the tea party, which mobilized against “Obamacare.” Isn’t it obvious that Hayek would have slammed a law that redistributes resources and mandates health insurance? Actually, no. Hayek saw no incompatibility between capitalism and redistribution of resources. Hayek, for example, favored a minimum income for all. “There is no reason,” Hayek wrote, “why in a free society, government should not assure to all protection against severe deprivation in the form of an assured minimum income.” He insisted, “This need not lead to a restriction of freedom or conflict with the rule of law.” Closer to the topic at hand, his 1944 landmark book, “The Road to Serfdom” stated, “In the case of sickness and accident, … the case for the state helping to organize a comprehensive system of social insurance is very strong.” In this book, which returned to the best-seller lists after Glenn Beck strongly endorsed it, Hayek goes on to argue, “There is no incompatibility in principle between the state providing greater security in this way and the preservation of freedom.” How is it possible to endorse capitalism and redistribution at the same time? In a complex society, prosperity — indeed, survival — depends on people’s ability to coordinate their actions. Producers must be free to make more or less what consumers want. Capitalism works so well, in Hayek’s view, because it alone relies on prices to coordinate economic activity. Because free-market prices are determined by supply and demand, they convey information used by many individual buyers and sellers — which couldn’t possibly be held by any one mind. But, as Hayek argued, the price system conveys this information only if people are free to make their own decisions. A system like Britain’s National Health Service is unacceptable, in this view, because it offers health care outside the free market — at a price set by the government. In this arrangement, the price system is displaced and can’t serve to coordinate economic activity. But it is perfectly possible to redistribute resources without interfering with the price system — provided people are free to make their own decisions about how to spend the money they get. Indeed, in a world in which resources are unevenly distributed, some redistribution would arguably improve the functioning of the price system, if the redistribution allows people otherwise unable to act on their knowledge to do so. A health insurance mandate is somewhat harder to reconcile with Hayek’s vision, because it imposes restrictions on individuals’ ability to invest in whatever they desire. Yet it’s only a minor deviation from the Hayekian ideal. For one thing, most people able to purchase health insurance usually do. One lawyer arguing the legal challenge admitted as much when she told The Los Angeles Times, “Candidly, it is not as easy as it sounds” to find a plaintiff for the case. If that’s true, the mandate does not interfere much with the price system. Moreover, the mandate might be more politically palatable than the ideal Hayekian redistribution scheme, which would involve cash transfers that recipients can spend however they please. Hayek himself was sympathetic to mandates. In “The Constitution of Liberty,” he wrote: “Perhaps there is also a case for making [health insurance] compulsory since many who could thus provide for themselves might otherwise become a public charge.” Not only is health reform compatible with free-market capitalism, but the man regularly cited as one of the 20th century’s greatest economists and philosophers of freedom might even have endorsed it. Erik Angner is the author of “Hayek and Natural Law.” He is an associate professor of philosophy, economics and public policy at George Mason University. |
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