Angner Politico
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1/25/14, 8:31 PM Health care policy libertarians go for - POLITICO.com Print View Page 1 of 2 http://dyn.politico.com/printstory.cfm?uuid=01CA87A3-264C-4EE2-A41C-1AA81FF1AD6A Health care policy libertarians go for By: Erik Angner June 25, 2012 09:56 PM EST Is President Barack Obama’s health care law compatible with free-market capitalism? “Obamacare” seeks to achieve universal health coverage by mandating that people not already covered must purchase health insurance — and makes it possible for all to do so by redistributing resources from the relatively affluent to the relatively poor. For critics like Rep. Louie Gohmert (R-Texas), this stinks of socialism. But is he right? For an authoritative answer, we can turn to Austrian economist Friedrich Hayek. This Nobel laureate is celebrated for his impassioned defense of capitalism and sharp criticism of socialism. Margaret Thatcher, for one, lauded Hayek’s book “The Constitution of Liberty,” announcing: “This is what we believe!” President Ronald Reagan was a fan; so is Rep. Paul Ryan (R-Wis.). Hayek’s writings are cited as a key inspiration for the tea party, which mobilized against “Obamacare.” Isn’t it obvious that Hayek would have slammed a law that redistributes resources and mandates health insurance? Actually, no. Hayek saw no incompatibility between capitalism and redistribution of resources. Hayek, for example, favored a minimum income for all. “There is no reason,” Hayek wrote, “why in a free society, government should not assure to all protection against severe deprivation in the form of an assured minimum income.” He insisted, “This need not lead to a restriction of freedom or conflict with the rule of law.” Closer to the topic at hand, his 1944 landmark book, “The Road to Serfdom” stated, “In the case of sickness and accident, … the case for the state helping to organize a comprehensive system of social insurance is very strong.” In this book, which returned to the best-seller lists after Glenn Beck strongly endorsed it, Hayek goes on to argue, “There is no incompatibility in principle between the state providing greater security in this way and the preservation of freedom.” How is it possible to endorse capitalism and redistribution at the same time? In a complex society, prosperity — indeed, survival — depends on people’s ability to coordinate their actions. Producers must be free to make more or less what consumers want. Capitalism works so well, in Hayek’s view, because it alone relies on prices to coordinate economic activity.
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Angner Politico
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1/25/14, 8:31 PMHealth care policy libertarians go for - POLITICO.com Print View
Page 1 of 2http://dyn.politico.com/printstory.cfm?uuid=01CA87A3-264C-4EE2-A41C-1AA81FF1AD6A
Health care policy libertarians go forBy: Erik AngnerJune 25, 2012 09:56 PM EST
Is President Barack Obama’s health care law compatible with free-market capitalism?
“Obamacare” seeks to achieve universal health coverage by mandating that people notalready covered must purchase health insurance — and makes it possible for all to do soby redistributing resources from the relatively affluent to the relatively poor. For critics likeRep. Louie Gohmert (R-Texas), this stinks of socialism. But is he right?
For an authoritative answer, we can turn to Austrian economist Friedrich Hayek. ThisNobel laureate is celebrated for his impassioned defense of capitalism and sharp criticismof socialism.
Margaret Thatcher, for one, lauded Hayek’s book “The Constitution of Liberty,”announcing: “This is what we believe!” President Ronald Reagan was a fan; so is Rep.Paul Ryan (R-Wis.). Hayek’s writings are cited as a key inspiration for the tea party, whichmobilized against “Obamacare.” Isn’t it obvious that Hayek would have slammed a lawthat redistributes resources and mandates health insurance?
Actually, no. Hayek saw no incompatibility between capitalism and redistribution ofresources.
Hayek, for example, favored a minimum income for all. “There is no reason,” Hayek wrote,“why in a free society, government should not assure to all protection against severedeprivation in the form of an assured minimum income.” He insisted, “This need not leadto a restriction of freedom or conflict with the rule of law.”
Closer to the topic at hand, his 1944 landmark book, “The Road to Serfdom” stated, “Inthe case of sickness and accident, … the case for the state helping to organize acomprehensive system of social insurance is very strong.”
In this book, which returned to the best-seller lists after Glenn Beck strongly endorsed it,Hayek goes on to argue, “There is no incompatibility in principle between the stateproviding greater security in this way and the preservation of freedom.”
How is it possible to endorse capitalism and redistribution at the same time? In a complexsociety, prosperity — indeed, survival — depends on people’s ability to coordinate theiractions. Producers must be free to make more or less what consumers want. Capitalismworks so well, in Hayek’s view, because it alone relies on prices to coordinate economicactivity.
http://www.huffingtonpost.com/2012/03/27/obamacare-socialism-louie-gohmert-steve-king_n_1383973.html
1/25/14, 8:31 PMHealth care policy libertarians go for - POLITICO.com Print View
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activity.
Because free-market prices are determined by supply and demand, they conveyinformation used by many individual buyers and sellers — which couldn’t possibly be heldby any one mind. But, as Hayek argued, the price system conveys this information only ifpeople are free to make their own decisions.
A system like Britain’s National Health Service is unacceptable, in this view, because itoffers health care outside the free market — at a price set by the government. In thisarrangement, the price system is displaced and can’t serve to coordinate economicactivity.
But it is perfectly possible to redistribute resources without interfering with the pricesystem — provided people are free to make their own decisions about how to spend themoney they get. Indeed, in a world in which resources are unevenly distributed, someredistribution would arguably improve the functioning of the price system, if theredistribution allows people otherwise unable to act on their knowledge to do so.
A health insurance mandate is somewhat harder to reconcile with Hayek’s vision, becauseit imposes restrictions on individuals’ ability to invest in whatever they desire. Yet it’s only aminor deviation from the Hayekian ideal.
For one thing, most people able to purchase health insurance usually do. One lawyerarguing the legal challenge admitted as much when she told The Los Angeles Times, “Candidly,it is not as easy as it sounds” to find a plaintiff for the case. If that’s true, the mandate doesnot interfere much with the price system.
Moreover, the mandate might be more politically palatable than the ideal Hayekianredistribution scheme, which would involve cash transfers that recipients can spendhowever they please.
Hayek himself was sympathetic to mandates. In “The Constitution of Liberty,” he wrote:“Perhaps there is also a case for making [health insurance] compulsory since many whocould thus provide for themselves might otherwise become a public charge.”
Not only is health reform compatible with free-market capitalism, but the man regularlycited as one of the 20th century’s greatest economists and philosophers of freedom mighteven have endorsed it.
Erik Angner is the author of “Hayek and Natural Law.” He is an associate professor ofphilosophy, economics and public policy at George Mason University.© 2014 POLITICO LLC
