By Keith Nobles
I am a big believer in equilibrium.
What is equilibrium? Equilibrium is what two or more parties voluntarily agree to. Equilibrium cannot occur if a party is being forced to do something, being prohibited from doing something, if they are being regulated in how they must do it, or penalized or subsidized for having done it.
One of the most valuable pieces of information acquired via equilibrium is price discovery. Simply put, price discovery is where a buyer and a seller voluntarily agree on a price and a transaction occurs.
A free market invites competition and rewards those who can make the most customers happy and satisfy their needs and desires.
A basic problem with socialism is absence of price discovery and that there is no reward for making customers happy and satisfying their needs and desires. Indeed making customers happy and satisfying their needs and desires is not even a recognized component of the socialist model and the socialist model contains no mechanism aside from Molotov cocktails and firearms for the customers to rectify their dissatisfaction.
Price is important because in a free market the price is primarily a result of supply and demand.
Price indicates where demand is high and where demand is low. If price is high and it correlates to demand being high then it is an indication of where resources should be placed. Conversely, price informs as to where demand is low or a market is saturated and where resources should be reallocated.
Price discovery allows producers and suppliers to know where their resources should be applied in order to satisfy market demand.
Socialism and government central planning has no mechanism to discover a market price, consequently it has no method of adjusting to demand. With socialism, the allocation of resources is a product of a bureaucrat guessing at what demand may be and allocating resources to comply with the bureaucratic guess.
Some of those guesses may be more educated than others but they are still a guess.
Bonus: I am not even discussing the inevitable corruption in socialist systems when bureaucrats are provided this level of life-and-death decision making.
People who have experience with Indian Health Services or the Veterans Administration have experience with how wrong bureaucratic guessing can be when it comes to healthcare.
People often confuse money spent with the quantity and quality of government-controlled goods and services but those are typically secondary factors, the primary factor being the bureaucrats who allocate resources are guessing at what demand may be. Politicians for their own nefarious reasons often encourage this confusion.
This is just one of many reasons that socialism is inefficient and always leads to a lower standard of living followed by poverty, misery and death.
In these scenarios demand exceeds supply because at the end of the day, the bureaucrats are simply guessing and they will inevitably guess incorrectly and their guess placed insufficient resources for the demand. Conversely, the bureaucratic guessing may place an over-abundance of resources in an area where there is little demand.
In practical terms, it comes down to how many people will require the resources to treat kidney disease versus how many people will require the resources to treat lung cancer or how many apples people want versus how many peaches.
An inaccurate guess, no matter how minor the inaccuracy, will mean that people will not get what they desire, will needlessly suffer and perhaps even die.
Another problem with socialism is that government inevitably institutes price controls. Government institutes price control so, when they have guessed incorrectly and demand outstrips supply, they do not go broke covering the explosion of healthcare cost inherent when they guess wrong and there is a shortage in a particular area.
Price controls create shortages. That is Econ 101.
In socialism shortages are inevitable, both via price control and bureaucratic guesses about future demand.
This is why the United States welcomes tens of thousands of visitors each year from other countries that come to America seeking healthcare that their single payer system in their home country cannot provide. If you have the financial means and your choices are to come to the United States and pay out of pocket for healthcare or stay home and risk dying while you await a bureaucrat to make the appropriate guess so you can live, you come to the United States.
There is a beauty to the free market and an efficiency unmatched by central planning. Part of that beauty is in price discovery and the ability to obtain information from price and allocate resources appropriately in near-real time.
Bureaucracies do not operate in that way and central planning destroys price discovery, hence all of the vital information one would gather from price is unavailable to the bureaucrats who are doing the planning.
Without price discovery based on what people are willing to pay then you cannot know demand and allocate resources to meet the demand. Central planning is central to socialism. It cannot exist without central planning.
The counter-argument is something akin to “healthcare is a right, everyone should have healthcare.”
Let us look at that. This is somewhat of a bait-and-switch argument to proclaim that healthcare is a right because it is premised on the only method of attaining universal healthcare being single payer and, as I have already detailed, obtaining the actual healthcare in a centrally planned system must be a hit or miss proposition due to the inability to accurately forecast demand.
Charity provides the alternative to single payer. Charity preserves price discovery because it is voluntarily assuming the responsibility for payment on behalf of someone else. In a charity model you are much more likely to actually obtain the needed healthcare due to the preservation of price discovery than in a single payer system.
The advocates of single payer will argue that charity is not a guarantee that anyone will step in and pay on your behalf while conveniently ignoring single payer does not guarantee actual healthcare.
The bedrock here is that the conspicuously compassionate advocates of socialism are actually arguing that they will not step up and voluntarily help their neighbor, that they will only help if they are forced to help via taxes being involuntarily taken from their paycheck.
This is the absurdity of the conspicuously compassionate argument for socialism – that they will refuse to help voluntarily but will help if forced to at the point of a gun.
The other societal benefit to the charity model is when people must rely on each other rather than the government they treat each other better.
We can certainly benefit from people treating each other better.