Friday, October 5, 2012

Plans and Economic Reality

For all of the talk from Keynesians that their goal is to help the private economy "gain traction," Keynesianism ultimately is about central government planning, be it monetary planning, government spending, or regulatory mandates. The ultimate mantra of the Keynesian is this: Statism equals prosperity.

Thus it is that in the wake of the Obama debate debacle, Paul Krugman has decided to go to war...over dueling medical plans, and his argument is this: Obama has a better "plan" than does Romney, and if Romney says otherwise, he is lying. One has to understand that what Krugman is arguing is that these plans are going to perform exactly as they are written, and that requires a huge stretch of the imagination.

When one peels away the rhetoric about the dueling "plans," one finds that the central assumption is that government central planning works. In Wonderland, we are supposed to believe that the Obama plan actually will result in expanded coverage at lower costs? Why? Because Obama says so. With the Romney plan, things will not turn out well? Why? Because Krugman says so.

Never before in economic history has government planning done what Krugman claims ObamaCare will do: create more need-fulfilling services while simultaneously using fewer per capita resources. That is the heart of the debate, not which candidate has the better central plan.

Krugman can throw out all of the ex ante projections he wants, but the point is that by expanding the regulatory and confiscatory state, and employing an army of bureaucrats to see that all of the jillions of rules are followed to the letter, ObamaCare -- or RomneyCare II, for that matter -- ultimately will result in higher real costs of medical care. And as people find that the heart of ObamaCare's "cost-cutting" measures really means denial of medical choices for those who are not politically-connected, the ensuing "crisis" will bring demands for even more government control.

The regulatory state is quite predictable in its outcomes, yet people continually go to the same dry well because that is what the Progressives who essentially control all of our major institutions claim will "solve" the latest set of problems. Whether the OC or RC plans are implemented, in the end we will find that central planning from Washington will mean deterioration of medical services.

As I see it, the real issue is not the red herring of whether Mitt Romney told the Truth According to Paul Krugman. No, the real issue is that Washington is embarking on a journey that will have outcomes that are much different -- and much worse -- than what is being promised. Paul Krugman is politically-connected and he is wealthy; he won't have to worry about being denied care.

But those people who are not in Krugman's privileged category are going to find that not only will the government actively restrict their medical care, it will do it in an iron-fisted way. Central planning is central planning, and all of the rhetoric in the world cannot change that hard and sad fact.


Dennis said...

As a Canadian with nearly a lifetime of experience with socialized medicine, I will tell you that the inevitable outcome of Obamacare or Romneycare (which is merely Obamacare Lite) is going to be Canadian style healthcare service (lineups, delays, cancellation of treatment) at American style prices. The only reason why Canadian medical services appear cheaper is that we have a very different tort law system here, such that Canadian medical care providers are rarely sued.

Just wait until American trial lawyers figure out that the object of their lawsuits will be the guy with the deepest pockets in the land: Uncle Sam.

Calgacus said...

Obamacare might have succeeded in making the US system worse though. But the rest of the planet has a different experience of socialized medicine, backed up with statistics. Superior care, lower cost, fewer resources used.

In fact, one of the secrets of US economic success (relative to Europe) is that our crazy, wasteful health-care and other social welfare systems have been a source of Keynesian stimulus. WHAT IS THE AMERICAN MODEL REALLY ABOUT?: Soft Budgets and the Keynesian Devolution

Remember, when there is involuntary unemmployment, the usual state of a modern capitalist economy, waste is beneficial and efficiency is inefficient. Only when you have full employment do all the "Laws" of Austrian or neoclassical economics become valid.

That's what the Euro is all about - destroying the too-efficient, too-effective welfare states, that would have outstripped the USA if they hadn't been underspending even worse than the USA for 40 years, and creating a feudal bankster-owned economy.

Dan said...


You have clearly learned about Austrian economic theory from pundits.

As does your faith in the welfare state.

PS - (After re-reading your post, I'm fairly certain you don't even know what the word "feudal" means.)

Pulverized Concepts said...

Ah, the Keynesian central planners are what the macro-economy needs to create the land of bliss. Certainly my neighbor is happy to take my suggestions on when he should mow his lawn, who his daughter should marry, if or if not his pug should be neutered and I'm just as happy to seriously consider his ideas about what color to paint my house and what plastic animals I should tether in the yard. But neither of us has the coercive power of the state to mandate those thoughts. Why should some elected or appointed apparatchik have the right to structure our health care system in any way? The health care now in the US is a creation of central planning itself, will more of that planning make it even better?