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Friday, October 20, 2017

Hayek Warned Us About Obamacare

It is impossible to plan for an entire national economy comprised of individual beings.

What would Hayek say if he was around to see the ongoing fiasco that is Obamacare? Well, for one thing, he probably wouldn’t be surprised, but he would be deeply saddened. And while he could never know the specifics of our country’s progressive strides towards universal health care, he managed to predict the overall situation quite perfectly in the fifth chapter of The Road to Serfdom.

It is impossible to plan for an entire national economy comprised of individual beings. Each has different goals and desires, making one-size-fits-all economic policies unfeasible, to say the least. It’s also an expensive endeavor to attempt.

Yet, the Affordable Care Act sought to do just that. Economics and logic went out the window in favor of the supposed “general welfare” of the American public. So long as the end result was increased–if not universal– health coverage, then the means were rationalized.

And while it was fought by many who had read Hayek and heeded his warnings, Obamacare was approved by both chambers of Congress and was eventually upheld as constitutional by the SCOTUS.

Advocates championed this as a democratic victory. The American people had finally taken control of their health care back from the greedy, capitalist health care sector.

But just as many free market economists had predicted, Obamacare was a complete disaster both economically and democratically. And while many have been shocked by the implications of giving the government so much power over an entire market sector, Hayek warned of these dangers long before Obamacare’s conception.  

Obamacare took away the ability to choose, and replaced it with coercion.

The Individual Gets Left Behind

Among other things, Obamacare claimed to know the health care priorities of every single American. From dictating what coverage must be provided by employers to fining individuals for not choosing to buy health insurance, Obamacare took away the ability to choose, and replaced it with coercion.

But even worse, it cost the taxpayer $42.6 billion in fiscal year 2017 alone. So not only did this lead to increased government control over health care, it was also a financial black hole. And it completely neglected the individual consumer by assuming that a small body of experts was better suited to make these intimate decisions in their stead.

But how could they be? Each of these alleged health care experts is incapable of knowing the wants and needs of every single American.

In the chapter fifth chapter of The Road to Serfdom, “Planning and Democracy” Hayek writes:

The point which is so important is the basic fact that it is impossible for any man to survey more than a limited field, to be aware of the urgency of more than a limited number of needs. Whether his interests center round his own physical needs, or whether he takes a warm interest in the welfare of every human being he knows, the ends about which he can be concerned will always be only an infinitesimal fraction of the needs of all men.”

And sure enough, health care consumers were mad because they were not getting what they wanted or needed. President Obama’s infamous line, “If you like your plan you can keep your plan,” turned out to be nothing more than rhetoric. In fact many Americans lost their plans altogether, or couldn’t afford to pay the increased premium costs.

Many advocates of state-run health care excused this blunder by suggesting that perhaps this was in the people’s best interest. Maybe their original insurance premiums were insufficient, at least according to the new government standards. Perhaps Obamacare was doing these health care consumers a favor by stripping them of their prior coverage.

But even though the facts were staring every single American in the face, many still believed these “insignificant,” shall we say setbacks, were worth the result of increased national coverage.

And to be fair, there was increased national coverage. Fining or “taxing” citizens for not purchasing health care works as a powerful incentive. But it stifled individualism.

Anyone who dared to speak out against the state’s intervention in the health care industry was quickly made to feel selfish. Clearly, if you weren’t in favor of government interference in health care, you were unconcerned with what happens to those who can’t afford coverage.

Consequences be damned, if the desired end result of increased coverage was eventually obtained, that was all that really mattered.

But opponents of Obamacare are hardly selfish. They just understand that planning for an entire nation is an impossible task. The individual always loses.

As Hayek wrote:

This is the fundamental fact on which the whole philosophy of individualism is based. It does not assume, as is often asserted, that man is egoistic or selfish or ought to be. It merely starts from the indisputable fact that the limits of our powers of imagination make it impossible to include in our scale of values more than a sector of the needs of the whole society, and that, since, strictly speaking, scales of value can exist only in individual minds, nothing but partial scales of values exist – scales which are inevitably different and often inconsistent with each other. It is this recognition of the individual as the ultimate judge of his ends, the belief that as far as possible his own views ought to govern his actions, that forms the essence of the individualist position.

The Problem with Democracy

Unlimited democracies, will always be the enemy of individualism.

It is odd that proponents of Obamacare often use the “greater social good” as their excuse, since the implementation of a government-controlled health care system necessarily leads to a breakdown of social order, or rather, a crackdown on individual liberty.

Hayek understood this far too well. But acknowledging this point was almost unavoidable in Hayek’s time since the world watched in horror as European empires sacrificed the individual in the name of nationalism.

But if it was difficult for Hayek to get this point across to others in his day, even as WWII was unfolding, it is not hard to understand how those in 2017 could easily forget and dismiss these historical lessons. Though this hardly makes it less frustrating.

When opponents of universal health care policies voice concerns over the power Obamacare gives a very small group of people, they are dismissed as hyperbolic and irrational. Clearly, this is what the people wanted, and needed! Those with hesitations should consider the great strides Obamacare has given people. If not for this intervention, the breakdown of the health care system would have resulted in chaos to the consumer. This is the only policy suited to meet the needs for the greatest number of people!

Of course, Hayek spoke to these fallacies too:

The fashionable concentration on democracy as the main value threatened is not without danger. It is largely responsible for the misleading and unfounded belief that, so long as the ultimate source of power is the will of the majority, the power cannot be arbitrary the contrast suggested by this statement is altogether false: it is not the source but the limitation of power which prevents it from being arbitrary.”

But this power is absolutely arbitrary and untamable. Obamacare ushered in a new era of increased state control and broke down constitutional “limitations” by increasing the scope, and thus the role of the federal government in healthcare. The rule of law was demolished, or at least broadened.

Not to mention, procedural rules were broken or bent in order to ensure its passage. “We have to pass it to see what’s in it,” Nancy Pelosi famously said when many members of Congress were enraged to have been given an absurdly long bill and only a short time to actually attempt to read its contents.

But again, Hayek predicted all this too:

And to make it quite clear that a socialist government must not allow itself to be too much fettered by democratic procedure.”

And make no mistake, a socialist government is essentially what a post-obamacare America is. And while Trump has made some rollbacks, the government will continue to encroach on the health care sector, which is precisely why constant vigilance is of the utmost importance. It’s also why everyone should read Hayek.

“The cry for an economic dictator is a characteristic stage in the movement toward planning,” Hayek astutely says. Whenever the people, or perhaps just the congressional leaders who claim to speak on their behalf, assert that economic or social chaos is coming, they often relinquish their sovereignty, or do not even realize it has been taken from them until it is already gone.

In theory, democracies are supposed to safeguard the will of the people. And to be sure, democracy on its own is not necessarily negative, or at least it doesn’t have to be according to Hayek.

Hayek ends this chapter by arguing that a democracy, adequately limited in scope can serve as a safeguard to the individual. But unlimited democracies, will always be the enemy of individualism. And unfortunately, our real world experiences with democratic societies have proven to have more of a tendency towards the latter.

As Hayek says:

Democratic control may prevent power from becoming arbitrary, but it does not do so by its mere existence. If democracy resolves on a task which necessarily involves the use of power which cannot be guided by fixed rules, it must become arbitrary.”

  • Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.