It's not this hard, really
As expected, Xon wrote an opus in response to my linking to a Jay Bookman column discussing the allegiance many conservatives play to a free market approach to health care.
Being a libertarian of sorts, he had issues with it, and that's fine. But something repeatedly pops up in this discussion that honestly bugs me. I can accept disagreement over the matter and I can accept that, say, in this instance Bookman generalized to some extent.
But I'm quite honestly tired of folks who trot out the tired argument 'well, gosh, I don't want a bureaucrat making this decision for me.' I'm tired of it because I don't know of a single person who advocates for expanded and/or universal health care who wishes to strip all elements of choice or flexibility out of the equation. The plans on the table increase consumer choice and the majority of them incorporate existing private insurance companies to offer the consumer additional flexibility (not to mention the fact that it, you know, actually extends some measure of coverage to those who currently lack it).
Being a libertarian of sorts, he had issues with it, and that's fine. But something repeatedly pops up in this discussion that honestly bugs me. I can accept disagreement over the matter and I can accept that, say, in this instance Bookman generalized to some extent.
But I'm quite honestly tired of folks who trot out the tired argument 'well, gosh, I don't want a bureaucrat making this decision for me.' I'm tired of it because I don't know of a single person who advocates for expanded and/or universal health care who wishes to strip all elements of choice or flexibility out of the equation. The plans on the table increase consumer choice and the majority of them incorporate existing private insurance companies to offer the consumer additional flexibility (not to mention the fact that it, you know, actually extends some measure of coverage to those who currently lack it).
posted by Jmac at 6:24 AM
15 Comments:
Xon's argument consists of viewing any amount of governmental control over resource distribution in health care as involving a "bureacrat" whose interests appear to involve the dehumanization of potential and actual patients. However, it's not clear from his argument why a bureacrat would do this. For example, is the bureacrat just an asshole who enjoys slowly killing people through lack of care, or is the bureacrat the sort of person who is completely ignorant of the medical needs of the community, or is the bureacrat just very inefficient when it comes to the task? Note, also, that we are talking about the bureacrat, and not several bureacrats or several employees within a department: "centralization" invokes the imagery of a one man, a one figure, when the Department of Labor or the Department of Health are clearly not summed in one person. However, the one mischievious or doltish bureacrat is a convenient imaginary that everyone despises, and it operates as such.
Still, it seems to me that where Xon's argument really turns is at the point where the bureacrat cites tables and figures to deny someone treatment they probably need. But the free market already does this; hence the groundswell among poor and middle class people to vilify HMOs for cutting corners to turn a profit. Thus, is the bureacrat denying medical coverage to someone because they are interested more in balancing the budget of a government operation? Having worked in a department where the budget is set by the schedules and algorithms of a state agency, I have the impression that the motivation to save money on the whole is there in order to allocate money for certain, other functions or desires. Otherwise, the other trope of conservatives against the state—that the state blissfully and stupidly wastes mountains of money, eventually going into loaned debt we all have to inevitably pay—comes into play: why wouldn't the bureacrat, faced with the suffering of a human being, spend in excess to save this person?
Because the bureacrat is trying to save money.
If a government bureacrat can be so easily judged, why not an insurance agent or HMO doctor concerned with saving money to maximize profit?
If the argument holds that individuals in a free market, acting in their own self-interest without specific regard paid to whether those interests are "rational" or not, determine a system that is decidedly more efficient in distribution of resources, what is it about their own subjectivity as acting agents that fundamentally changes when they become "bureacrats?" In other words, if the motivation of an individual in the marketplace is towards increasing their share of profit or towards guaranteeing the consistency of their current share, and that is what makes for a more efficient system, then what is it about the individual in the bureacracy, motivated by the same fundamental desires, that is substantially and uniformly different?
The bureacrat, simultaneously wasteful and stingy, seems no different than the one driven by personal profit.
Any free market economy (or analysis) has to presume that there are no barriers to entry into the marketplace, other than economic ones.
With regard to healthcare, or insurance for same, there are many people to whom insurance is not available at any price. Try giving birth to a baby with health problems, and then try to locate private market insurance for the baby.
The "free market" response would be, "well you shouldn't have had the baby if you can't take care of it". There's a realistic solution.
Likewise reach a certain age, and develop any age related condition. Sure you can get health insurance ---- for everything except what ails you. BFD. In fact, reach a certain age and just have a family history of certain ailments, and insurance is unavailable to you.
The free market argument also misses the point that health care is already controlled by bureaucrats; it's just bureaucrats employed by Blue Cross and Humana, not the government. If health care is to be provided on a truly free market basis, each consumer would have to come to an agreement with each individual provider. Absent that one on one relationship, some bureaucrat will have to intercede, and it seems to be logically irrelevant whether that bureaucrat a government or private employee.
With the present market composition, forcing people to rely on "free market" medical care only condemns hundreds of thousands, if not millions to substandard life or early death due to untreated conditions. Whether we choose it or not, the indirect costs of this lack of medical care is passed on to society at large in numerous ways, which is the final point that the free market proponents ignore.
JMac, this is an interesting point (about choices), and I think we've discussed it before, somewhere, sometime.
But what exactly do you mean? Whenever someone is offered more "choices", we have to ask what was going on before. Either:
A. The choices were limited by governmental force (i.e., there were providers willing to supply consumers with more choices, but they were prevented from doing so by law). Or,
B. The choices for consumers were limited b/c those were all the choices the market would support.
If A, then you're advocating the libertarian's own argument. If there are currently laws on the books that restrain health care providers and insurance companies from providing more choices that they would on their own volition provide, then those laws need to be repealed. Voila, we have more choices, and we should, and you're advocating libertarianism. Everybody's happy.
(And here's a real-life example of an "A" situation. In most (or is it all?) states, insurance companies are required to cover certain conditions. For instance, a person who doesn't want to be covered for heart disease, perhaps b/c he's young and has no family history for that sort of thing, is not allowed to opt out of that particular coverage. He must instead accept--the insurance provider must provide--that coverage as part of every policy it offers. This restricts choices for consumers.)
If B is the case, then I'm not sure what you're complaining about. If the 'market' will not bear insurance companies offering other choices, then that just means (by the very definition of 'the market will not bear') that consumers are not willing to spend the money they have on those particular choices. In other words, consumers have made a 'choice' in effect that they do not want those choices to be offered. If everybody started begging for them and offering significant portions of their money, then they would be provided.
The only other option I suppose is to say that many people WANT these other choices, but that unofrtunately they cannot AFFORD them. The solution, presumably, is to make everybody wealthier, but how is this done exactly? Money doesn't grow on trees, or at printing presses (or on computer hard drives), and so if people are to become wealthier then their money must start to go further than it used to. Can the government make this happen? To ask is to answer. But the market, by distributing resources more efficiently in accordance with people's priorities (i.e., people have more of their top priorities met for less cost), ends up freeing up more money in those people's wallets. That's the whole upshot of efficiency. It's not that Company X made so much profit selling widgets; it's that widgets are now being delivered to more of the people who want them at prices those people are willing/able to pay, thanks to Company X.
Charles is fair in pointing out that I might have overpressed my critique of 'bureaucrats' a bit. But in my own defense I plead the astounding fact that Bookman spoke favorably of them in his own article. If Bookman had not couched his own argument in terms of preferring these decisions to be made by a bureaucrat, then I would not have made them my main whipping boy in my counter-argument. He put it on my mind, what can I say?
For the record, I don't care whether central planning is done by one sole planner or by a committee or by an amorphous group of (dare I say it?) buzzing-about bureaucrats. It fails in almost all, if not all, cases.
The issue, as I said in my response to Bookman's article, is one of efficiency. Charles asks reasonably (and I appreciate the chance to clarify):
"Xon's argument consists of viewing any amount of governmental control over resource distribution in health care as involving a "bureacrat" whose interests appear to involve the dehumanization of potential and actual patients. However, it's not clear from his argument why a bureacrat would do this. For example, is the bureacrat just an asshole who enjoys slowly killing people through lack of care, or is the bureacrat the sort of person who is completely ignorant of the medical needs of the community, or is the bureacrat just very inefficient when it comes to the task?"
It's a combination of the latter two, usually. The "dehumanization" is not directly in the central planner(s)'s self-interest. He/they is/are not just an 'asshole' who gets his/their jollies by harming people, or by seeing people waste away. Rather, the central planner is simply not able to know:
A. What the "appropriate" priority of the community actually is. They cannot know this b/c there is no such objective priority; priorities are subjectively determined by each individual according to their own system of valuation; the vast majority of people value having enough drinking water way up at the top of their own subjective list, and so we can say that "drinking water is a human need." But really all we are doing when we say this is using shorthand for this generalized priority that holds for the majority of the population.
No matter how smart he is, the central planner cannot possibly "know" that health care is more important than, say, secure homes, well-insured property, or football games. This is b/c it is simply not a knowable sort of thing. You might as well ask him whether the hairs of Martian goats are valuable, if there indeed are Martian goats. No matter how smart you are, there's not much you can say to that. If the public chooses to spend their own scarce resources on other things, then who is to say that this is 'wrong'? (I admit there are exceptions to this argument, which is why I am not a full-out Austrian-Libertarian-economic subjectivist, or whatever. But I think the basic sketch rings true, and in any case I'm just trying to illustrate the actual anti-centralized-health-care argument rather than the straw men that are put in its place to make libertarians and the conservatives who love them look like fools.)
Nor can the central planner know:
B. How many natural and captial resources are "worth it" to expend on providing this health care to the population. This is a critical decision; too many resources allocated to providing health care, and the society will suffer from a lack of other important things. But no person, or group of people, can "calculate" the answer to this question in a way that is as efficient as the (still imperfecgt) price mechanism of the market. Again, this is not an insult agains the bumbling central planner; they are simply trying to do what no person can do.
C. And b/c the central planner is ignorant of A. and B., his attempts to act as though he is not ignorant of them will lead to widespread economic inefficiencies. And, just in case we're losing sight of the ball here, "inefficiencies" is not code for "greedy capitalists don't make as much moeny. It's code for "people die."
(As JMac knows well, I have my own 'pet peeve' in these economic debates, and that is the progressive/socialist refrain that only they truly 'care' about the poor. The inefficiencies that free market advocates want to avoid are the greatest threat to the poor. I admit that not all free market advocates make that argument as clearly as they could, but many of them do; and they are often simply ignored (or accused of being disingenuous) by their leftier counterparts. Why, I've even been personally attacked in the past when I made this claim by someone who wanted to use what precise 'causes' I'd given to as a litmus test for whether I 'really' cared about the poor. You see, I simply cannot REALLY care about the poor, because if I did then I would support harming them through government-mandated inefficiency. But I dislike personal anecdotes in these discussions, so onward!)
That's the basic argument, with lots of details left out admittedly. Obviously we can follow up on a hundred things I just wrote. But I'm just trying to sketch the libertarian argument here. And I think this basic sketch is sufficient to answer Charles' question of "What's wrong with the bureaucrat?" What's wrong with him/them is that they are trying to do "calculations" that no human being can possibly make.
The individual decision-makers acting according to their own subjective valuations are not in this same position. They are just as ignorant as the central planners as to how to 'run' an economy, and if they tried to run it they would fail just as miserably. But they aren't trying to run a whole economy; they are simply trying to attain their own goals as best they can with the resources available to them. But the net result of this, completely unintended effect (Adam Smith's 'invisible hand', or--my preference--God's providence) is that as millions of people make these decisions for themselves, prices change, and as prices change producers change and the end result is that resources get distributed differently than they were before. No 'planning' required.
"But what exactly do you mean? Whenever someone is offered more "choices", we have to ask what was going on before. Either:
A. The choices were limited by governmental force (i.e., there were providers willing to supply consumers with more choices, but they were prevented from doing so by law). Or,
B. The choices for consumers were limited b/c those were all the choices the market would support."
Or C: the choices were limited by corporate activities --engaging in cartels, for instance. Yes, no doubt you'd argue that this is an example of the market not operating "as it should." But, be that as it may, that's how markets DO operate w/out govt regulation (Sherman anti-trust law anyone?). In other words, markets can only operate as "free" markets when govt is there to regulate them appropriately.
Xon, read this section again:
"And in real life, it's hard to believe that a mother working full time would be a tougher and more informed negotiator over the cost of her child's surgery than would an insurance company or government bureaucracy armed with experts and data. But that's just what Johnson and others claim to believe."
You then responded to this with a rhetorical device deploying the bureacrat who knows better than the ma'am what surgery she shouldn't have.
How is Bookman's point favorable commentary about bureacrats? You responded to his comment as if you were repeating his point, rather than responding to it. Bookman seems to criticize the statistician bureacrat in addition to anarcho-capitalism, and so I think your interpretation is more eisegesis than exegesis. (^_^) Vn
He didn't couch his argument in favorable terms for them, nor did he put that on your mind: Johnathan is entirely correct that Bookman's article is about how political ideology forces people into taking a partisan stand without regard for how to make a sustainable, working health care system for all. It's not unilaterally supporting a governmental approach at all, and I think DECON (in the other-other thread) and stopthebs (in this thread) both offer up positions that cut the binary into thirds. Johnathan appears to me to be offering something similar: pragmatic solutions to an ideological problem.
As for your philosophical argument against centralized planning, [kicking his foot against the Terry College of Business] I refute it thus.
Look, if economists are anything, they are individuals who note trends and movements in the purchasing and saving habits of populations, creating models for not only explaining but also predicting these behaviors. And all this according to mathematical algorithms and computational calculations. Economics could not be a discipline were it not for the ability to completely disregard the claim to total knowledge in favor of statistical sampling. As such, they are able to do a great many things with qualitative observations transformed into quantitative operations.
Thus, my point here is that you act as though it is extremely difficult for any group of people to make judgment calls about how people are using money, and so difficult that essentially the attempt should be ignored. Yet, people already are making judgment calls about how people are using their money, and as a result are making money off of those judgments. These people not only make these observations and create models for these behaviors, but then use the models to interrupt and manipulate the behaviors in ways that are more profitable for themselves and their shareholders. This is just how industrial capitalism became—invested in material and production—global capitalism—invested in speculation and evaluation. The very thing that makes the so-called free market a seemingly endless generation of wealth, you say is far too difficult for any group of persons to do. But they do it everyday: making mistakes in order to succeed, making success in order to have more opportunities to make mistakes and successes.
I do not see why you do not see this.
But, I take you you would say that the present inefficiencies, since people are dying for lack of access to health care, are due to state interference in the market?
Of course, as I had said some time ago on my own blog, where you say that these calculations are nowhere near being made by human beings, I agree: these calculations are being made by semi-intelligent algorithms whose econometrics are written and computed in the terabytes of data flowing through human-owned supercomputers. But humans still have access to the computations, and humans still make decisions based upon them.
Why the state cannot or does not have such machines working for them is not clear to me.
Charles, I agree that modern economics tries to function as a mathematical, algorithimic, modeling discipline. But, with the Austrians, I actually think this is a mistake that turns economists into statisticians. An interesting and useful occupation in many circumstances, but not properly on point.
Economists are supposed to be, first and foremost, "practical philosophers" who analyze resource allocation in light of the normal functioning of human nature. That's pretty much it, really.
So this doesn't really respond to my view. Your claim is that we in fact use all these whiz-bang statistical methods to understand how economic resources ought to be distributed all the time (and so why can the government not make use of the same whiz-bangery?), but I simply disagree. We use these methods to do no such thing.
"Thus, my point here is that you act as though it is extremely difficult for any group of people to make judgment calls about how people are using money and so difficult that essentially the attempt should be ignored. Yet, people already are making judgment calls about how people are using their money, and as a result are making money off of those judgments."
Well, no, that's not quite my point at all. Of course people can make 'judgment calls' about how people are using money. This is precisely what happens when, say, Minute Maid puts resources into producing a new fruit drink. The MM perceive some trend in the way consumers are spending their money on fruit drinks (people are buying less orange juice, and more cranberry juice), and so they respond to try to capitalize on that trend.
Sometimes these perceptions are right on, and sometimes they aren't. When they aren't, businesses sink, or at least have significant resources liquidated into other projects that the market will bear better. But this is not the same as what governments do when they make their "judgment calls"--the judgment calls are different in kind.
When someone in the market makes a judgment call and they fail, the end result is that the resources used in their failed attempt wind up utilized in other, more market-bearable projects. So, the temporary inefficiency yields a greater efficiency. The nature of the mistake also holds a key to the better way.
When someone trying to 'plan' the economy says "let's send more trains to Pittsburgh", he has no idea of precisely WHY everything has gone to pot. B/c more trains went to Pittsburgh, less grain gets to the factories in Minneapolis, and less families in California are able to afford flour. How on earth can the central planner discern that it was his decision to send trains to Pittsburgh that more or less led to this disaster (and of course a real economy is far too complex to even isolate one cause like this)?
The common socialist answer (not a pejorative; that's truly what these intellectuals were) to von Mises in the early 20th century in journals and things was that central planners can simply "mimic" the price mechanism of capitalism in one way or the other. Afterall, if capitalist societies have access to it, then why can't socialist societies? The answer is that socialist societies, by explicit intent, eradicate the price mechanism by undermining/terminating private ownership. When things are owned in common (whatever that actually means, in practice), then there is no price mechanism. Indeed, is this not one of the explicit desires of Marx himself? Imagine there's no money, it's easy if you try...Sometimes the socialist economy manages to piggy-back a bit off of the 'capitalist' economies (so, for instance, a Soviet planner might set prices on widgets based on the price they are going for in the U.S.), but this is hardly an argument for socialism.
"Or C: the choices were limited by corporate activities --engaging in cartels, for instance. Yes, no doubt you'd argue that this is an example of the market not operating "as it should." But, be that as it may, that's how markets DO operate w/out govt regulation (Sherman anti-trust law anyone?). In other words, markets can only operate as "free" markets when govt is there to regulate them appropriately."
Actually, I disagree with the standard account of the anti-trust laws. For a fun game, look at Standard Oil's market share BEFORE anti-trust and after. Anti-trust is just a way of letting the government be the cartel. And when that happens, we have problems indeed.
DiLorenzo's "How Capitalism Saved America" is a book that has been assigned in UGA intro to econ classes. I'm not claiming it is a mainstream account, but it's not simply the work of a self-publishing hack on his mother's internet connection either. His basic sketch of the history of antitrust legislation in this country provides a good summary of the contrarian view. I'm happy to debate this, of course; but sometimes bibliographies are helpful to know where someone is coming from.)
As to your choice C more specifically, what exactly is a 'cartel'? Unless I know precisely what you mean, I'm not sure what to say. My understanding of a 'cartel' has always been a group of producers who use coersion (outright physical violence and the threat thereof) to maintain control of the market. No libertarian agrees with this, and by saying that I don't mean that we just wring our hands and say "Well, sometimes the market just doesn't behave itself." Rather, cartels are not free-market activity. Again, that word 'coersion' gets in the way of that.
When thugs beat people up or otherwise threaten them into abandoning a market so they can have complete control, what on earth does that have to do with teh 'free market'? No libertarian says that such violence should not be punished. The definition of a 'free market', again, is a place where all exchanges are mutually voluntary. So a cartel, by definition, is not a free-market situation.
If Bill Gates starts blowing up Apple factories, then arrest him. He would deserve it! But this is not an issue of ecomonic philosophy.
If libertarians are against non-defensive coersion (and they are), then how is it a response to thier philosophy to say that sometimes people coerce? Right, they do, and libertarians are against that. As always, there are probably too many different working definitions of "free market" going around. We (me, you, everyone) need to be clear on this up front.
"Anti-trust is just a way of letting the government be the cartel. And when that happens, we have problems indeed."
First of all, I completely disagree, and this seems little more than the tired and typical "govt is bad by definition" argument. Second, even if I accept the argument that the govt is the cartel (which I don;t), at least the govt is accountable, via the electoral process; corporations are not. It comes down to this: either you can have a private monopoly/ cartel or you can have a public monopoly/ cartel. I prefer a public one.
" My understanding of a 'cartel' has always been a group of producers who use coersion (outright physical violence and the threat thereof) to maintain control of the market."
Well, w/ all due respect, I think you have a narrowly tailored view, which reeks of the straw man. A cartel is when a group of individuals come together and decide amongst themselves what price they will set for a good, how much of it they will produce etc. There doesn't need to be outright physical violence or threat thereof. Think OPEC, the airlines, and myriad others.
"Rather, cartels are not free-market activity."
Exactly, but w/out govt intervention you will get them, because that's how markets that are not regulated work. No capitalist likes competition; they'd prefer a monopoly. Only via regulation is our "free market" economy even made to be competitive. This is why the neoliberal argument about "freeing the market from regulation so that it may be more competitive" is a bunch of hooey. As paradoxical as it sounds, no govt regulation = no "free" market.
"The definition of a 'free market', again, is a place where all exchanges are mutually voluntary"
Meant to add this (sorry!): again, I think you have a very weak understanding of "voluntary". For something to be "voluntary" the two producers need to have equivalent political and economic power; this is rarely, if ever, the case in the market. To argue otherwise is to ignore vaste social structures (like class, which we don;t like to talk about in the US but is VERY real) which shape how two individuals even get to the marketplace in the first place.
Xon, you make me bonkers. Coocoo for cocoa puffs.
Anon, I asked for your definition of 'cartel' b/c I was genuinely curious. It wasn't a rhetorical trick on my part.
In any case, working with your definition (which is fine), you say you'd prefer a public monopoly/cartel to a private one, but I have no idea why this is. A public/governmental monopoly is enshrined and protected by the law. In other words, it has the law backing it up as the way things are going to be. There is little or no hope for change.
Private monopolies at least can be (and often are) undercut by competitors. If a bunch of producers get together and conspire to "set" a price higher than what the market really demands, then this creates an opportunity for other producers. Anyone who is willing to go against the cartel's wishes can have a field day. The question is, will the cartel be able to suppress them by force of arms/law? This is what we get with a government-sanctioned cartel. And that's bad, and libertarians are against it.
"A cartel is when a group of individuals come together and decide amongst themselves what price they will set for a good, how much of it they will produce etc. There doesn't need to be outright physical violence or threat thereof. Think OPEC, the airlines, and myriad others."
Airlines are only able to do what they do b/c they are constantly supported and bailed out by the government. So thy are not a good example of a "free-market" problem.
Likewise, OPEC does not own all the oil in the world. So they are free to act as a unified entity and "set" whatever prices they want, but this just means that anyone who is able and willing to refine oil and sell it for an even lower price than what OPEC has set is going to be in an even stronger position. The only way that OPEC's attempt to "set" the price is anything worth worrying about is if governments get their back and work against their competitors.
If the five biggerst dog food producers got together and decided that they are all going to charge 100 dollars for a bag of dog food, then those five companies are only hurting themselves. B/c people aren't going to pay 100 dollars for a bag of dog food. Trying to artificially 'set' the price that high is really just doing a nice favor for all the other companies who aren't in on the collusion. People are going to flock to them for their cheaper bags of dog food.
Unless, that is, the government comes in and forces people to only buy dog food from the colluding companies. That would, of course, be bad. As always.
"No capitalist likes competition; they'd prefer a monopoly."
Maybe, but governments are the same way. They prefer (and usually insist) that people only give allegiance to their laws. They want to be the masters. But, whatever capitalists might WANT, the better question is what can they actually do?
If I WANT a monopoly on the corn market, that's great, but how exactly am I going to a. make it happen, and b. sustain it? Some companies are able to pull off (a), at least briefly. But (b) is a much harder trick if there is no government helping you out.
"I think you have a very weak understanding of "voluntary". For something to be "voluntary" the two producers need to have equivalent political and economic power; this is rarely, if ever, the case in the market. To argue otherwise is to ignore vaste social structures (like class, which we don;t like to talk about in the US but is VERY real) which shape how two individuals even get to the marketplace in the first place."
Sure, this is the locus of the debate in the philosophical literature about libertarianism. What is the nature of "voluntary"? What is "freedom"? Etc. A debate more than worthy of our attention.
Quickly, I don't understand why you would think that two people who are in drastically different social classes cannot still engage in a genuinely voluntary exchange. The plebian wants a widget; the patrician sells widgets. The patrician offers the plebian the widget at a certain price. If the plebian is willing to pay that price, he does. If not, he tries to negotiate a lower price. Eventually they meet on some price, and the exchange takes place. What's the problem? How is this not voluntary?
"In any case, working with your definition (which is fine), you say you'd prefer a public monopoly/cartel to a private one, but I have no idea why this is. A public/governmental monopoly is enshrined and protected by the law. In other words, it has the law backing it up as the way things are going to be. There is little or no hope for change"
I prefer it for the following raeson: public monopolies are subject to political control by the people through the voting process; private ones are not.
"Private monopolies at least can be (and often are) undercut by competitors. If a bunch of producers get together and conspire to "set" a price higher than what the market really demands, then this creates an opportunity for other producers. Anyone who is willing to go against the cartel's wishes can have a field day."
Assuming they can get into the market --tried to start a car company or aircraft manufacturing company or airline recently? The start up costs essentially exclude anyone w/out huge financial resources getting into the market. We no longer live in a world of small-scale producers wherein anyone (well, most people) can get into the market as was the case when Adam Smith was writing.
"Airlines are only able to do what they do b/c they are constantly supported and bailed out by the government."
No, they're able to do it because it costs so much in terms of fixed capital to get into this industry that virtually no one can afford to do so, unlike in the days of the WRight brothers, Henry Ford etc. There will never again be hundreds of small-scale car companies competing in the market place as was the case 100 years ago --the entrance costs are just too great.
"If the five biggerst dog food producers got together and decided that they are all going to charge 100 dollars for a bag of dog food, then those five companies are only hurting themselves. B/c people aren't going to pay 100 dollars for a bag of dog food. Trying to artificially 'set' the price that high is really just doing a nice favor for all the other companies who aren't in on the collusion. People are going to flock to them for their cheaper bags of dog food."
Yes, but if they are the only 5 making the stuff then people will only have two choices: either buy at $100 or don't buy. Now, if we're talking about something like dog food there are always alternatives --buy scraps of meat from the butcher. If we're talking about other things (like healthcare) then there aren;t other options (well, I guess unless you count dying as an option).
"Quickly, I don't understand why you would think that two people who are in drastically different social classes cannot still engage in a genuinely voluntary exchange. The plebian wants a widget; the patrician sells widgets. The patrician offers the plebian the widget at a certain price. If the plebian is willing to pay that price, he does. If not, he tries to negotiate a lower price. Eventually they meet on some price, and the exchange takes place. What's the problem? How is this not voluntary?"
Ah, the old widget example that economists love to trot out as the exemplar. Sure, if widgets are a necessity for Mr Plebian and he can get them almost anywhere then there is a greater degree of freedom for him and he is more able to come "voluntarily" to the market place. But if Mr Plebian really needs a widget and there are only 1 or 2 places he can get them then the seller and buyer aren't coming to the market place as equals. This is why Adam Smith's arguments about small-scale producers of things like widgets and how the market operates made sense in an age of competitive capitalism when you had tons of small-scale producers making widgets but are severely outdated for an age of what some (like Baran and Sweezy) call "monopoly capitalism" in which manufacturing in many sectors is dominated by a small number of producers (and, btw, Adam Smith argued that competition only works when you have an interventionist state making sure the rules of competition are follwoed :-) ).
Yeah, Adam Smith was less libertarian than I am. Again, I'm more sympathetic to the Austrian school, which is critical of Smith and the "classical" school in a number of ways (Marx himself was working within the classical school in many ways, after all). So Smith's claim that markets "need" government regulation does not bother me in the least; I already knew he thought that, and I think he was wrong.
Obviously I do not personally have the resources to start up an airling (or auto manufacturing compnay). But that isn't really the point. The point is that there are wealthy people out there (either individuals or groups of individuals) who could, if they thought there was opportunity there, invest in starting up an airline. Southwest Airlines made a name for itself just ten years ago for doing things differently than the 'major' airlines. But my understanding is that since 9/11 (and maybe before?) Southwest has also agreed to suck at the government teat.
It IS difficult to go into certain sectors of the economy. But anytime there is a monopoly that will provide added incentive for someone who DOES have the resources to give it a try. Thousands of small-scale business ventures are not necessary.
"But if Mr Plebian really needs a widget and there are only 1 or 2 places he can get them then the seller and buyer aren't coming to the market place as equals."
I know what you are trying to say, but I still don't see why they aren't 'equals.'
First, what does it mean to say that Mr Plebian really "needs" a widget? Does this mean that it is necessary for his survival, or for some baseline standard of living? Okay, but then he should be relatively happy that someone has a widget to sell him, shouldn't he?
Second, if widgets are genuinely needed by Mr. Plebian, then they are probably needed by a bunch of other people too, right? If this is the case, then again there is a market with high demand ready to be taken advantage of by any producer who can beat the price of the current Patricians who sell widgets. Again, competition creates incentives to come up with lower prices, b/c that's a surefire way to increase profits. And this not only the case when there are a bunch of small-scale producers. The incentive for compeitition is there just as much (if not more) when there are only large, bumbling producers, too.
People need widgets, which means they are willing to pay a relatively high price for them. Which means there is money to be made in selling widgets. And there is even MORE money to be made if I can figure out a way to sell them for cheaper than the established producers currently do. Again, I'll make MORE money this way than if I just demand a higher price for my widgets.
But if the government comes in and says "Because widgets are a human NEED, we shall take over the distribution of widgets to the people," then the same number of widgets will cost much MORE money to produce and distribute. Which means the economy has less money left over for other things, which means everybody loses. And there will most likely end up being a shortage of widgets as well, which also means everybody loses.
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