From: starr@genie.slhs.udel.edu (Tim Starr)
Subject: Re: HIAA and Reform
Organization: UDel, School of Life & Health Sciences
Date: Fri, 18 Dec 1992 11:59:39 GMT

In article <92352.184901DGS4@psuvm.psu.edu> DGS4@psuvm.psu.edu writes:
}Physicians and public officials agree to limit the number of residency slots
}because it maximizes their utility.  Med school deans and all others involved
}agree.  A private rational decision which has created a government act.  Where
}is the coercion?

If public officials agree, then it's no longer a private decision.  However,
there's no State act here if the schools aren't legislated into compliance.

}>coecion are free-market.  Those which are done with it aren't.
}>
}>However, there are two further comments to be made: 1) David Friedman
}>argues precisely on public choice grounds that libertarianism will tend to
}>be favored; and 2) public choice theory assumes economic self-interest as
}>sole motivation for human actors, which is questionable.  Many are moved
}>by other factors, such as ethical considerations.  If most thought it
}>wrong for the State to intervene in the economy, and this moved them to
}>oppose it, then this would lend support to libertarianism.
}
}Libertarianism will be favored?  over what?  Am I missing something?

Yep, a whole book, which I don't have at the moment.

}Public choice theory can adapt to any goal of an economic actor (and has
}been in many cases).  In any case, many rational, informed people like me,
}who have thought long and hard about these issues do want to State to
}intervene.  I daresay we might be a majority.  Theoretically, you may be
}right.  Practically, I think even a libertarian state would be under constant
}pressure to exapnd, and would be unable to resist it.

Informed people who've thought long and hard about licensure and these other
issues are by no means a majority of the US population, sorry.  I think
you're equating this group with those who merely support statist intervention
on an uninformed basis.

}>}>I HIGHLY suspect that the crux here is the "efficient market" definition.
}>}>Care
}>}>to explicate this assumption?
}>}
}>}It is not really an assumption, but a definition.
}>
}>The assumption is that this is the standard for the evaluation of policy.
}
}It is one standard that people have used to argue against state intervention.
}It is one which is often used by proponents of free-markets.  If you are
}using a different one, please explain it to me.

As I've already said, I'm currently learning the Austrian critique of the
Perfect-Competition/General Equilibrium theories.  As a beginning student, I
can't articulate it as yet.  However, I do know where to find it; in the
sources I've already mentioned.

BTW - my understanding is that it originated not out of any desire to support
or oppose State policy, but in an attempt to understand the economy.  It
was criticized by the Austrians when it originated in the early 20th century,
it's been criticized since by them and others.

}>An efficient market system
}>}is one in which marginal benefits are equated to marginal costs.
}>
}>What?  Please forgive me, but I still don't get it.
}
}An efficient market system is one in which the ratio of marginal benefit to the
}consumer (in utility or satisfaction) from consumption of goods is
}equal to the ratio of marginal costs or price of those goods.  Producers in
}the system equate the ratio of marginal productivities of inputs to their
}prices.  In layman's terms, given the constraints of income and technology
}at a given time, consumers and producers are doing the best they can.

If a ratio can be expressed as a fraction, with consumer satisfaction on top,
what would be on the bottom?  How would the other ratio be expressed as a
fraction?

}>This last is also something I still don't get.  By what mechanism?  I don't
}>get graphical curve explanations very well.
}
}Well, I haven't tried graphs (and I'm not willing to type them in).  I'm
}not willing to type in the calculus either.  My verbal explanations appear
}to have fallen short. I'm at a loss.

Don't type graphs!  I won't get 'em.  I'm terrible with graphs.  You've
used graphical terms, though, and I haven't gotten 'em.  I don't even know
calculus, so it wouldn't do any good to try that.  I'm at a loss, too.

}>which might increase
}>}prices as costs fall, because it might increase the monopoly power
}>}of firms by raising search costs, thus reducing search.  Licensing
}>}might also provide consumers with an indication of quality.  On net,
}>}which do consumers prefer?  It seems to me that you are arguing that
}>}the rich and the physicians impose this policy of licensing on the
}>}rest of us. Yet, I see little indication that many Americans want to get rid f
}>o
}>}the licensing system.  I'm inclined to believe that the relationship
}>}between physicians, the rich, and the state is reinforced by an agreement
}>}by many other consumers that licensing provides benefits beyond costs.
}>
}>I see other factors which I think have greater significance: many have
}>bought the rationale for licensure, incorrectly in my opinion, and there's
}
}Sorry, but I believe that if enough people really oppose a policy
}they can change it.  I don't even see people very interested in it.
}I don't think you can fool so many people for so long without some
}underlying problem having to do with uncertainty, for example.

I believe this, too, but don't think this falls into this category.  However,
polls have shown that most people support tax cuts, yet they've been getting
increases.  How do you explain this?  Not enough of a majority?

}>}I would argue that
}>}the libertarian conclusion that lowered costs=more consumer welfare
}>}applies primarily to a
}>}hypothetical world of perfect competition
}>
}>I'm certain this isn't a shared assumption.  "Perfect competition" is not
}>well-liked amongst Austrian economists.  I'm still learning about their
}>critique of it, though.
}
}True, though it sometimes seems to be that Austrian economics somehow
}reaches nearly identical conclusions as though who use perfect comp.
}models.

Yes, I've noticed this, too.  It seems to me that what's going on is that
some Austrian principles are being implicitly relied upon.

}>To you, they're distortions.  To me, they're general conditions of human
}>existence.  Intervention by the State distorts.
}
}You say tomato..etc??

Yep.

}>}To me the government policies reflect not only attempts by private
}>}parties to capture profits through legal restrictions, but attempts
}>}by consumers to create social structures that deliver welfare in
}>}areas when markets do not (Arrow's "Uncertainty and Welfare Economics
}>}of Medical Care) meet expectations or desires.
}>
}>You posit much more power in the hands of consumers as voters than I.
}
}Yes, I'm not big on believing that everything government does is
}only on behalf of some special interest.  I think that many minor
}voices play a role, too.

Then how do explain the Department of Agriculture's price support programs,
the Department of Education, etc.?  BTW, you're mistaken to think that I
exclude the little guy from playing any part; I just exclude him from any
significant part.  If he was significant, he wouldn't be a little guy.

}>}The arguments of libertarians about the removal of legal restrictions
}>}IMHO fails to address either the underlying distortions or the
}>}possibility that the legal restrictions may, in fact, reflect consumer
}>}desires.
}>
}>Consumers want deviant medical practitioners to be persecuted?  Tough.
}>Nazis want Jews persecuted, too.  Violations of individual rights are
}>impermissible.
}
}Consumers cannot take legitimate, collective, constitutional action to protect
}themselves from fraud and negligence in those cases when a tort system
}is not doing the job?

Sure they can.  But constitutional action excludes licensure, among other
things.  It violates the presumption of innocence, freedom of contract, etc.

}Are people allowed to establish rules and laws in society which may limit
}individual freedom if it also assists them in reducing uncertainty,
}limiting fraud, reducing negligence. etc.?

Yes, under tight constraints in the USA, those of the takings clause of the
5th amendment: "nor shall private property be taken for public use without
just compensation."  Takings must be for a public use, not a private one,
and the victim of the taking must be compensated in full.  Licensure, for
example, takes from the poor to subsidize the searches of the rich, thus
violating the second condition.

}>I'm working on this, I'm working on it.  Haven't come up with an answer yet,
}>but apparently the only libertarian proposal there is is Epstein's "Theory
}>of Strict Liability," which I know I've mentioned previously.
}
}Thanks for the reference.  I can certainly say that, unlike some netters, you
}always give me a few leads to track down for more information.

I try to support my arguments with evidence from the relevant literature.  I
wish more people did this, like you do.

}Ignore hypotheticals:
}What I am saying is that there exist several systems with significant state
}intervention which appear to outperform the U.S. system along several metrics.
}I would agree that measuring this comparative performance is still a difficult
}task.  I don't see any systems in the past or present with less "coercive"
}elements which did or do better.

Yep, and it's up to me to bear this burden of proof, so I'll get back to you
after I've done some research.

Tim Starr - Renaissance Now! - Think Universally, Act Selfishly
starr@genie.slhs.udel.edu

"True greatness consists in the use of a powerful understanding to enlighten
oneself and others." - Francois Marie Arouet Voltaire
Newsgroups: talk.politics.medicine