Thursday, July 30, 2015

The immense cost of cutting off price information in health care

A National Post article explained how the simple act of informing surgeons about the price of some of the items they use can result in huge cost savings, and thus free up money for spending in more beneficial areas.  Unfortunately the article stopped well short of revealing the full importance of this realization.

In a free society the price of a thing is the indicator of its value relative to all other things.  All the individuals in society prioritize their values using the price integrating mechanism known as the free market.  In this way, millions of people with individual priorities have their say about what is important and what is not.

When a government acts to throttle (regulation) or totally block (monopoly) the price mechanism, the members of society lose the extremely valuable information provided by the price mechanism and thus loses access to the brain power of millions of human beings, substituting for it the opinion and dictates of a few bureaucrats.  No matter how smart the bureaucrats are, it is impossible for them to even come close to applying the reasoning power of the millions who are cut off from the thinking process by government interference.  

This is why a free society sees the price of the most valued things rise so that competitive attention is directed towards that specific area, resulting in higher production, higher efficiency and thus lower costs in the future.  Interference in the price mechanism is thus truly cutting off the values of citizens and leaving them unable to direct competition towards their preferred areas.  A good example in the medical field is laser eye surgery, an area that has seen little government interference and a mostly free price mechanism.  The quality of service has steadily risen while the cost and accessibility of the service has declined to the point where this life-improving treatment is available for just hundreds of dollars per eye.

To provide the best, lowest cost, most diverse market for health care the government must stop using its powers to coerce and punish the producers and consumers of health care services and return to protecting the rights of all citizens to participate and benefit from a free market.

Saturday, July 25, 2015

On being identified as an "enemy of humanity"

Dave: I was referred to a blog called Dialogues On Global Warming, where a friend of mine had been labeled as an "enemy of humanity" because he believes people who use global warming as an excuse for massive social change are mistaken.  In this case, he was pointing out some of the errors of replacing fossil fuels with wind power.  I decided to comment and then attracted a reply.  The dialogue is below.
A brief word on being an enemy of humanity. Energy from fossil fuels has provided the basis for virtually every advance in the quality of human life since the industrial revolution. If it was not for fossil fuels human life would still be full of darkness, disease, arduous physical labor, discomfort, poor nutrition and education, a lack of transportation and communication and a litany of other failings when compared to life today.
The Moral Case for Fossil Fuels is brilliantly laid out in the book by Alex Epstein. The overwhelming evidence of the dramatic benefits of fossil fuel energy is clearly laid out for anyone who takes the time to think and learn. If human life is your standard of value as it is mine, then you will understand the (currently) irreplaceable value of fossil fuel energy.
The scientists, entrepreneurs and industrialists who discovered, commercialized and mass produced this life-giving energy should be celebrated as heroes of humanity instead of being vilified. The true enemies of humanity are those who would force the use of expensive and unreliable energy upon us. By themselves in a free country wind and solar would occupy a niche market and it is only through force that they are more than a tiny fraction of total energy production. These forced initiatives reduce the freedom, choice, health and wealth of humanity, especially the poorest who are most in need of cheap industrial scale energy.
I'm well aware of this book and it is a perfect example of how the fossil fuel industry engages in deceit. The thing that has benefited people is energy, not fossil fuel energy. If we replace coal and oil with something else, people still get the benefits of energy. And, by the way, I find it interesting how you failed to mention the cost of that fossil fuel energy. Where is your concern about the mercury, arsenic, particulate matter, SO2 and other poisons? Why don't you mention all of the cancer, asthma, heart disease and many other ailments caused by fossil fuel energy? Did you show any concern for the environmental devastation caused by the fossil fuel industry?
Oh, please note who suffers the most from all of this - the poor. And, also note the fossil fuel industry has steadfastly refused to pay for the damage. Let the poor deal with it. It's there problem. Right?
Funny how all of that got left out of your message.

I did not evade the legitimate concerns of particulates and SO2 etc. The effects of these on human life are already included in the data on human health, wealth and longevity.  In "The Moral Case For Fossil Fuels" Alex Epstein demonstrates through clear, rational widely available data that as fossil fuel energy production rises so to does every important aggregate measure of human quality of life. People are healthier, wealthier and live much longer because humanity has developed energy from fossil fuels that leverages our ingenuity and ability to do work to improve our environment. Would you rather live in a feces-ridden, disease-filled, place with polluted air, water and food like the pre-fossil fuel medieval times where people burned anything they could find to survive, or a comfortable, warm, modern home built with, from and energized by fossil fuels and with access to a safe, inexpensive supply of food and water also provided by the use of fossil fuels? It is the poorest in society who benefit the most from energy production since access to energy creates a more level playing field in the economy, shifting emphasis from the ownership or control of land towards the use of your mind for further wealth creation. When it comes to the value of your mind, unless prevented by the force of other individuals or government, the only limit is the one you place on it.

Every source of energy we have found so far has some aspects which will seem negative when viewed from certain perspectives. The key is whether people decide such an energy source is presently their best choice, given the full context of their lives. When a population is poor (pre-industrial) they have little wealth and so must use whatever energy sources they can find. If they decide their lives are improved by the use of coal, net of the negatives of mining and inefficient combustion, then that is all they can reasonably do. It is immoral to expect such a population to use natural gas or nuclear when they do not yet have the wealth or knowledge to do so. The damage you refer to is not caused by the fossil fuel industry but by the choice of the individuals who comprise the population to use energy from fossil fuels as the source of preference in their lives. In a free country no one is forced to use a particular type of energy. The minor effects of fossil fuel energy production are a rational by-product of the overall improvement in our environment and as wealth grows we can even reduce or eliminate these.

It is critical to realize that it is only as their wealth grows with the production and use of larger scale energy that the choices available to people increase and their preference will shift towards energy production that has fewer negative effects such as air particulates. When they have enough wealth they may be able to and choose to use a totally non-polluting form of coal combustion or some as-yet undeveloped form of fusion energy. To ask a society to shortcut the logical stages of development is a massive evasion of economic and scientific reasoning and fact. 

In Bjorn Lomborg's book "The Skeptical Environmentalist" he showed a graph using United Nations data of air pollution versus per capita production. The data is shaped like a bell curve, meaning that as production rises with industrialization, air pollution rises. When per capita income reaches a certain level then pollution starts to fall again. This is perfectly rational and should be expected of all developing societies and energy technologies. 

Evading the fact that it is actually the dense, portable, efficient fossil fuels that have been central in the greatest boost in human life in all history is to evade an essential positive aspect of fossil fuels. Sure, let's replace coal with something else, but only when we develop such products in a free market with willing participants. To force people to use more expensive, less convenient, and perhaps even more harmful sources of energy (how much fossil-fuel-powered mining for rare minerals and associated refining, smelting and transportation is required to build a wind turbine of solar panel?) is to substitute your judgement for that of free individuals, in fact dictating what they must do and forcing them to pay for your choices while suppressing theirs. The result is the social system known as dictatorship. Some may prefer it but I certainly do not.

Wednesday, July 1, 2015

The injustices of March for Jobs, Justice and the Climate

A friend just made me aware of a political rally planned in Toronto that can be seen at the web site called March for Jobs, Justice and the Climate.  Having looked over the site it seems a good opportunity to explore some of the concepts used by the authors of the site and their misuse and even abuse of reason.

The notion of uniting the concepts of jobs, justice and global warming must surely rank as one of the greatest leaps of illogic of recent times.  Let's look at each of the three concepts briefly to see if there are rational links between them.

A job is something one earns by offering to exchange value for value with a willing trader - the employer.  A job is created only when both parties agree the contract will be mutually beneficial.  If one cannot find an employer willing to pay what you ask as compensation, the logical step is to lower your demand for wages until you are able to make a trade.  Of course, this is how things work in a free market, but we do not have that.  By dictating thousands of rules regarding employment, competing for wages and making it illegal for wage contracts below a fixed price, government massively distorts the market and creates unemployment.  Since there is an unlimited amount of work to be done to maintain and improve the human condition, only government intervention or an unwillingness to improve skills or be flexible on wage demands can create anything more than temporary unemployment.

Justice is the recognition of the facts of reality when it comes to judging the character and actions of men.  Justice means that a man receives what he is due and nothing more or less.  If a man earns a billion dollars through free exchange of values with millions of others, it is justice.  If a man takes one dollar from others through the initiation of force then it is an injustice.  The Naomi Klein's of the world invert the meaning of justice, often under the cover of package deals such as "social justice", which is really a demand for the massive initiation of force against producers for the benefit of non-producers.  As philosopher Leonard Peikoff states:

"Every man, they argue, is morally the property of others—of those others it is his lifelong duty to serve; as such, he has no moral right to invest the major part of his time and energy in his own private concerns. If he attempts it, if he refuses voluntarily to make the requisite sacrifices, he is by that fact harming others, i.e., depriving them of what is morally theirs—he is violating men’s rights, i.e., the right of others to his service—he is a moral delinquent, and it is an assertion of morality if others forcibly intervene to extract from him the fulfillment of his altruist obligations, on which he is attempting to default. Justice, they conclude, “social justice,” demands the initiation of force against the non-sacrificial individual; it demands that others put a stop to his evil. Thus has moral fervor been joined to the rule of physical force, raising it from a criminal tactic to a governing principle of human relationships."

With regard to jobs and justice, a proper relationship between these two concepts would be to recognize that an employment contract formed of free will by both parties is a just one and one that is formed when one or both parties is acting under force, especially the force of government, in an injust one.

Now to the connection between jobs and global warming, now euphemistically hidden under the package deal of climate change.  Economically, every person in the world could have a job instantly if we fulfilled the highest wishes of the carbon dioxide fear-mongers and banned all use of fossil fuels tomorrow, because every living person would be forced into immediate starvation, survival and protection mode.  Their supply of food, health care, transportation, education, communication, shelter and every other economic benefit of capitalism would cease within hours.  They would have a job (but no pay), one that requires 15 hour a day of effort and vigilance, yet still billions would die within months and civilization as we know it would end.  Philosophically, this would represent perfect justice - justice for having abandoned the great advances brought to us and the great virtues enabled by the discovery and construction of industrial scale energy systems.  Such devastation would be justice for having abandoned the highest virtue, the one that literally defines us as humans - rationality.

The link between justice and global warming the alarmists wish to draw is that they wish to use the excuse of planetary salvation to justify the massive use of force against innocents.  In their view, the people who have created wealth are the ones guilty of encouraging energy production and thus of, in the carbon dioxide zealot`s view, of destroying future life on Earth.  The fact that these people almost certainly created their wealth by producing goods and services highly valued by many fellow humans and that they are innocent of any action to violate the rights of others is immaterial to these people.  Under their view of justice, the producers should be shackled and forced to comply with the wishes of anyone who claims the right to do so on the basis of their not producing wealth.  This is the system brought to its fullest expression in the former Soviet Union and China, which we know resulted in the suppression and devastation of human life on an unprecedented scale.

The proper way, the just way to unite the concepts of jobs, justice and climate as they are distorted by the Naomi Kleins of the world would be to set aside a large piece of un-populated but fertile land and invite everyone on Earth who wishes to participate in a new society to move there without bringing any of the fruits of our fossil-fueled industrial civilization with them.  Justice would demand that we ask these people to put up or shut up - to demonstrate they can develop an advanced civilization and persuade the rest of the world to join them, or to cease their bleating about capitalism, industrialization and the associated marvels of modern energy systems.  That would be true justice.