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Krugman on Obamacare: Almost Everyone Is Better Off When Gov’t Uses Force to Redistribute Wealth

by Aug 21, 2013Articles, Health Freedom0 comments

It is abundantly evident that Krugman's claims that somehow legislating away the free market and trying to centrally plan how the health care industry works can make health care so cheap that everyone can afford it is a fantasy.

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Commenting on the so-called Affordable Care Act, a.k.a. Obamacare, Paul Krugman writes:

At the most fundamental level, you can’t guarantee adequate health care to everyone unless the people who don’t need help right now — the young, healthy, and affluent — are induced, one way or another, to contribute to the care of those who do need help.

And by “induced”, he means coerced through the threat of penalty for not participating in the market for health insurance. So young people who eat a healthful diet and exercise must be forced against their will and their own financial interests to purchase insurance in order to subsidize the high costs of health care for others, including those who require a lot of care due to their unhealthy lifestyles. This is one illustration of how, rather than doing anything to actually address the underlying reasons for the high costs of health care, Obamacare just tries to shift the costs around in ways that will only continue to exacerbate the underlying problems, such as by creating even more perverse incentives.

Krugman goes on to suggest that this “redistribution” of wealth “makes almost everyone better off” and that “claims that somehow unleashing the magic of the marketplace can make health care so cheap that everyone can afford it” are “fantasies” because “There is absolutely no reason to believe that this is true.”

And yet, it is abundantly evident that Krugman’s claims that somehow legislating away the free market and trying to centrally plan how the health care industry works can make health care so cheap that everyone can afford it is a fantasy. There is absolutely no reason to believe that this is true.

The incentive of the market is for health care providers to give high quality care at low prices, since that is how they would make a profit. Government intervention in the market has only created perverse incentives, as I’ve frequently expounded upon, which is why the costs for health care are so horrendously high in the first place. The truth of the matter is that there is plenty of reason to believe that allowing the free market to work would help to fix the plethora of problems government intervention has created, which the bureaucrats judge requires even more legislation to fix, which in turn requires even more legislation to fix, and so on.

The bottom line is that government bureaucrats do not know better than the free market how better to efficiently direct scarce resources to productive ends, since absent the market’s pricing system, decisions about how to direct resources must be made at best arbitrarily, assuming good intentions. Furthermore, in a free market, resources are efficiently directed to productive ends through voluntary exchange for mutual benefit, while, with government intervention, resources are expropriated through the use or threat of force from one group of people to be redistributed to another, and so, if we hold as a moral principle that theft and violence are wrong, we must oppose interventionism and favor free markets.

Krugman closes with the prediction that “Once it’s in place, most people will see real benefits”. He’s made similar predictions before, such as the one I commented in this post:

Paul Krugman say of Obamacare that “pretty soon many Americans will have first-hand knowledge of how the system really works”.

Well, there’s one thing, at least, I can agree with him on about the so-called “Affordable Care Act”. Although, he means it is going to be really super-duper. I’ve written quite a bit about why he is wrong.

Here’s another post where I explained why Krugman is wrong to say that Obamacare is “probably going to work”.

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