It is only a matter of time until a mainstream economist declares that the recent Oklahoma tornadoes will be great for the economy. He will say that there will be all kinds of job creation for builders, roofers, you name it. Even a cursory knowledge of simple math will reveal the wisdom of Frederic Bastiat’s admonition to identify and acknowledge “what is not seen” with instances of property destruction. What will not be seen will be what would have been done with the huge amounts of capital needed to restore the destroyed homes and property, had the damage never occurred in the first place. All of the money spent on restoration will at best return the property to its original condition, not improve the prior condition. I find this mainstream economic reasoning offensive in the extreme. This reasoning discounts the fact that there is no way to economically quantify the human toll that people and families endure with destruction like this.
There is so much to learn from Bastiat. It occurs to me that governments rely on our ignoring “what is not seen” in order to politically pull off their various shenanigans, always hoping we will ignore the other side of the balance sheet. Politicians brag about government-funded projects, government-created jobs or government-financed Solyndra-like businesses, never acknowledging that these all owe their existence to the government’s prior looting and despoilation of private property. What would have been done with the money that government confiscated from everyone to launch Solyndra on its path? While we will never know, Bastiat reminds us that this destruction and diversion of capital is real, even though it may not be overtly visible. Here is his brilliant essay on a broken window.
Try to think of The Unaffordable Care Act (TUCA) in the same way. People will be forced to buy exchange-approved insurance products they neither want or need, while cooperative bureaucrats will institute price controls so that what is “paid” for various “approved services” is a very low amount, assuring that profits are maximized. This is the purpose of the IPAB (“Independent” Payment Advisory Board). The job of these central planners will be to discover prices/payments (for various services and procedures) below the market clearing price to guarantee a shortage of physicians willing to participate. There will be an inverse relationship between the “price paid” for a service and the length of the line of people desiring the service. This is rationing, pure and simple, a proven strategy for huge profits. What will be seen will be the direct relationship between the length of the lines the sick are standing in and the stock price of the rationing insurance carrier in collusion with the IPAB.
Remember that TUCA mandated the purchase of electronic medical record systems for physicians and facilities, systems that many doctors and facilities would not have purchased on their own. Proof of this coercion lies in the fact that the government threatened anyone who didn’t buy one of these systems with lower Medicare payments. This commerce at gunpoint has made many people in the Health Information Technology business very rich. That was the whole idea. One hospital system in Oklahoma(not for profit) spent $500 million (no typo) on their electronic medical records system. Here is how I think Bastiat might look at this, that is, “what is not seen”:
Using the prices on our website,with $500 million we could have performed:
163,934 tonsillectomies on children needing this operation
85,251 cholecystectomies(gall bladder removals)
111,607 surgeries to restore urinary continence in women
62,500 hysterectomies (removal of uterus) to alleviate painful bleeding and/or fibroid disease
81,168 rotator cuff repairs
71,530 anterior cruciate ligament reconstructions
163,398 inguinal hernia repairs
You get the idea. Try this with any of our prices in the denominator with $500 million in the numerator. You can then see a little of what Bastiat was talking about. Also keep in mind that many of the numbers you see above for particular operations are more surgeries of this type than are done in this country in an entire year! And this is using the amount that just one hospital system paid for “going digital.” And to think this hospital was about to go broke from uninsured people coming in to their emergency room.
It should now be clear to even supporters of this law that its purpose was no different than almost anything else that oozes out of Washington: to line the pockets of the connected cronies who supported it, in spite of all government claims to the contrary. In support of this accusation is the fact that having run out of money to promote this crazy law, the Secretary of Health and Human Services, Kathleen Sibelius, has recently come under fire for her “solicitation” of “donations” from various beneficiaries of this legislation, big hospital and insurance executives. If the evil insurance companies were the target and favorite “whipping boy” of the TUCA supporters, why would the HHS Secretary expect any support from the big wig executives of these companies?
Bastiat would have had a field day with so much of what we see today, but especially, I think, with the TUCA crowd and the other crony capitalists. I kind of like the acronym TUCA. It could also stand for “The Unsurpassed Crony Achievement.” I am open to any other interpretations.
G. Keith Smith, M.D.