This is an excellent article that exposes how little some people like Michael Moore think about the systems they consider corrupt and unworkable. It appears that Mr. Moore is so consumed with an anti-market bias that he hasn't really considered the true causes of the problem with healthcare in America. He isn't the first person to have problems with an anti-market bias, nor do I suspect he'll be the last.

Michael Moore Confirms that Government Health Care is Sicko
by Diana M. Ernst, Pacific Reserach Institute

Michael Moore showed up in Sacramento last week to promote his film Sicko. Senator Sheila Kuehl hailed Moore as a prophet of truth to the American people but the filmmaker is so mired in his own health hysterics that he regularly contradicts himself .

He rails against “for-profit” health care, but 85 percent of U.S. hospitals are non-profit, and almost half of privately insured Americans have polices from non-profit health insurers.

Moore referred to the Martin Luther King Jr.-Harbor hospital in Los Angeles, where a patient died of a perforated bowel after lying on the emergency room floor for 45 minutes. Since 2004, the hospital has received more than a dozen state and federal safety citations. Hospital errors included leaving sick patients unattended which resulted in death for three of them, giving patients the wrong medications, and using Taser stun guns to restrain psychiatric patients.

This hospital is not private, however. It is owned by the County of Los Angeles. So much for reliable government care. And the private insurers Moore rails against are currently selling health policies laden with government mandates and regulations.

The Council for Affordable Health Insurance (CAHI) has reported that mandated benefits have increased to the more than 1,800 today. In some states, mandated benefits have raised the cost of individual health insurance by 45 percent. Government solutions that create more government amount to nothing but expensive salt in the wound. Such is Governor Schwarzenegger’s plan to tax hospitals and physicians for mandated health coverage, and such is Senator Kuehl’s government monopoly plan, promoted as a "single payer" system.

We need to help insurers to be more competitive, not scrap them for big-government bureaucracy. Mr. Moore’s foolish preference of abolishing private insurance in favor of government-run, single-payer health care will not create universal care, only a government monopoly. In other words, Moore thinks the government should provide “free” health care that isn’t required to meet any standards.

Mr. Moore also thinks Canada is a good role model, but two years ago the Canadian Supreme Court found that government monopoly health care violates basic human rights. The winning plaintiff in this case, Mr. Zeliotis, needed hip surgery. When he tried to pay privately for his operation rather than wait in the public line (which takes two to four years) the Canadian government stopped him. Mr. Zeliotis argued against government interference with his freedom to choose private medical care. The denial of such a choice prolonged his pain and threatened his safety.

Mr. Moore also likes the single-payer system in Cuba, a one-party communist state. Some 11 million Cubans attend run-down facilities, receive dated prescription drugs, and are even required to bring their own sheets, food and soap to the hospital. Communist Party bosses get better treatment but when it came time for the great dictator Fidel Castro to go under the knife, he flew in a specialist from Spain. To adopt the health-care system of a totalitarian dictatorship like Cuba would be kind of, well, sicko. But government-run health care also presents problems right here at home.

Medicaid was instituted in the 1960s under President Johnson for the poor, but it has grown far beyond its capacity, putting its financial capabilities under great strain. In order to keep costs down, Medicaid underpays physicians, who have increasingly stopped accepting Medicaid beneficiaries as a result. Government restrictions on physicians also make it challenging to get prescription drugs for Medicaid patients.

Mr. Moore's remedies fail as heath-care reform and do not even amount to effective propaganda. He needs less rhetoric and more direct experience. He should get on a Canadian waiting list for treatment, try the “second” system that serves most Cubans, or follow a Medicaid patient’s struggle to get health care from the government.

Meanwhile, union nurses and hospital employees were among 1,000 people who must have taken sick time to cheer Michael Moore Tuesday. Perhaps Speaker Nuñez and Senator Kuehl will investigate how patient care suffered while their caregivers took to the streets.

An article titled "Nothing's Free" by Russell Roberts, published in The Freeman: Ideas on Liberty
http://www.fee.org/publications/the-freeman/article.asp?aid=4419 explains that even though we might be accustomed to thinking that the state's proceeds from taxes like those on the Kansas Lottery are "free," this is not at all the case. As Mr. Roberts explains:

About 55 percent of the receipts go to prizes, 10 percent to expenses, and 35 percent to education or some similar unimpeachable cause. Because 35 percent goes to neither winners nor losers, the real cost of the lottery is that you win less often and the prizes are smaller than would be the case without a government monopoly. If government allowed competition or made gambling legal, people who like to gamble would have a higher chance of winning and there would be more money distributed to winners.

So lottery-funded education is not free after all. Subsidizing education out of lottery proceeds punishes people who like to gamble. Those turn out on average to be people who are relatively poor with less education. Can you think of a more immoral solution for funding education than to take the money from those with the least education?

(I checked the Kansas Lottery's website. Our state's figures are close to the figures Mr. Roberts gives: "In fiscal year 2005 (July 1, 2004 through June 30, 2005), the Kansas Lottery paid out 54 percent in prizes. The State Gaming Revenues Fund received 31 percent of ticket sales; cost of sales was 5 percent (which covers online vendor fees, telecommunications costs and instant ticket printing); 6 percent was transferred to retailer earnings and 4 percent covered administrative expenses (salaries, advertising, depreciation, professional services and other administrative expenses.)")

(By the way, for Kansas in fiscal year 2005, a year in which $65,400,000 was transferred to the state, a whopping $80,000 went to the Problem Gambling Grant Fund.)

What's ironic is that gamblers are worse off playing against the State of Kansas than the mob-run numbers rackets. As a letter-writer in the New York Times wrote: "They [organized crime] paid out about 85 percent of the amounts that were bet, retaining 15 percent or less for profits and expenses like payoffs."

If we want to let people gamble, let's at least have a lottery where players have a decent chance of winning. From Mr. Roberts again: "Under a private, competitive lottery system, the prizes would be bigger and the odds of winning would be higher. It would be a better world than the one we now live in, where people in search of hope are forced to pay a 35 percent tax to finance the college education of mostly upper-class children."

The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else
Hernando De Soto
Basic Books, 2000

The problem with most third world countries, Mr. De Soto tells us, is not that there is no capital, it's that the capital is dead. Dead in the sense that it can't be used to its full economic potential. It can't be mortgaged, it can't be divided into shares, and it simply can't be used in the same way we make productive use of our assets in the West.

What is the difference between the West and the third world? The answer is formal property systems that allow the economic potential stored in property to be put to work. Until these poor countries develop the type of formal property systems that Western countries did, mostly during the 19th century, they are destined to remain poor.

The obstacles in the way of development of formal property systems are many, including social, political, and legal issues. One interesting fact is that third world countries do have property systems, in the sense that it is possible to know who "owns" property, but that knowledge is extralegal and local. It isn't as valuable as the knowledge contained in formal property systems, but it is there nonetheless.

We see advocates for poor people in third world countries constantly calling for more aid or debt relief for these countries. It is sadly true that many people are hungry and in poor health, and formal property system that unlock capital won't help these people tomorrow. But until poor countries start the process of developing formal property systems, they are unlikely to change and develop economies that can support themselves.

Unfortunately, everyone does not hold capital and private property rights in high regard. In 1992 Libya burned all land titles. Former socialist states are reverting to their former ways. In America, not all people agree that capitalism is good.

This book contains some interesting history of how private property systems developed in the United States.

Opponents of privatization of Century II, including the website www.savecenturyii.org, seem to think that the operating procedure of a profit-making business is to place so many restrictions on the use of their product, and to raise the price so high, that no one uses it anymore. The reality is quite the opposite. For a business to make a profit and survive, it must provide a product or service that people want to pay for, and provide it with costs less than its price. What could be wrong with that?

A few examples from www.savecenturyii.org illustrate common misperceptions: "These private management companies charge rental and service rates so they can make a profit." This is true. But underlying this sentence I sense two unspoken assumptions: First, that the rates the private management companies would be higher than the present rates. Might it not be possible that the new rates would be lower, if new management is more efficient or achieves greater volume? Second, the sentence implies that profit is evil. Compare that "evil" with the evil of supporting Century II users with taxpayer subsidies.

Profit is the motivating factor that businesses have that governments don't have. Consider again how companies earn a profit. It's by pleasing the customer, not driving them away. If they do this job well, they get to have a reward.

"In addition to paying rent, users are required to purchase services from the management company such as for box office systems and staffing, front of house personnel, security, etc., whether or not the user can provide them or does not need them at all." This implies that the management company can set whatever policies they want, and that customers are forced to "take it or leave it." But this is the way governments operate. Businesses sell to customers who have a choice. They have other sources to buy from, or they can refuse to buy at all. This applies, I think, in almost all cases to the customers of Century II, too.

"There are many examples throughout the country where privatization has created hardships for local users and ill will throughout communities." Paying taxes to subsidize Century II events, so that people can attend events for less than their true costs, also creates hardship and ill will.

Privatization might lead to other benefits. I have heard complaints that it is impossible to schedule some types of events simultaneously because of lack of soundproofing. A private company might find it in their interest to invest in soundproofing so that there can be more events. Wouldn't that be good?

What supporters of the status quo seem to forget is that when Century II requires a subsidy, it means that the public has to pay taxes so that the people using Century II can use it for less than the its full cost. Or, perhaps the users know this, but think it is good government policy. It is quite ridiculous for everyone to pay taxes so that symphony and music theater tickets can be cheaper than they might otherwise be. (On the other hand, the relatively well-to-do patrons of these events are used to paying taxes to support others, so maybe this is a way for them to get back a little.)

Here's a quote from a Wichita Eagle story: "'Typically, private companies, when they come in... make their money off the backs of local users,' said Mitch Berman, executive director of the Wichita Symphony." Remember that those who wish to use Century II presumably do so voluntarily, and even if Century II was private, using it would be voluntary. Currently, however, we all pay taxes, taxes we have little choice but to pay, to subsidize the rent Mr. Berman's organization pays. This is taking money "off the backs" of local taxpayers, and it is absurdly hypocritical for Mr. Berman to compare voluntarily transactions with the power of government to tax.

What must a business do to make a profit? It must deliver something that people want at a price they are willing to pay. It must deliver that product or service with costs lower than revenues, if it is to survive beyond the short-term.

If a business fails to do this it will become immediately aware, as it will be generating losses instead of profits. Since losses can't be continued for very long before the business goes bankrupt, management has a very powerful motive to make corrections.

There are some who believe that making a profit is evil or immoral, that to make a profit you must be ripping off the customer. But profits are a signal that the business is doing something right. It must be satisfying customers' desires, and doing it efficiently.

Governments, bureaucrats, and politicians, on the other hand, don't have such a powerful motivating factor. They have, at least in their minds, a deep well of public money to spend. Through their power to tax they have the ability to keep money-losing institutions in place, no matter how inefficiently the institution operates, or how little demand there is for its product.

The simple fact is, and there is really no way to sugarcoat this, the people of Sedgwick County do not value the product that Exploration Place offers enough to pay what it costs to produce it.

Now if Exploration Place was privately owned, its owners would have the right to keep it in business and operating at a loss as long as they wanted or could afford to. But Exploration Place is asking the government to pay for its losses and keep it operating. That means that you and I -- probably the very same people who thought Exploration Place didn't provide a product we were willing to pay for -- are asked to keep it in business.

Examine the incentives in place. Exploration Place operates at a loss. Instead of confronting the urgent and undeniable need to change, they receive a handout from the government. Considering the recent history of our local governments and other money-losing institutions, this is likely the first of a series of payments to be made.

Yes, I am aware that consultants are being dispatched to figure out how Exploration Place can change to avoid future losses, but I don't have a lot of confidence that the right changes will be made. That's because after changes are made -- whatever they may be -- Exploration Place will still undoubtedly lack the feedback mechanism of market signals that guide business managers to provide products and services that people actually value enough to buy.

Government leaders and newspaper editorial writers tell us that we cannot afford to lose such a wonderful place. But if it's so wonderful, why won't its customers pay what it really costs?

This is what I haven't seen mentioned in the debate over the future of social security.

Opponents of private accounts cite the risk inherent in investing in markets. Instead, they will rely on future generations of workers to pay the taxes necessary to pay promised social security benefits.

It seems to me, though, that investments in U.S. securities markets, both stocks and bonds, derive their value from the underlying strength of the U.S. economy. If the economy does well, in the long run, markets do well. If the economy does not do well, the investments will not do well, and social security recipients will need to rely on a future generation of workers to pay taxes that will pay benefits.

Where do these taxes come from? They come from workers, hopefully earning high salaries to pay the high taxes that will be needed. But if the economy does not do well, there will not be very many highly-paid workers, and the government may have trouble collecting enough taxes to pay social security benefits.

So we need to hope that the U.S. economy performs well, so that private accounts earn a high return, or there will be workers earning enough to pay high social security payroll taxes.

Writing in the November 3, 2004 Wichita Eagle, columnist Mark McCormick labels the vote in favor of a taxpayer-funded, government-owned arena a "rebirth of city's pioneering spirit." In this column, Mr. McCormick mentions our famous entrepreneurs and aerospace industry pioneers. Although he explicitly denies comparing the building of a downtown arena to the genius of Beech and Cessna, this article claims that the downtown arena will somehow lead to a rebirth of Wichita.

What I think Mr. McCormick has overlooked is that the people who in the past made Wichita great were people working as individuals, not as governments. Now, when we look to get something done, we look first to the government, and we seem to think that's a good thing. The entrepreneurs and risk-takers of the past were investing their own money, their own sweat and toil. Our government leaders invest none of this.