Health Care From Adam Smith

Emmett Tyrrell
Thursday, July 10, 2008

WASHINGTON -- I am back from travels in old Europe and have survived in the pink. Readers of this column will recall that during the past three weeks, I have been traveling through France and England. Add Scotland to the pilgrimage. In Edinburgh last weekend, I participated in the unveiling of an Adam Smith statue, prominently placed near the top of the famous city's Royal Mile. Smith now overlooks much of this city, in which he -- along with other members of the Scottish Enlightenment -- thrived. He is referred to often as the founder of economics. He certainly is the first advocate of free markets and one of the most famous. Now a heroic statue of him overlooks one of the great tourist spots in Europe. Thousands of tourists will confront him as they parade up to Edinburgh Castle. While there, I witnessed dozens of individuals having their pictures taken at the great man's feet.

Raising that statue would have been unthinkable a generation ago. The Edinburgh city council would not have heard of it. Smith and his ideas were supposedly passe. Now, of course, market economics has swept the world. Even old socialists, such as the Chinese and the Indians, believe in markets and allocate their capital and their energies according to the markets' demands. Marx and Engels are has-beens. The only Marx we admire today is Groucho.

I say I survived my travels in the pink because while in France and the U.K., I never had to avail myself to any aspect of their health care systems. Doing so remains perilous. Their systems remain socialist, or -- to use modern American liberals' euphemism -- "single-payer." The government pays, and the patient waits and waits. This is a point that never is mentioned by campaigning American Democrats, most notably the Prophet Obama. Liberal Democrats argue that health care costs are relatively low in Europe and quality care is superb -- another government-run miracle. "They don't do miracles," responds Regina Herzlinger, author of "Who Killed Health Care? America's $2 Trillion Medical Problem -- and the Consumer-Driven Cure." How are European medical costs kept low? Herzlinger explains: "They do it through rationing care to the sick. That's an unacceptable way to control costs."

Thus, I am glad to be home and not waiting in an emergency room, say, in London. Health care officials in Britain discovered that patients were lingering in emergency rooms for days before being treated. Incensed by this, the bureaucrats magisterially ordered that emergency room patients be treated within four hours . The consequences were reported in the Daily Mail. Hundreds of "seriously ill patients" simply were kept longer in ambulances before being admitted to the emergency rooms. Hence, there were fewer ambulances available for subsequent emergencies. As Herzlinger notes, the consequence of socialized medicine is "rationing."

Since President Harry Truman first envisaged socialized health care (sorry, we now say "single-payer" health care), the liberal wing of the Democratic Party sedulously has championed it as though nothing in the realms of economics or social innovation has changed. Milton Friedman, another illustrious free market economist in the long line extending from Smith, noted in a 2001 essay in The Public Interest that technological leaps in agriculture, transportation and communication have lowered prices and raised quality. Yet such technological leaps in medical technology have been accompanied by higher rather than lower costs. The reason, he explained, was single-payer health care -- that is to say, government-sanctioned employer-based health insurance, Medicare and Medicaid. These are not market solutions, so costs have skyrocketed.

Friedman estimated that had health care expenses been paid for according to free market principles, as they were in the first half of the 20th century -- before government involvement -- today they would be less than half what they are, and the quality would be no less than it is today, possibly better. The alternative to the European heath care system with its long waits and rationing is to seek market solutions, such as health savings accounts and increased competition among health insurance carriers unburdened by stat-imposed mandates.

The likely Republican presidential nominee, Sen. John McCain, proposes a health care package that would contain many of these alternatives. Modern-day heirs to the tradition of Smith have even more ideas. Yet as Philip Klein writes in a comprehensive report on the health care debate in the current issue of The American Spectator, conservatives simply have been lazy about taking up the debate. As he says, "The persistent indifference of conservatives will virtually guarantee that government will devour the private market for health care." It is time they take up the debate and argue for the same kind of free market solutions to health care that Adam Smith's acolytes have applied to other aspects of the economy around the world.