A Striking Observation of Socialist Health Systems

Actress Natasha Richardson died in 2009 because she could not be treated for head injury in Canada, she is an unfortunate victim of socialist health care


I have argued before that US health care ‘insurance’ is not really health insurance because it covers uninsurable health conditions. In my past article I said,

"There can only be insurance where insurance companies can create groupings and sub-groupings of classes. In order to do this, they have to --- wait for it --- discriminate! Suppose insurance company X has a number of professional boxers and economists as clients. They would of course have to segregate the two groups. The professional boxer has to pay a higher insurance premium because his risk of injury is much higher than that of the economist, more importantly, he has to be pooled together with other boxers while the economist has to be pooled together with other economists. Putting the two groups in one pool will amount to a redistribution scheme as the economist has to pay a higher premium, subsidizing the boxers he is being pooled with."

"[Situations which are] under the control of individuals are not insurable. There is really no such thing as car insurance since the physical condition of a car falls under the responsibility of its owner. No insurance company would offer car insurance since they will incur losses because of clients taking advantage of car insurance. This rule is also the reason why so -called government 'unemployment insurance' creates more unemployment. The government has created, in the realm of health care, a scheme similar to having insurance on the loss of sales of a business ---- it is that ludicrous!"

"It is obvious that health care insurance in the United States even before Obamacare is really just a fraudulent redistribution scheme creating perverse incentives that will make a population less healthy and more degenerate. It is therefore no surprise why so many Americans do not have health insurance for the simple reason that they did not want to pay high premiums to subsidize sickness, recklessness and degeneracy and in the process creating more of such."

Ludwig von Mises stated that,

"The psychic forces which are active in every living thing, including man, in the form of a will to health and a desire to work, are not independent of social surroundings. Certain circumstances strengthen them; others weaken them. The social environment of an African tribe living by hunting is decidedly calculated to stimulate these forces. The same is true of the quite different environment of the citizens of a capitalist society, based on division of labor and on private property. On the other hand, a social order weakens these forces when it promises that if the individual's work is hindered by illness or the effects of a trauma, he shall live without work or with little work and suffer no very noticeable reduction in his income. Matters are not so simple as they appear to the naive pathology of the army or prison doctor."

"Social insurance has thus made the neurosis of the insured a dangerous public disease. Should the institution be extended and developed, the disease will spread. No reform can be of any assistance. We cannot weaken or destroy the will to health without producing illness."

Many free marketers argue that data affecting mortality rates cannot be used when comparing the US health care system (which is semi-socialized since the State comprises 50% of health care spending) with UK/Canadian health care systems because Americans kill each other more often, consume more narcotic drugs and have unhealthy lifestyles leading to obesity and illnesses. However, those unhealthy lifestyles and crime statistics are also caused largely by government and not by some wild American ‘culture’. The unhealthy lifestyle is subsidized by the welfare scheme as explained above while the high crime rates and narcotic drug usage can be explained by the destructive ‘War on Drugs’.

It is interesting because the US system encourages sickness while the UK/Canadian system discourages it. The UK/Canadian health care systems discourage getting sick because getting treatment is such a hassle and quality is low. Waiting lines don’t really coincide with consumer preferences while sin taxes and FDA regulations do not give citizens of social democratic Europe many options to live unhealthily. This is the reason Americans are obese while Europeans are fairly fit (not to downplay the thousands who die every year in the socialist hospitals of the UK and Canada, see here, here, here and here). In the end though, no one is happy and human freedom is lost when responsibility and control over health and life are surrendered to politicians.

Blessed John Paul II on the Dignity of Work

*This entry is not intended to give a political interpretation of the late Pope but rather to show what he definitely did NOT mean by contrasting what he said with the leftist perspective. Too many times Christianity is exploited by the Left in the Philippines.




When the late Pope John Paul II, who is to be beatified today, visited Legazpi City, Philippines in 1981, he expressed interesting thoughts on manual labor. I quote from this article,

“Do not be ashamed of your work. Be proud of manual labor” – Pope John Paul II

“The eloquence of the life of Christ is unequivocal: He belongs to the ‘working world,’ He has appreciation and respect for human work. It can indeed be said that He looks with love upon human work and the different forms that it takes, seeing in each one of these forms a particular facet of man’s likeness with God, the Creator and Father,” – Pope John Paul II (Encyclical Laborem Exercens, n. 26)

A paraphrase of the late Pope bluntly makes an important point here,

He said the Son of God did not disdain being called a “carpenter” and did not want to be spared the normal condition of every human being.

All form of work, even that of garbage collector or street sweeper is dignified work. And it is dignified because it serves the needs of men. Man must work for him to survive and improve his economic condition.

I point this out because political opportunists in the Philippines use the moniker ‘Christian Social Democracy’ or ‘Christian Socialism’ to deceive the gullible and get new recruits. Theirs is a political philosophy which brings dissatisfaction, shame and misery to the laborers by making the latter think the worker as a victim of some social injustice rather than an acting agent in an economy who has the ability to shape his own destiny. The pride and virtue of work is taken away by the belief that wages are not tied to the productivity of labor but is arbitrarily set by greedy employers and can hence be changed by using the political process and passing legislation.

Nothing could be further from reality. Wages reflect the marginal productivity of workers. The only way to increase wages is through higher marginal productivity which depends on the amount of capital investment per head of labor, among other factors like skill level and education. At the macro level, wages are determined by supply and demand, with the demanders of labor being the employers and the suppliers the employees. The extent to which this analysis does not apply to the real world is the extent to which the government has intervened in the market through various taxes, regulations and licensing. The average private school teacher earns less than the professional boxer because there are much more people who can teach relative to the number of people who can enter the field of professional boxing.

Before complaints can be made against working conditions and wages in a market economy, five things must be considered.

1. Real wages were much lower and working conditions harder during the time of our fathers and grandfathers than they are now.

2. That the number of occupations and employment opportunities available during the past were very limited compared to what it is now.

3. That social mobility in the past was less than what it is now. If your father was a carpenter, then you would most likely end up a carpenter despite your personal dislike of such occupation. Today, there are more opportunities to pursue one’s passion and women are not so much pressured by their parents to marry a man of high status.

4. That the accumulated savings of our forefathers which were invested in entrepreneurial ventures is the sole cause of our higher standard of living.

5. That government intervention (no matter how well-intentioned) can only serve to impede the process of economic, cultural and social development. The amenities of modern civilization such as clean toilets, hot showers, books, mobile phones, and air-conditioned homes are enjoyed by the majority of people despite of governmental activity and never because of it. The inventor of can opener has done much more for humanity than all the welfare programs of politicians combined.

Whether or not the worker feels joy or misery about his work largely depends on his mental state. The ‘grand old man of economics’ Ludwig von Mises lists two joys of work which the socialist ideology destroys.

1. Joy of being productive member of society

2. Joy coming from the aesthetic appreciation of the worker’s skill in producing something valuable

von Mises stated that,

“… anticapitalist propaganda is a systematic scheme for the substitution of tedium for the joy of labor…The worker rejoices in his place in society and his active cooperation in its productive effort. If one disparages this ideology and replaces it by another which represents the wage earner as the distressed victim of ruthless exploiters, one turn the joy of labor into a feeling of disgust and tedium.”

He further discusses,

“The worker begins to hate his work if he becomes convinced that what makes him submit to the disutility of labor is not his own higher valuation of the stipulated compensation, but merely an unfair social system. Deluded by the slogans of the socialist propagandists, he fails to realize that the disutility of labor is an inexorable fact of human conditions, something ultimately given that cannot be removed by devices or methods of social organization. He falls prey to the Marxian fallacy that in a socialist commonwealth work will arouse not pain but pleasure.”

The leftists want workers to feel like they are victims of injustice so that they can be used to push for government intervention which is not based on any economic literacy. This only makes the worker feel unhappy about his work. If one is concerned about the lot of workers, then the first step to forming a solution is to understand the situation. This requires an understanding of economics. Economics grounds our thinking in reality. By informing us of the limits of our efforts to change society, we are more effective in pursuing that change. As economist and social theorist F.A. Hayek said,

"[t]he curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

For more info on Blessed John Paul II and his views on social issues, please read the following:

The Pope and the Cause of Freedom

and

Centesimus annus

Marc Faber on Democracy

Economist Marc Faber appeared on CNBC to talk about financial markets. But along the way he launched into a devastating analysis of class relations in a democracy. Here is my paraphrasing of Marc Faber,



It’s a question of entitlements. The majority of people are not very well to do. They want entitlements so they can work less. The people who have money and work hard are outnumbered by the poor people. The rich are very few in number so they have no vote. One way to get back at masses is to print money and outsource production, say to China. So you disenfranchise the working class and your asset prices increase dramatically. If you are affluent you have the same vote as somebody who was born illegitimate and poor. More than half of American children are born illegitimate and most of them are poor and they have the same vote as someone who is affluent. So the well to-do people will cheat the system as well.



It reminds me of what I wrote about democracy more than a year ago. Democracy according to Bertrand de Jouvenel "because of its centralizing, pattern-making, absolutist drive, can easily become an incubator of tyranny". Democratic society undergoes four stages before it becomes totalitarian.

1.In a democracy, the poor outnumber the rich so they vote to take away the property of the rich through policies like progressive taxation.

2. The rich, formerly gaining wealth through honest means, are encouraged to lobby and bribe politicians to protect their wealth. Honest entrepreneurs are placed at a permanent disadvantage while those with the skills of bribery and deception at an advantage.

3. The poor are further impoverished and dehumanized by the endless conflict in politics. While those who remain rich are those with very good political connections and are more likely parasites than producers (which makes the masses blame capitalism even more)

4. The political class conflict of rich versus poor wipe out the middle class, whom are entrepreneurial or high skilled workers, and thus the oligarchy is realized.

In a democracy, there is always a manufactured class conflict to keep the political machine running. The masses have to be incited and provoked so politicians' policies can be justified and their power strengthened. Politics creates what Jose Ortega y Gasset calls the mass-man, livestock for the state. The mass-man does not have independent thought, but a product of the state propaganda apparatus. A mentality of going(or voting) with the crowd is engendered and what left of independent thought and action is eroded. All democracies today are undergoing the same process. Democracy, is most destructive, governing large geographical areas. India, the largest democracy in the world, has less than half the per capita GDP of China and is politically unstable precisely because India is a democracy and China is not. The destructive effects of democracy, however, are restrained in states of small geographical areas like Switzerland. Rousseau, the great preacher of equality, believed democracy only works in states covering small territories because people will vote on their feet. Rousseau would find the current arrangement rather idiotic.

But such an analysis is not new. Frederic Bastiat observed the inherent problem with democracy as early as in the 19th century. He called it legal plunder or the perversion of the law by turning it into a means of taking another’s property. A major contributing factor to the decline of civilization in a democracy is the corruption of the wealthy class. As government and political pull are increasingly being used to gain wealth, traditional bourgeoisie values of hard work, frugality and bravery are replaced with opportunism, deception and bribery. The result is that wealth is no longer a symbol of virtue but of vice. There is also the issue of inheritance where the poor look at the rich as undeserving due to inherited wealth. But if an inheritor is really undeserving of his inheritance, then that inheritance would quickly dissipate on consumption and frivolous activity. It is only in a statist society where the inheritor uses political pull to pass legislation creating barriers to entry in order to unjustly enrich himself at the expense of the consumer.

Capitalism starving the Philippine Left of new recruits

I rejoiced when I read this article today. Facebook has afforded the disgruntled Filipino youth an alternative, and dare I say more productive, way of venting out frustration at politics than joining the communists. It is a sick irony that more poverty creates more demand for socialism. Far leftist groups have more recruits when the voices of the marginalized in society are not heard by the government. But it is unfortunate since the government is philosophically similar to the communists. They all think in terms of egalitarianism and 'from each according to his ability' philosophy. The far left, then, only serve an emotional purpose for the marginalized when what they really need is an understanding of 'why' they are poor and marginalized. The last thing the Filipino poor need is a decrepit ideology which has failed too many times to count. Socialism is mankind's greatest failure, an attempt to play god, a misunderstanding of what it means to be human. The fact that the leftists now resort to indoctrinating the children of the elite rather than propagandizing the masses shows utter hypocrisy in the stubborn attempt to redeem leftist falsehood. Socialism has broken many eggs but has never made any omelets. Those who stick to it in the face of mountains of evidence are slaves to false idealism and are unable to live in this world.

In contrast, capitalism has provided a way to satiate the urge of the marginalized to be heard. The Philippine government might have severely hampered the life-giving market process through inflation, taxes, licenses and regulations, but capitalism has still managed to deliver the goods in the unregulated sector of cyberspace. The most unproductive in society cannot find employment because of the economic ignorance of politicians in legislating minimum wage levels. They are curtailed from having a good education because of tax-funded 'public' education. But whereas before such conditions encourage extremism and anti-social behavior, now facebook is there to provide an avenue for communication and entertainment. Capitalism has filled in the social gap through peaceful means, and on top of all the bureaucracy and wealth destroying government programs. In comparison, the socialists have to expend so much effort taking over the government and dispensing of the bourgeoisie. And only then can progress be possible, they say.

Capitalism works even without an intellectual vanguard. The universities and schools are stacked with leftists of all sorts trying to pound the common sense out of young peoples' brains. But their irrational ideology is most of the time pushed aside as untenable, because let's face it, who could honestly take the stance business, that institution which we acquire our daily meals, is a harm to society. Business provide goods, services, allow labor to be integrated into the structure of production. How can an institution which we depend on to live, simultaneously be a great evil in the world? In fact, capitalism not only provide the means for material satisfaction but opportunities for spiritual satisfaction as well, as the high levels of social production in capitalism allow more time to go to Church or on a noble advocacy. The fact that capitalism delivers even without or with little of an intellectual vanguard is a source of hope. No words better express my sentiments than that of Ludwig von Mises in saying,

"Neither economic thinking nor historical experience suggest that any other social system could be as beneficial to the masses as capitalism. The results speak for themselves. The market economy needs no apologists and propagandists. It can apply to itself the words of Sir Christopher Wren's epitaph in St. Paul's: Si monumentum requiris, circumspice(If you seek his monument, look around)"

It is a sort of a joke that 'social' networking has weakened the growth of the socialists. They must all be seething in their self-righteous rage in the mountains. And we are all better for it!

A la carte democracy advocacy

I got this from Ryan Faulk

One thing I find when arguing with pro-democracy ideologues is how they’re allowed to be a la carte, while I’m forced to defend every thing that comes about in a market.

Bailouts? Wars? Retarded “regulations”? The FCC “regulating” the internet? Taxation and inflation taking up 43% of GDP? Kids learning in a month online what they took a year to learn in the obsolete state schools?

See, don’t bother blaming those things on democracy. We just didn’t vote for the right things or have the right guys in office! It’s not democracy that has failed, oh perish the thought. Something as big and old and that we have known since childhood as being the manifestation of goodness as democracy can’t be to blame.

So I advocate a total market, and then some people will point out some mean things that happened. Now almost always it’s some myth, involved state intervention (like with the state giving the robber barons land grants - essentially monopolies - and then the resulting monopolies being blamed on the market), or ignores context - like working conditions in early industrialization not being humane by modern standards.

But all that notwithstanding, NEVER am I allowed to say, “Oh, well those were just the wrong businessmen. See, I’m for having nice angelic businessmen. The key is to get the right capitalists at the head of large firms.” No, I have to either defend the market as it stands or explain why X problem is not a result of a market.

Democracy pushers are allowed to make arguments from fantasy, and I’m supposed to argue not against the reality of democracy but against this hypothetical where whoever I’m debating against got their way in elections.

The problem is that most people don’t even know that they’re doing this. They don’t recognize that they’re advocating democracy anymore than a fish realizes it’s in water. And so each individual has their little a la carte proposal, and when I come in advocating a total market, they treat my idea like it’s just another democratic hypothetical, not as a paradigm alternative to democracy itself.

Repeating the Obvious

This is the cover of Ludwig von Mises' 1944 book where he popularized the term statolatry. If you think modern Philippine politics is far away from the sort of delusion depicted in the cover of this book, think again.



Statolatry looks like the new religion of the Philippines. It is defined as worship of the State. Statolatry entails that nothing exists outside of the State. The State is the means of emancipation and human progress. The State can never go wrong because 'We' are the State and 'we' only need to do 'our' part by voting and paying taxes to improve the lot of society. Moreover, the Catholic Church, which is an institution with the staying power of over 2000 years now, an institution which has contributed a lot to the glory of Western Civilization, is being undermined by the empirically unfounded pseudo-rationality of Reproductive Health Bill (RH bill) supporters. (for RH bill rebuttal, see here, here, here, here and here)




Having your heart in the right place is not enough, and could even cause harm when combined with fallacious beliefs.


That was my impression when I saw this photo of students protesting the government, particularly the Department of Labor and Employment (DOLE), for its failure to provide jobs for Filipinos who then work abroad and become vulnerable to abuse. Although well-intentioned, they cannot think outside the State apparatus. The fact that these students think of the government as job provider when people are employed in private firms everywhere they look is alarming. As George Orwell put it,

"...we have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men. It is not merely that at present the rule of naked force obtains almost everywhere. Probably that has always been the case. Where this age differs from those immediately preceding it is that a liberal intelligentsia is lacking. Bully-worship, under various disguises, has become a universal religion, and such truisms as that a machine-gun is still a machine-gun even when a "good" man is squeezing the trigger..."

And whereas those on the Left think of themselves as 'progressive' and independent thinkers who are fighting an uphill battle against the 'neo-liberal' oligarchy, but the powerful influence of Marxism is evident in that its opponents also think like Marxists. As Ludwig von Mises said,

"...the ideas of Karl Marx ... are widely accepted today, even by many who emphatically declare that they are anti-communist and anti-Marxist.To a considerable extent, without knowing it, many people are philosophical Marxists, although they use different names for their philosophical ideas."

Today, only self-confessed morons and over-educated college professors call themselves Marxists, but it is no doubt that the vast majority still think in terms of egalitarianism, collectivism, class struggle, sacrificing the self to society, etc. It would be unfathomable for the leftists to think that it is their ideology which is the cause of social ills. As a political philosophy, Marxism will remain dead from the neck up, but its body is still swinging the bludgeon on the life-giving market order.

The answer to social ills lies in an understanding of basic economics. Its importance cannot be overstated.

Fruits of State Resource Management: The Case of Pasig River, Manila Bay and Makati Area Slums

Public property can be seen as one type of interventionism. The most pollution happens in public land because government does not have an incentive to take care of its property. As a result, those on the perimeters of the public land are affected. People living on the side of roads, seas, and rivers suffer from the pollution that is encouraged. Just look at Pasig River. Huge amounts of money and effort were expended to pressure the government to 'do something' about the dying river. And even now the its pH level is just enough for fish to survive. We would likely see little or no outcry if that river was privately owned. The owner would make use of it in the most profitable way he can think of, which means that resource will be used in the most socially optimal way. Even if the government successfully cleans Pasig River, it would still remain an idle resource slowly accumulating pollutants again.


Pollution is encouraged when the resource has no owner, i.e. public property.

Recently, there has been news of a residential community urging the government to cleanup the shores of Manila bay. As a result, 130,000 squatter families will be displaced without relocation. Here we see another effect of public property, the creation of conflict between different groups of people. The poor cannot find work because of the minimum wage and are made dependent on government urban planning schemes. They end up in public land that are then leased to those who have political pull. If private property were respected, then the homesteaders (the first to imprint his mark as owner) of the shores of Manila Bay would become the rightful owners. The squatters who now stay there would not have been made dependent and treated as expendable by politicians but would have found employment at a wage matching their level of productivity.






Public property not only encourages pollution, but creates conflict between different groups of people. The government relocates slum dwellers to areas which are polluted due to its own mismanagement. Now their homes are going to be demolished because of the whims of those with political pull.

In a free market, poor urban areas would be bristling with commerce because of employment opportunities provided by capitalists. Wages would be bid-up through competition between different capitalist employers vying for labor power. The relationship between rich and poor would be mutually beneficial, give-and-take, value for value. It now be very different from the situation now where wage controls restrict employment opportunities and the location of the urban poor is arbitrarily determined by government zoning. If the minimum wage, urban planning and welfare schemes were abolished, the poor would either find employment in the city or move to areas where the cost of living is low or in the peripheries of the city. Government urban planning creates disorder, leading many to wonder why there are slums not so far away from large banks and 5-star hotels like in Makati. It gives the impression of an inherent conflict of interest between the rich and the poor, with the former gaining at the expense of the latter. How is it that there can be cooperation across long distances, as in the case of foreign capital investment putting upward pressure on wages in China, but not amongst individuals a few kilometers away? This is the destructive power unintended consequences of interventionism. It makes enemies out of neighbors by outlawing mutually beneficial employment through the minimum wage on the one hand, and promoting dependency through welfare on the other. This economic and social inequality is then exploited by the Left to promote Marxist class struggle theory which only make the problem worse. The last thing slum dwellers need is a false ideology.





Most of the slum dwellers are unemployed or work in undeveloped extra-legal economies. Why aren't the rich in Makati 'exploiting' the nearby slum dwellers by making them work for low, but higher than pre-existing, wages? The answer: The government makes it illegal for them to do so.


Under conditions of capitalist freedom, the shores of Manila Bay would be de-socialized ( 'privatization' is misleading) and the residential community living nearby would own shares to it. The squatters, since they are also victimized by government intervention, could also be given shares, albeit less since they are 'late-comers'. The government would not be paid anything. Voluntary arbitration (not political pull) would settle the matter with equal representation of the two groups and conflict easily relieved. Private property is the best means man has discovered to solve conflicts. A society, for it to be considered civilized, must recognize it.

To contrast, 130,000 families are going to be driven to the streets just so to waste tax-payers money on cleaning up the shores of Manila Bay, unproductive land which will eventually accumulate pollution in the future. Not only is this insensitive, it is un-capitalist and uncivilized.