Wednesday, April 29, 2009
About Arlen Specter and other matters
The news that Senator Arlen Specter of Pennsylvania has switched parties, knowing that he can not be reelected as a Republican, has started me to ruminate (and rant a little) about the current ideologues who are running the Republican Party. What we have, both in Washington, DC, and here in California is a party dominated by the legacy of Howard Jarvis and Jerry Falwell. Howard Jarvis was a tax crusader who advocated small government. Jerry Falwell was a Conservative Christian minister who advocated a return to belief that the Bible is literally the will of God and placing his interpretation of the Bible ahead of the federal constitution as the supreme law of the land.
Jarvis, like such philosophers as Milton Friedman and Gottfried Wilhelm Leibnitz, advocated ideas that pleased his rich supporters. All three men were well paid by their patrons. Leibnitz convinced the rich of his day that, by arguments similar to those used in applying the calculus of variations to physical problems, the structure of society was stable and the only stable and proper structure, with a few rich men and a large class of poor people. The rich should therefore not feel ashamed about being rich. Friedman argued in favor of free, unregulated markets. By arguments similar to those of Leibnitz he convinced the corporate managerial class that unregulated free markets would produce a stable economic system in which every resource would be used and distributed for the greatest efficiency and good of the society. Jarvis's argument was that small government and low taxes would bring about the best society. Why, he asked, should government have to provide such things as free libraries or free education or free health care? Governments should be forced to abandon such unnecessary activities and the way to do it was to reduce taxes so that there would be no funds for them.
Jarvis was a clever rascal. He saw that there was no popular support for a general reduction of taxes. However, there was some popular hysteria over the rapid increase of property values and the concurrent increase in the property tax. Even that would have to be spun to achieve a populist swell to bring about his goal. He exploited the fear of aging homeowners that they would be taxed out of their homes unless something drastic was done, such as vote for Proposition 13 that froze property taxes at some arbitrary level.
Actually, he didn't care much one way or the other about the plight of the aging home owners. He was more interested in the welfare of his patrons, the landlords and the other business people who depended on using property to provide their incomes. Home owners could have simply not paid the tax. The State would wait until the property was finally sold or inherited to collect the back taxes. However, hysteria prevailed over common sense and the proposition passed with an overwhelming vote. (My wife and I were aging homeowners at the time and we voted against it.)
I won't write anything here about Falwell and other conservative clerics.
The Republican Party has traditionally been the party of the rich business class. I recall reading once about a poor American of latino descent. He hoped some day to be rich. The Republican Party was the party of the rich. Therefore, he became a Republican. Republicans have taken the philosophy of Jarvis to its logical extreme. In California, they refuse to consider any revenue enhancement to solve the budget shortage the State faces. Given their way, they would cut and eliminate enough State services to make the available tax revenue cover them. If that means very high tuition for the State Universities and Community Colleges, so be it. If it means school classes of 60 students, so be it. If it means closing of hospital emergency rooms, so be it. These are examples of services that government shouldn't be providing, anyway. Certainly the government of George Washington provided none of these services.
Unfortunately for the Republicans, the country is moving away from these ideas. Young people want to be able to attend university and they want to be able to afford it. Nearly everyone wants emergency rooms to be available and funded and staffed so that one doesn't have a four-hour wait at an emergency room in case of a serious injury or stroke or heart attack. Nearly everyone enjoys and wants to keep free public libraries. The party that would deny them these things is not going to do well in coming elections.
Senator Specter knows that many more moderate Republicans of Pennsylvania have moved from the Republican Party to the Democrats and Independents. To achieve survival in the Senate, he has done likewise.
Jarvis, like such philosophers as Milton Friedman and Gottfried Wilhelm Leibnitz, advocated ideas that pleased his rich supporters. All three men were well paid by their patrons. Leibnitz convinced the rich of his day that, by arguments similar to those used in applying the calculus of variations to physical problems, the structure of society was stable and the only stable and proper structure, with a few rich men and a large class of poor people. The rich should therefore not feel ashamed about being rich. Friedman argued in favor of free, unregulated markets. By arguments similar to those of Leibnitz he convinced the corporate managerial class that unregulated free markets would produce a stable economic system in which every resource would be used and distributed for the greatest efficiency and good of the society. Jarvis's argument was that small government and low taxes would bring about the best society. Why, he asked, should government have to provide such things as free libraries or free education or free health care? Governments should be forced to abandon such unnecessary activities and the way to do it was to reduce taxes so that there would be no funds for them.
Jarvis was a clever rascal. He saw that there was no popular support for a general reduction of taxes. However, there was some popular hysteria over the rapid increase of property values and the concurrent increase in the property tax. Even that would have to be spun to achieve a populist swell to bring about his goal. He exploited the fear of aging homeowners that they would be taxed out of their homes unless something drastic was done, such as vote for Proposition 13 that froze property taxes at some arbitrary level.
Actually, he didn't care much one way or the other about the plight of the aging home owners. He was more interested in the welfare of his patrons, the landlords and the other business people who depended on using property to provide their incomes. Home owners could have simply not paid the tax. The State would wait until the property was finally sold or inherited to collect the back taxes. However, hysteria prevailed over common sense and the proposition passed with an overwhelming vote. (My wife and I were aging homeowners at the time and we voted against it.)
I won't write anything here about Falwell and other conservative clerics.
The Republican Party has traditionally been the party of the rich business class. I recall reading once about a poor American of latino descent. He hoped some day to be rich. The Republican Party was the party of the rich. Therefore, he became a Republican. Republicans have taken the philosophy of Jarvis to its logical extreme. In California, they refuse to consider any revenue enhancement to solve the budget shortage the State faces. Given their way, they would cut and eliminate enough State services to make the available tax revenue cover them. If that means very high tuition for the State Universities and Community Colleges, so be it. If it means school classes of 60 students, so be it. If it means closing of hospital emergency rooms, so be it. These are examples of services that government shouldn't be providing, anyway. Certainly the government of George Washington provided none of these services.
Unfortunately for the Republicans, the country is moving away from these ideas. Young people want to be able to attend university and they want to be able to afford it. Nearly everyone wants emergency rooms to be available and funded and staffed so that one doesn't have a four-hour wait at an emergency room in case of a serious injury or stroke or heart attack. Nearly everyone enjoys and wants to keep free public libraries. The party that would deny them these things is not going to do well in coming elections.
Senator Specter knows that many more moderate Republicans of Pennsylvania have moved from the Republican Party to the Democrats and Independents. To achieve survival in the Senate, he has done likewise.
Labels: Arlen Specter, dim future for Republicans, Howard Jarvis, Jerry Fallwell, Leibnitz, Milton Friedman, the Bible as the literal word of God
Saturday, April 14, 2007
Odd Thoughts for a Saturday Morning
My friend M, whom I consider to be a complete right wingnut, trades insults with me by e-mail at least twice a week. In his latest, he included this comparison between "conservative" and "liberal." I will leave it to you to decide which of us is the nuttier.
First, his definition is not new; I'm sure I've seen it before.
Conservative Beliefs:
Liberal Beliefs:
What's new to me is that the RW nuts have added the line on global warming to make it a political issue. It shouldn't be.
I am not familiar with any "liberal" comparison of "liberal" with "conservative." I won't try to construct such a list myself. Rather, I choose to punch a few holes in my friend M's definition of the two. First, it's big news to me that free enterprise, freedom of speech, self reliance, and freedom of religion are beliefs that only conservatives have. There's a question about the meaning of the second amendment right to bear arms: is that an individual right or is it the right of the States to have their own independent militias? That's still an unsettled question. At any rate, conservatives in cities like Los Angeles are just as appalled as liberals whenever an innocent child is killed by gunfire from a street gang member, and when the police find that gangs have superior weapons to the ones we provide to our policemen.
My point is that, according to M's list, nearly all of us are "conservative." The only persons not included are some criminals and a few hard-core dedicated communists. Even communists believe in self-reliance. A fundamental flaw in M's list is that it isn't useful as a means of classifying opinions.
Now, what does M have to say about liberals? Obviously he regards them with scorn and contempt. Don't worry; that's just one of M's insults. I get even with him in the next round of e-mails. Aside from that, what is wrong about the list for liberals?
Government Regulation: Contrary to what Libertarians and the Cato Institute would have us believe, private enterprise does not remain competitive without some rules. Monopolies are forbidden. Conspiracies to fix prices are forbidden. Companies are required to label their products and provide printed warnings of any hazards regarding a product. These are sensible rules that we all agree with. Someone has to enforce them. An impartial policeman is needed to keep free markets free and competitive. We all pay the policeman to do that; it is one of the functions of government. You may argue that some regulations are unnecessary and burdensome. No one disagrees with that possibility. The necessity of a particular regulation must be settled by the public and not by industry.
The Government takes care of everyone: I certainly hope that government would treat everyone fairly. A great man, our sixteenth President, said that government should do for people what people can't do for themselves. Perhaps M favors a government that takes care of only a select few. We have a tendency toward such a government now. The Bush Administration is concerned about caring for the wealth of the rich, by keeping their taxes low, and caring for the feelings of the christian fundamentalists by forbidding federal funding of embryonic stem cell research and by advocating against abortion and gay marriage. It's not greatly concerned about the lives of the volunteers who are fighting Bush's War in Iraq nor about the lives of their families. The care or neglect is shown in the funding priorities of the administration.
Only Government has (controls) guns: People who call themselves liberals have all sorts of attitudes regarding the ownership and use of guns. You attitude depends on where you live. A farmer uses a gun to protect his chickens from the hawk. Men in small towns and on farms in some States like to go deer hunting in the fall. Rural people tend to regard a gun as a useful and necessary tool. City folk don't shoot at hawks and don't spend their vacation time hunting deer. To them, a gun is something a policeman uses to protect them, or something a mugger uses to rob them, or something gang members use to kill each other. City folk would feel more comfortable if guns didn't exist. If they didn't exist, the police wouldn't need them, either. There are certainly some liberals who passionately desire strict regulation of hand guns, dealing with who is allowed to own or use one, how they are marketed and sold, the kind of ammunition available for them, and what type of gun is allowed to be sold to the public. A lot of the controversy has to do with automatic or semi-automatic weapons: weapons that can fire many bullets for one pressing of the trigger. Farmers have no interest in such weapons. Neither do deer hunters. Gangs and other criminals like them. The police generally do not carry such weapons.
Freedom of speech you agree with (witness the treatment of conservative speakers on campus): It's just plain nutty to conflate the behavior of rude, impolite college students with liberalism. I suspect that what the students object to is not the "conservative" content of a particular speech but the obvious lies and half-truths that so many "conservative" speakers utter. If a speaker states that he believes in a society in which everyone has an equal chance for success but must achieve success through his or her own efforts, I don't see why anyone would object. However, if the speaker goes on to say, as Milton Friedman once said before a college audience, that there is no poverty and there are no poor people in the United States, he deserves to be booed.
Blind Belief in the Only True Religion (Global Warming): Now, there is an assertion that is just plain nutty. I won't bother to respond to it.
Recently, M, H, S, R, and other friends have been e-mailing me and each other about global warming and universal health care. Now I admit that universal health care is a rather radical idea. I'm not sure it's a liberal idea. It's probably to the ideological left of many liberals. However, the existence of Global Warming has been condeded by almost everyone except James Inhofe, a Senator from an obscure mid-western State. It is not sure what the consequences will be. One prediction is that the levels of the oceans will rise several feet.
I keep trying to think of a model for a system of universal health care. Some Republicans (e.g., Mitt Romney, Arnold Schwarzenegger) think of the model of auto insurance. Everyone is required to carry liability insurance for his car. Why not require everyone to buy health insurance? For those who can't afford the premiums, the State will provide a subsidy. Mr. Bush proposes that the federal tax code be modified to allow health insurance premiums to be counted as deductions. (They were allowed until about 1970).
One model I think of is fire protection. In Los Angeles City and County, everyone is protected by fire departments who try mightily to protect homes threatened by wildfires. We don't buy insurance so that the fire crew will come; we pay taxes that pay for the fire departments. We do have fire insurance on our homes, but that is to pay for repairing the damage done, not to pay the fire crew to come to extinguish the fire. If we followed this model, we would set up numerous free health clinics where people could get treatment for various medical problems. The free clinics would also encourage people to participate in preventive medicine, just as fire departments encourage us to install smoke and fire alarms, give us advice on how to protect out houses from wildfires, how to build houses that resist burning, and the like. Really serious medical problems would be dealt with in hospital emergency rooms. As to health insurance, that would pay for expensive treatment needed to restore good health.
I'm not sure I like this model very much, but it would be an improvement over what we have now. It would be like the health care system in Los Angeles in 1960, when the county had funds to operate free health clinics. My wife and I used to go to such a clinic every year to get our flu shots.
Anyway, that's enough odd thinking for a Saturday morning, especially as it is almost noon.
First, his definition is not new; I'm sure I've seen it before.
Conservative Beliefs:
- Free enterprise.
- Self reliance
- Second amendment right to bear arms.
- Freedom of speech
- Freedom of religion
Liberal Beliefs:
- Government regulation.
- The government takes care of everyone.
- Only government has (controls) guns
- Freedom of speech you agree with (witness the treatment of conservative speakers on campus).
- Blind belief in the only true religion (Global Warming)
What's new to me is that the RW nuts have added the line on global warming to make it a political issue. It shouldn't be.
I am not familiar with any "liberal" comparison of "liberal" with "conservative." I won't try to construct such a list myself. Rather, I choose to punch a few holes in my friend M's definition of the two. First, it's big news to me that free enterprise, freedom of speech, self reliance, and freedom of religion are beliefs that only conservatives have. There's a question about the meaning of the second amendment right to bear arms: is that an individual right or is it the right of the States to have their own independent militias? That's still an unsettled question. At any rate, conservatives in cities like Los Angeles are just as appalled as liberals whenever an innocent child is killed by gunfire from a street gang member, and when the police find that gangs have superior weapons to the ones we provide to our policemen.
My point is that, according to M's list, nearly all of us are "conservative." The only persons not included are some criminals and a few hard-core dedicated communists. Even communists believe in self-reliance. A fundamental flaw in M's list is that it isn't useful as a means of classifying opinions.
Now, what does M have to say about liberals? Obviously he regards them with scorn and contempt. Don't worry; that's just one of M's insults. I get even with him in the next round of e-mails. Aside from that, what is wrong about the list for liberals?
Government Regulation: Contrary to what Libertarians and the Cato Institute would have us believe, private enterprise does not remain competitive without some rules. Monopolies are forbidden. Conspiracies to fix prices are forbidden. Companies are required to label their products and provide printed warnings of any hazards regarding a product. These are sensible rules that we all agree with. Someone has to enforce them. An impartial policeman is needed to keep free markets free and competitive. We all pay the policeman to do that; it is one of the functions of government. You may argue that some regulations are unnecessary and burdensome. No one disagrees with that possibility. The necessity of a particular regulation must be settled by the public and not by industry.
The Government takes care of everyone: I certainly hope that government would treat everyone fairly. A great man, our sixteenth President, said that government should do for people what people can't do for themselves. Perhaps M favors a government that takes care of only a select few. We have a tendency toward such a government now. The Bush Administration is concerned about caring for the wealth of the rich, by keeping their taxes low, and caring for the feelings of the christian fundamentalists by forbidding federal funding of embryonic stem cell research and by advocating against abortion and gay marriage. It's not greatly concerned about the lives of the volunteers who are fighting Bush's War in Iraq nor about the lives of their families. The care or neglect is shown in the funding priorities of the administration.
Only Government has (controls) guns: People who call themselves liberals have all sorts of attitudes regarding the ownership and use of guns. You attitude depends on where you live. A farmer uses a gun to protect his chickens from the hawk. Men in small towns and on farms in some States like to go deer hunting in the fall. Rural people tend to regard a gun as a useful and necessary tool. City folk don't shoot at hawks and don't spend their vacation time hunting deer. To them, a gun is something a policeman uses to protect them, or something a mugger uses to rob them, or something gang members use to kill each other. City folk would feel more comfortable if guns didn't exist. If they didn't exist, the police wouldn't need them, either. There are certainly some liberals who passionately desire strict regulation of hand guns, dealing with who is allowed to own or use one, how they are marketed and sold, the kind of ammunition available for them, and what type of gun is allowed to be sold to the public. A lot of the controversy has to do with automatic or semi-automatic weapons: weapons that can fire many bullets for one pressing of the trigger. Farmers have no interest in such weapons. Neither do deer hunters. Gangs and other criminals like them. The police generally do not carry such weapons.
Freedom of speech you agree with (witness the treatment of conservative speakers on campus): It's just plain nutty to conflate the behavior of rude, impolite college students with liberalism. I suspect that what the students object to is not the "conservative" content of a particular speech but the obvious lies and half-truths that so many "conservative" speakers utter. If a speaker states that he believes in a society in which everyone has an equal chance for success but must achieve success through his or her own efforts, I don't see why anyone would object. However, if the speaker goes on to say, as Milton Friedman once said before a college audience, that there is no poverty and there are no poor people in the United States, he deserves to be booed.
Blind Belief in the Only True Religion (Global Warming): Now, there is an assertion that is just plain nutty. I won't bother to respond to it.
Recently, M, H, S, R, and other friends have been e-mailing me and each other about global warming and universal health care. Now I admit that universal health care is a rather radical idea. I'm not sure it's a liberal idea. It's probably to the ideological left of many liberals. However, the existence of Global Warming has been condeded by almost everyone except James Inhofe, a Senator from an obscure mid-western State. It is not sure what the consequences will be. One prediction is that the levels of the oceans will rise several feet.
I keep trying to think of a model for a system of universal health care. Some Republicans (e.g., Mitt Romney, Arnold Schwarzenegger) think of the model of auto insurance. Everyone is required to carry liability insurance for his car. Why not require everyone to buy health insurance? For those who can't afford the premiums, the State will provide a subsidy. Mr. Bush proposes that the federal tax code be modified to allow health insurance premiums to be counted as deductions. (They were allowed until about 1970).
One model I think of is fire protection. In Los Angeles City and County, everyone is protected by fire departments who try mightily to protect homes threatened by wildfires. We don't buy insurance so that the fire crew will come; we pay taxes that pay for the fire departments. We do have fire insurance on our homes, but that is to pay for repairing the damage done, not to pay the fire crew to come to extinguish the fire. If we followed this model, we would set up numerous free health clinics where people could get treatment for various medical problems. The free clinics would also encourage people to participate in preventive medicine, just as fire departments encourage us to install smoke and fire alarms, give us advice on how to protect out houses from wildfires, how to build houses that resist burning, and the like. Really serious medical problems would be dealt with in hospital emergency rooms. As to health insurance, that would pay for expensive treatment needed to restore good health.
I'm not sure I like this model very much, but it would be an improvement over what we have now. It would be like the health care system in Los Angeles in 1960, when the county had funds to operate free health clinics. My wife and I used to go to such a clinic every year to get our flu shots.
Anyway, that's enough odd thinking for a Saturday morning, especially as it is almost noon.
Labels: auto insurance, fire damage to homes, fire insurance, liberal vs. conservative, Libertarian, Milton Friedman, second amendment, Universal health care
Monday, November 20, 2006
Reflections on the Influence of Milton Friedman and the Needs of a Just Society
Milton Friedman, who died recently, was an influential economist and advisor to three Presidents. He established the following dicta in the thinking of conservatives:
1. Free markets are better at making economic decisions than governments.
2. Individuals make better economic decisions than government.
3. Government is unable to create jobs. Any new jobs resulting from government action only take money away from other jobs. Government can only redistribute jobs, not create new ones.
Although many Conservatives accept these statements as axioms, our history as a nation contains counterexamples. Friedman’s dicta are true part of the time, but not all the time.
The first and second dicta (or axioms) assert that individual decisions about spending money and the supply and demand forces that set prices give “better” results than prices and spending priorities of governments. My question is, better for whom? If you consider a sum of money that, in one situation is taken by a government in taxes, and in another situation is spent by the individual, it may be true that letting the individual spend the money is better for him or her than letting the government spend it. However, the result may not be better for society as a whole.
It is easy to cite examples that contradict the third dictum. The Internet was a government invention. The result has been a profound change in the way information is transmitted and the creation of a whole new industry with many jobs. Other examples of government creating infrastructure that created new industries and new jobs are the Erie Canal, the interstate highway system, and the U. S. Postal Service. There are many others.
At present we Americans have serious problems that will not be solved simply by government inaction and letting free markets work on them. Two important ones are the breakdown of our system of health care and the lack of good public transit systems in our cities.
Our health care system has always depended on medical doctors acting as private entrepreneurs, like grocers and barbers, providing medical treatments in return for fees. This model seemed to work fairly well when I was a child in a small town in Michigan. I would go to the village doctor for immunization shots, eye examinations, health check-ups, and treatment for various diseases. The doctor would extend credit to those patients who were temporarily short of money. Some patients never were able to pay. Care in hospitals worked the same way. No one was denied medical attention or treatment for lack of money.
This small-town model may actually still prevail in some parts of the country. I don’t know; I have not lived in a small town since I left home in 1944. Since that time I have lived in Washington, DC, in Champagne and Urbana, Illinois, in Fayetteville, Arkansas, in New York City, and in Los Angeles. I recall that my wife spent time in a hospital in Fayetteville; the bill for the stay was nine dollars a day. Today a stay in a hospital costs more than a thousand dollars a day. At the time that my wife and I were living in Arkansas, I was a professor at the University earning a salary of $4800 a year. Today a starting salary for a professor is at least fifteen times that much. If the cost of hospital stays were still in the same ratio to professors’ salaries, the cost would be $135 per day. This is an example of how medical costs in the United States have risen much faster than the inflation index.
Of course, Fayetteville may not be a good example. While we were living in New York, my wife was in a hospital there to give birth to our first child. The total bill, including the services of the doctor, was about two hundred fifty dollars. The year was 1952. I was earning $5600 a year as an employee of Columbia University, working on a Navy project to study the transmission of sound under water over long distances.
It is clear to most Americans that our system of health care needs repair. Relying on Friedman’s dicta isn’t going to bring about any improvement. Depending on market forces won’t provide health care to persons who can’t pay for it. The existing institutions – doctors, hospitals, insurance companies – will continue to make profits under the present system as long as they are not obliged to provide any care for those who can’t pay. A corollary of Friedman’s dicta is that government should not interfere and enact laws that require hospitals to care for the indigent. As long as the existing system is restricted to providing medical services to those who can afford them, that part of society will continue to be well-served. One of the big problems is that hospital emergency rooms are obliged to care for anyone. Our compassionate laws do not allow a seriously injured person to die just outside the entrance to a hospital for lack of money.
Perhaps I am unfair to the late Professor Friedman. I have not taken into account the existence of compassionate benevolent organizations, such as churches. These organizations take care of the poor. In Professor Friedman’s society, they would care for those poor wretches who can’t afford the medical care provided to the more affluent members of society. Unfortunately, there are too many poor wretches and too few benevolent organizations.
As a long-time resident of Los Angeles, I am aware of the limitations and inadequacies of the public transit system of this city. In all of my working experience here I have never held a job where it would have been convenient to take public transportation from my home to my job site. I had to use an automobile to commute to work. During the last twenty years of my working life the commute was either twenty or thirty-six miles one way. Like millions of others, I drove on our excellent freeway system. During part of my working life I commuted with other workers, either car-pooling or riding in a van pool. Even then I had to use my car to drive from my home to the meeting place for the van, a distance of about four miles. If I had ridden the bus, the bus routes were laid out so that I would have had to make one transfer. During rush hour the buses I would have taken ran at intervals of half an hour.
Car pooling and van pooling are results of following Friedman’s dicta and letting free markets solve the problem of getting me to and from work. Although I was able to ride a pool van to get to work, millions of other commuters drove in their cars with one person per car. That is easily the most expensive way to transport workers back and forth from their homes to their jobs. A fraction of the cost of operating and maintaining and insuring all those autos would have provided an excellent and extensive rapid transit system. However, such a reordering of priorities and resources was beyond the ability of our political leaders and contrary to the prejudices of the voting and tax-paying public. People would rather pay the cost of owning and operating a car than the increase in taxes necessary to maintain an effective and convenient public transit system. Many conservative or libertarian politicians advocate building additional freeways, perhaps with double decks, to accommodate the ever increasing number of private automobiles used to transport workers between home and work.
Friedman’s dicta allow private entrepreneurs to offer commuting services. A number of private bus companies have come into existence, principally to provide transportation between communities outside of Los Angeles and various job sites that employ large numbers of workers. I have not examined the operation of any of these bus lines with respect to just where they pick up and discharge passengers. I assume that the discharge locations are at several aerospace firms in the city that employ thousands of workers. One bus carrying fifty workers is certainly more economical than fifty cars carrying the same workers. In addition, the one bus is less demanding of highway facilities than fifty cars. These private bus lines represent a limited validation of Friedman’s dicta, but they also show the limits of what can be achieved by relying on free markets and government inaction.
I am convinced that relying on private entrepreneurs and free markets will never provide a system of public transportation in a large city that is fair to all residents. Private enterprise will develop profitable routes that serve the more affluent part of the population; that is, people who can pay the price will enjoy convenient and comfortable transportation between their homes and jobs. The poorer part of the population have just as great a need for good public transit, but their needs will be met by methods that are less comfortable, less convenient, and less reliable. A good, comprehensive, and convenient transit system for a large city is not a profit-making proposition. Where such systems exist in the world they are subsidized by local governments. Everyone in the city pays to keep the transit system in operation. Receipts at the fare box are never sufficient to pay the cost of operating and maintaining a good system.
The same argument can be applied to public health care facilities. Years ago the County of Los Angeles maintained many free clinics where one could go to receive certain simple but useful medical procedures, such as immunizations against smallpox, measles, and influenza. These and other services were provided free of charge to any resident of the county. Because of cutbacks in revenue, largely due to the passage of the property tax limitation (known as Proposition 13 in California), these free clinics have been closed. People desiring or needing medical care who can’t pay are now forced to go and wait in hospital emergency rooms. The crowding in these rooms is a serious problem not merely for the indigent waiting for medical care but for the affluent who are stricken with heart attacks or strokes and need immediate attention. They also have to wait.
Just as a good public transit system requires a subsidy from local government, so also does a good system of basic medical care. If the people are willing to provide less than satisfactory public transit and less than satisfactory public health facilities they are not living up to traditional American values of fairness to all. We have a conflict of values between fairness and efficiency. Friedman’s dicta provide a means of utilizing resources in the most productive and profitable way possible. They do not provide fairness in social policy.
1. Free markets are better at making economic decisions than governments.
2. Individuals make better economic decisions than government.
3. Government is unable to create jobs. Any new jobs resulting from government action only take money away from other jobs. Government can only redistribute jobs, not create new ones.
Although many Conservatives accept these statements as axioms, our history as a nation contains counterexamples. Friedman’s dicta are true part of the time, but not all the time.
The first and second dicta (or axioms) assert that individual decisions about spending money and the supply and demand forces that set prices give “better” results than prices and spending priorities of governments. My question is, better for whom? If you consider a sum of money that, in one situation is taken by a government in taxes, and in another situation is spent by the individual, it may be true that letting the individual spend the money is better for him or her than letting the government spend it. However, the result may not be better for society as a whole.
It is easy to cite examples that contradict the third dictum. The Internet was a government invention. The result has been a profound change in the way information is transmitted and the creation of a whole new industry with many jobs. Other examples of government creating infrastructure that created new industries and new jobs are the Erie Canal, the interstate highway system, and the U. S. Postal Service. There are many others.
At present we Americans have serious problems that will not be solved simply by government inaction and letting free markets work on them. Two important ones are the breakdown of our system of health care and the lack of good public transit systems in our cities.
Our health care system has always depended on medical doctors acting as private entrepreneurs, like grocers and barbers, providing medical treatments in return for fees. This model seemed to work fairly well when I was a child in a small town in Michigan. I would go to the village doctor for immunization shots, eye examinations, health check-ups, and treatment for various diseases. The doctor would extend credit to those patients who were temporarily short of money. Some patients never were able to pay. Care in hospitals worked the same way. No one was denied medical attention or treatment for lack of money.
This small-town model may actually still prevail in some parts of the country. I don’t know; I have not lived in a small town since I left home in 1944. Since that time I have lived in Washington, DC, in Champagne and Urbana, Illinois, in Fayetteville, Arkansas, in New York City, and in Los Angeles. I recall that my wife spent time in a hospital in Fayetteville; the bill for the stay was nine dollars a day. Today a stay in a hospital costs more than a thousand dollars a day. At the time that my wife and I were living in Arkansas, I was a professor at the University earning a salary of $4800 a year. Today a starting salary for a professor is at least fifteen times that much. If the cost of hospital stays were still in the same ratio to professors’ salaries, the cost would be $135 per day. This is an example of how medical costs in the United States have risen much faster than the inflation index.
Of course, Fayetteville may not be a good example. While we were living in New York, my wife was in a hospital there to give birth to our first child. The total bill, including the services of the doctor, was about two hundred fifty dollars. The year was 1952. I was earning $5600 a year as an employee of Columbia University, working on a Navy project to study the transmission of sound under water over long distances.
It is clear to most Americans that our system of health care needs repair. Relying on Friedman’s dicta isn’t going to bring about any improvement. Depending on market forces won’t provide health care to persons who can’t pay for it. The existing institutions – doctors, hospitals, insurance companies – will continue to make profits under the present system as long as they are not obliged to provide any care for those who can’t pay. A corollary of Friedman’s dicta is that government should not interfere and enact laws that require hospitals to care for the indigent. As long as the existing system is restricted to providing medical services to those who can afford them, that part of society will continue to be well-served. One of the big problems is that hospital emergency rooms are obliged to care for anyone. Our compassionate laws do not allow a seriously injured person to die just outside the entrance to a hospital for lack of money.
Perhaps I am unfair to the late Professor Friedman. I have not taken into account the existence of compassionate benevolent organizations, such as churches. These organizations take care of the poor. In Professor Friedman’s society, they would care for those poor wretches who can’t afford the medical care provided to the more affluent members of society. Unfortunately, there are too many poor wretches and too few benevolent organizations.
As a long-time resident of Los Angeles, I am aware of the limitations and inadequacies of the public transit system of this city. In all of my working experience here I have never held a job where it would have been convenient to take public transportation from my home to my job site. I had to use an automobile to commute to work. During the last twenty years of my working life the commute was either twenty or thirty-six miles one way. Like millions of others, I drove on our excellent freeway system. During part of my working life I commuted with other workers, either car-pooling or riding in a van pool. Even then I had to use my car to drive from my home to the meeting place for the van, a distance of about four miles. If I had ridden the bus, the bus routes were laid out so that I would have had to make one transfer. During rush hour the buses I would have taken ran at intervals of half an hour.
Car pooling and van pooling are results of following Friedman’s dicta and letting free markets solve the problem of getting me to and from work. Although I was able to ride a pool van to get to work, millions of other commuters drove in their cars with one person per car. That is easily the most expensive way to transport workers back and forth from their homes to their jobs. A fraction of the cost of operating and maintaining and insuring all those autos would have provided an excellent and extensive rapid transit system. However, such a reordering of priorities and resources was beyond the ability of our political leaders and contrary to the prejudices of the voting and tax-paying public. People would rather pay the cost of owning and operating a car than the increase in taxes necessary to maintain an effective and convenient public transit system. Many conservative or libertarian politicians advocate building additional freeways, perhaps with double decks, to accommodate the ever increasing number of private automobiles used to transport workers between home and work.
Friedman’s dicta allow private entrepreneurs to offer commuting services. A number of private bus companies have come into existence, principally to provide transportation between communities outside of Los Angeles and various job sites that employ large numbers of workers. I have not examined the operation of any of these bus lines with respect to just where they pick up and discharge passengers. I assume that the discharge locations are at several aerospace firms in the city that employ thousands of workers. One bus carrying fifty workers is certainly more economical than fifty cars carrying the same workers. In addition, the one bus is less demanding of highway facilities than fifty cars. These private bus lines represent a limited validation of Friedman’s dicta, but they also show the limits of what can be achieved by relying on free markets and government inaction.
I am convinced that relying on private entrepreneurs and free markets will never provide a system of public transportation in a large city that is fair to all residents. Private enterprise will develop profitable routes that serve the more affluent part of the population; that is, people who can pay the price will enjoy convenient and comfortable transportation between their homes and jobs. The poorer part of the population have just as great a need for good public transit, but their needs will be met by methods that are less comfortable, less convenient, and less reliable. A good, comprehensive, and convenient transit system for a large city is not a profit-making proposition. Where such systems exist in the world they are subsidized by local governments. Everyone in the city pays to keep the transit system in operation. Receipts at the fare box are never sufficient to pay the cost of operating and maintaining a good system.
The same argument can be applied to public health care facilities. Years ago the County of Los Angeles maintained many free clinics where one could go to receive certain simple but useful medical procedures, such as immunizations against smallpox, measles, and influenza. These and other services were provided free of charge to any resident of the county. Because of cutbacks in revenue, largely due to the passage of the property tax limitation (known as Proposition 13 in California), these free clinics have been closed. People desiring or needing medical care who can’t pay are now forced to go and wait in hospital emergency rooms. The crowding in these rooms is a serious problem not merely for the indigent waiting for medical care but for the affluent who are stricken with heart attacks or strokes and need immediate attention. They also have to wait.
Just as a good public transit system requires a subsidy from local government, so also does a good system of basic medical care. If the people are willing to provide less than satisfactory public transit and less than satisfactory public health facilities they are not living up to traditional American values of fairness to all. We have a conflict of values between fairness and efficiency. Friedman’s dicta provide a means of utilizing resources in the most productive and profitable way possible. They do not provide fairness in social policy.
Labels: fair society, Milton Friedman, Proposition 13, public health, Public Transportation
