Tuesday, July 2, 2013

Capital for the Masses

Here's a letter from Virginia's own Don Boudreaux, one of the Old Dominion's great Men of Letters, writing to a local syndicate (reprinted here with permission):
This morning one of your newscasters pitched an upcoming report on an entrepreneur whose business plan is to make medical products “widely available to the poor.”  The newscaster described this entrepreneur’s efforts as “capitalism with a twist.”

There’s no twist.  Making goods and services increasingly affordable – turning what yesterday were luxuries available only to the rich into products that today are commonplace in even the most modest households – is what entrepreneurs under capitalism have done from the start.  Think Josiah Wedgwood.  Think John D. Rockefeller.  Think Gustavus Swift.  Think Richard Sears.  Think Henry Ford.  Think Sam Walton.  Think Michael Dell.

As Joseph Schumpeter observed in 1942, “Electric lighting is no great boon to anyone who 
has enough money to buy a sufficient number of candles and to pay 
servants to attend them.  It is the cheap cloth, the cheap cotton and 
rayon fabric, boots, motorcars and so on that are the typical 
achievements of capitalist production, and not as rule improvements
 that would mean much to the rich man.  Queen Elizabeth owned silk 
stockings.  The capitalist achievement does not typically consist in 
providing more silk stockings for queens but in bringing them within
 reach of factory girls in return for steadily decreasing amounts of 

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* Joseph A. Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper & Row, 1942), p. 67.

All very true. And I'm always baffled by people who sneeringly dismiss capitalism because of its profit component. For example, your garden-variety socialist is often heard to remark, "Health care shouldn't be an industry grounded in profit. It's too essential a good for that." Say what? Food is also an essential good, and you don't hear these folks arguing for universal food distribution (well, sometimes they make that argument, but the results are very, very ugly).

The Don's quotation of Schumpeter's observation of capitalism's price-depressing effects is a good one, and it can be applied towards health care as well as it can towards stockings; in fact, it's worth pointing out that "medical products" are already "widely available to the poor" in ways that would seem mesmerizing to our grandparents. Pain relievers, cold medicines, allergy medicines, gauzes and band-aids and antibacterial cream and hydrogen peroxide, antacids, vitamins of every sort, probiotics for digestion issues, sleep aids---all of these things are terrifically available at incredibly low costs compared to what they once demanded (if they even existed at all one hundred years ago). Then, too, condoms are readily accessible and relatively cheap for men, and even if women have to go through the ridiculous charade of seeing a "health" "care" "provider" in order to obtain a prescription for hormonal birth control, it's still fairly easy to obtain, and costs, like, less than $10 a month.

(It still blows my mind that feminists demand "free" birth control via insurance providers when it's just unbelievably cheap in the first place, but that's another subject for another time. In any case, I feel certain it would be even cheaper if it were over-the-counter; the fact that one has to see a doctor and get a prescription for birth control is also a profit-seeking mechanism, but of the worst sort.)

But wait---there's more! As a greenie granola crunchy neo-hippie back-to-the-earther, I'm not really given to use most of the pharmaceuticals listed above. But in this day and age, that's no problem---I can head on over to the health food store and take my pick of hundreds of homeopathic, herbal, plant-root beatnik remedies that were completely unheard of in Western society in my parents' childhoods. These bohemian companies almost assuredly operate under the profit motive, as well---but they bring me wildly diverse products at surprisingly low cost. I picked up a few ounces of tea tree oil for ten bucks tonight; I feel certain it would have been more expensive in the past, if it were even in any store in the first place. Is that a "twist" on capitalism? Is that a bug, or is it a feature? The answer is obvious.

Of course, supermarkets and health food stores aren't the only components to health care; there are also hospitals and doctors' offices, which are still generally grossly expensive. But capitalism can make those things cheaper, too; free up the system, take away the absurd "certificate-of-need" program that stifles innovation and competition, maybe relax some zoning laws, and you're on your way to a dynamic health care market where you're not paying thousands of dollars for simple medical procedures.

A while ago my brother had a shard of glass stuck deep in his foot, and he had to go through a laughable joke of a process to get it removed, including general anesthesia and a preposterous medical bill. "A med school dropout," he said to me later, "should have been able to come to my apartment and do that for a hundred bucks in thirty minutes." Assuredly the med school dropout would've been enmeshed in the profit motive, as well---but he would have provided a valuable service to my brother at an astounding fraction of the cost. Would that be a "twist?" Or would that be simply the nature of the free market---of capitalism---at work?

1 comment:

  1. A veterinarian would have removed the glass for 50 bucks and given Luke an Elizabethan collar at no extra cost.
    But seriously, this is a good argument, a good essay.