February 17, 2004

#145: Health care is socialism's last stand

P. Krugman

Most observers would agree that the battle between capitalism and socialism during the last two decades was won by capitalism. As a means of developing, producing and distributing goods and services it proved to be far superior to socialism, and as a medium of technological innovation and adaptation to changed economic circumstances it was unmatched. So that debate is over, right? Well, not quite. When it comes to issues concerning health care socialism is alive and well. Apparently, on such important matters, the market system is not to be trusted. Thus, while no one would suggest we need universal, affordable BMWs, no politician can deny we need universal, affordable health care. The fact that the policies required to provide free BMWs would destroy a company seems lost on those advocating similar policies to care for our health.

Because of this dichotomy, Paul Krugman in The Health of Nations (02/17/04 can, in one sentence, acknowledge that US health care is the best in the world and then, in a subsequent sentence, imply that health care should be affordable to all and then, in yet another sentence, claim that the means to get from here to there is to crack down on prices received by drug companies and health insurance companies. There's not a word about the returns on investment that are necessary to keep financing innovations in health science and technology, or drug research. In fact, an apparatchik in the old East Germany could not have put it better. Somehow when it comes to health care they get away with it.

There is a sensible, market-based solution to the US health care problem and the Bush administration is sort of moving down that sensible road. But since Krugman says he will "talk more about alternatives for health care in future columns" we will wait and see how his solutions evolve before discussing this further.

But one thing is clear. Health care is socialism's last stand.

[The Truth Squad is a group of economists who have long marveled at the writings of Paul Krugman. The Squad Reports are synopses of their discussions. ]

Posted by John Weidner at February 17, 2004 7:28 AM
Weblog by John Weidner