The Trends to Foster (Reply to Edwin Perello)

Over at his blog, Edwin Perello has a very subtle critique of my “market-based” approach to primary care:

The problem with this idea, of getting rid of the pre-paid health insurance problem, is that it still leaves some areas of the country vulnerable. One of the benefits of health insurance is that people in both poor and sparsely populated areas have their health care subsidized whether they have insurance or not (people without insurance are even more subsidized) by those who do have insurance. Hospitals and clinics in poor or low population areas will not have as many paying patients to churn out. Even if medical facilities bring down their prices through competition, these areas will not reap the benefits of the new paradigm shift in medical cost pushback.

The most pertinent “problem” here is in low population areas. Poorer areas often already have a large retail chain within at least convenient busing distance which could easily offer health services (WalMart, Walgreens, etc). Often, the very sparsely-populated areas do not.

But then, the very sparsely populated areas already don’t have much by way of medical services, and the rural people find themselves travelling to the nearest “population center” to get all of their care, anyway. Of course, part of my plan is a means-tested program to give people money for medical expenditure. Unpaid medical service is definitely not the problem that I assume Perello thinks it is. Indeed, according to the Economic Report of the President, the US total cost of unpaid demand care was $58 billion. That may sound like a lot, but it is a paltry 3% of the $2.5 trillion in total US medical expenditure. Furthermore, if you read this post, you’ll find that before Medicare/Medicaid, doctors were giving out care to the old and poor for free (this is a point that Ron Paul has made quite often).

Think about it, a marketing push my Safeway to get you to shop there, and get their “club card”. The benefits? Two free medical checkups a year for two children, discounts on gas, and selected savings weekly. Why not package things like this?

Large cities, of course, subsidize the rural areas of the country fairly heavily already (mail, roads, electricity). But is this a trend that we would like to foster? I say no…but that is a personal opinion.

I am very far from an urbanist, like Ryan Avent. But, urban and suburban living lowers costs in both relative and absolute ways. It also necessitates greater efficiency — if you have ever read a Charles Dickens novel, you’ve no doubt had the image of a dirty, sooty London painted for you. This was a product of the old type of coal that Londoners burned before the migration to city life. The realization that more efficient (cleaner) forms of energy generation were a necessity caused Britain to find a newer (cleaner) source. Today’s dense infrastructure requires highly compact and efficient forms of energy generation and usage. If everyone lived in or in close proximity to, and urban center, a “smart grid” wouldn’t be a very big deal. In addition to this, mass transit is a more efficient way to move people. People living very close to each other and to the places they frequent creates more efficient lines of communication and retail.

One of the greatest challenges in the US when it comes to communications[1]/broadband penetration (another of Perello’s topics of interest) is the fact that the US is sparsely populated in many places. Should the state subsidize their choice to live in a rural area? That was, of course, one of the more ridiculous aspects of the recent unemployment insurance extension bill. Pundits everywhere were decrying the fact that people in rural areas may no longer receive their local television. Should we subsidize rural couch-potatoes? And if so, should we do it in a way that hides the subsidy from them? Why not just give them the money to get cable? According to Thomas Hazlett, we pass up a trillion dollars of gain, simply so people who choose to live in rural areas don’t have to suffer the indignity of direct handout.

So the question is, should we be subsidizing people who choose to live in rural communities? And should we do so in indirect, expensive, dignity-preserving ways?

[1]One of my favorite paintings is “The Spirit of Service“, a painting adopted by the Telecom Pioneers of America. Rural telecommunications are heavily subsidized by urban consumers.


3 thoughts on “The Trends to Foster (Reply to Edwin Perello)

  1. You won’t win an argument with me concerning whether people who live in urban communities should subsidize people living in rural communities. That’s because we won’t have an argument.

    I don’t lament the day I decided to leave my home, New York, for my new place of residence, Indiana because I did move here to be with the woman I love. I wasn’t unproductive, for sure; I did do my part in the manufacturing world. At the same time, however, I do lament moving away from what I, personally, consider civilization.

    Having said that, just like what you said previously concerning the debate on minimum wage vs. just giving money to people, it’s a fact of life that we have to deal with–but if we have to deal with it, at least do it right. You said that as a response on Twitter, in not so many words (damn the limit!). People living in rural areas of the country, even if they don’t really have a profit-maximizing reason for being there, is a fact of life we can’t avoid without giving direct incentive to people to change that fact. People want to live out on the open range for some ungodly reason. You’d have to give them a better reason than that to convince them to move closer to an urban/suburban area.

    In my opinion, I’d much rather see the open range of the American land mass used for what it’s intended to be used for: farming. All these people living in small pockets of wanna-be-cities–these things we call towns–shouldn’t exist. I can’t think of any reasonable point in their existence except to tie farm land to some semblance of civilization.

    I’d also rather see several smaller urban areas throughout the country–something between Indianapolis and a small town but more towards the population density of Indianapolis than a small town. They should be set reasonably apart so they can tie larger swaths of farmland together and provide the amenities those small towns provide though on a larger scale.

    Doing that would fix a big part of the problem I’m concerned with in the Paul Ryan-esque plan–or, more specifically, your ideal. These smaller cities would concentrate more people in an area with more choice, more competition, more job opportunity, more entrepreneurial opportunity, and a lot fewer rural people to subsidize.

    Farmers could provide their goods more directly to consumers since they’d have a bigger local market, too. Get rid of the corn subsidy and we might get a healthier populace which will walk more (I heart city sidewalks) instead of drive everywhere like in rural areas. A healthier populace is a much less expensive (medically) populace.

    So, sure, there can be ways to fix the health care problem while ignoring the fact people will still live in rural areas and not give a crap. Perhaps, though, if they’re not subsidized, those people living in rural areas will stop living there. Then again, life proves, every day, that Ayn Rand was wrong in proposing that mankind is a rational creature.

    1. Fundamentally, I believe that throughout history, leftist-liberal (and I say leftist because, lets face it, the welfare state is a leftist-liberal project) “solutions” conflate the desire to posses with the means of payment (a very basic Marxian fallacy, and one that USP poster, “kRud”, tried to use tonight!). Ceterus paribus, the poor are not in at a disadvantage because they lack the desire to consume. They’re there because they lack the means to pay.

      So…provide a remedy for the problem, not the effects of the problem. Personally, I’m fine with giving people cold, hard cash, and then letting them make their own choices…but that attitude doesn’t seem to be prevailing. The problem is that leftist-liberals want people to spend the money the way they see fit, and conservatives (quite confusingly) demand something of a “return on investment” from cash transfers — which is not really the point in the first place.

      As far as rural living goes, I think we pretty much agree that the government shouldn’t be in the business of subsidizing lifestyle choices (I vaguely recall you posting something about the government should not designate “marriage” and only “civil union” — which is on the same lines). Being forced to live with the costs of rural inefficiency would likely shrink rural areas very quickly…and erase the problem you identify.

      Next on the agenda: How much of the cost of disruption due to evolution of social and physical technologies should people be forced to bear individually? Which is a very interesting question, and not one in which I have a very “realistic” answer.

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