Sunday, October 17, 2010

Statist paranoia, part 3

The price of anything is a good indicator of how free or how scarce a good or service is. Air is free when we're on land. But air is for sale and has a price when you go scuba diving, or when you climb very high mountains like Mt. Everest.

In public policy, it is not good to provide things as free -- like free healthcare, free housing, free transport ride, free agri credit, etc. When something is given for free, supply will always be bigger than demand, and that will result in supply problem, resulting in rationing. Like the food rationing, healthcare rationing, in many communist countries. In many rich countries now, there is healthcare rationing already. If your disease is not so urgent, a free physician will attend to you after several weeks or even months.

Example, you have a headache. The "free" physician may request for some diagnostic tests, then give you some medicines. But you can insist, "I want a CT scan; I want a skull X-ray" because you suspect there could be other problems on your head. It's free anyway, why not? The hospital staff will say, "Yes, but so many people also want a free CT scan, free skull X-ray, you come back after 2 months."

And that is where some problems and disappointment with welfarism come in.

A friend asked me this question:

Noysky, How did you in recent years become such a die-hard free market advocate?

Some economists in the Third World (Peru's Hernando de Soto, for instance) agree that the free market is a "more efficient" system for
reaching or sustaining economic development than a controlled state economy.

But they also argue that it works better only in some countries whose people have a certain mindset, a certain set of values shaped by its historical and socio-cultural experiences.

In this case, it has worked for peoples of Europe (at least most of it) and North America. But people who have undergone a different historic evolution (such as the case with former colonies whose resources were exploited, such as countries in Latin America, Africa and some in Asia), there is not the kind of mercantilist class that developed among the locals, who can make it function well....

When I got "converted" to the free market thinking, I did not read much world history. I did not read much political philosophy. I have not even read Hernando de Sotto's famous book, "The mystery of capital". I just looked around the country. The food sector for instance, has almost zero government presence -- no govt carinderia or restaurant corporation, no govt fish/vegetable/meat dealer corp., no govt food insurance corporation, etc. And people are eating. There is a "market" -- where supply meets demand -- for everyone, from the poor to the rich.

When people complain of expensive food, expensive clothes, expensive shoes, expensive tools, they do not rally in front of DTI or DA or Malacanang or Congress, to demand price control of food, clothing, shoes, tools, etc. No. Only statist NGOs, media and academics think they should do so. People go to Divisoria, Baclaran, Quiapo, tiangge-tiangge (literally "market-market") and find the things they need at a price they can afford. Free market works. No need to read Hayek or Mises or Adam Smith or the history of Europe and north America.

Look around the country also. Lots of "tambay" in several neighborhoods. Some of them have zero ambition -- just to drink and party everyday or everynight. They smoke and drink and gamble like they have no responsibility to their kids or siblings or others. Then they become poor. Or they have dilapidated lungs or liver or kidney. Then government says we should pay more taxes because many people are poor and have lung cancer and liver cancer and have stab wounds after a fight. Wow, great logic.

Things like that. That's why in most of my writings, I do not cite any philsopher or other free market writer. Just plain, day to day experiences and observations. If you want to refuel for your car, do you wish that the government will over-regulate and control the local petrol industry and that we should buy only from Petron or any other state-owned monopoly in other countries? That the fredom of choice which petrol company, which gas station that has a clean toilet and friendly staff, be removed from us?

It's our daily experiences and observations that can tell us whether more coercion and more government intervention, regulation and taxation is good for us, our family, our work and school, and our community.

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