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Old 10-08-2011, 06:58 PM
 
766 posts, read 1,694,893 times
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Seeing how the United States and Europe have struggling economies and increasing government role in the marketplace to alleviate the current situation, I think asking this question becomes very important in understanding what is wrong with today's system, to identify the problems and to learn a lesson in history so future generations can look back and know what not to do.

Free Market Capitalism vs Mixed/State Capitalism...what is a better system overall in your opinion?

By free market capitalism, I mean a system in which government has a very *limited role* in the marketplace in which they do not interfere with the price system (unless in extreme cases, if there are any).

By mixed/state capitalism, I mean a system in which government has a very active role in the marketplace in which governmental policies have the sole intentions of protecting the interests of the nation and its citizens by these interventionist policies.

What is your take?
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Old 10-08-2011, 07:36 PM
Status: "But in the aggregate..." (set 26 days ago)
 
Location: The Triad (NC)
31,331 posts, read 69,479,051 times
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Quote:
Originally Posted by Libohove90 View Post
What is your take?
When is your paper due?
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Old 10-08-2011, 07:46 PM
 
766 posts, read 1,694,893 times
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Quote:
Originally Posted by MrRational View Post
When is your paper due?
I'm a physics major, I don't have papers to write.
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Old 10-08-2011, 11:46 PM
 
28,661 posts, read 31,263,525 times
Reputation: 29652
Quote:
Originally Posted by Libohove90 View Post
Seeing how the United States and Europe have struggling economies and increasing government role in the marketplace to alleviate the current situation, I think asking this question becomes very important in understanding what is wrong with today's system, to identify the problems and to learn a lesson in history so future generations can look back and know what not to do.

Free Market Capitalism vs Mixed/State Capitalism...what is a better system overall in your opinion?

By free market capitalism, I mean a system in which government has a very *limited role* in the marketplace in which they do not interfere with the price system (unless in extreme cases, if there are any).

By mixed/state capitalism, I mean a system in which government has a very active role in the marketplace in which governmental policies have the sole intentions of protecting the interests of the nation and its citizens by these interventionist policies.

What is your take?
I generally support free market capitalism. However, what a lot of people on the political left don't see is that a lot of what passes for "capitalism" is not caapitalism at all....it's more like corporate cronyism.

I think the health sector of the economy fits this best. We have a private market in health care, but it's very far from a free market. There is very limited competition in health care, as most people don't have the ability or the incentive to shop around for care. They don't know what their health care really costs, and they don't normally care. Even if they do know, most people are herded into an employer or government sponsored plan with little or no ability to purchase their own individual plans at anywhere near the same cost (eg, limited or no choice). This is why prices keep going up and the quality of care is mediocre (at best). But liberals see this as an example of the failure of the free market. I see it as not allowing the free market to work properly.
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Old 10-09-2011, 03:20 PM
 
11,004 posts, read 10,601,480 times
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Quote:
I think the health sector of the economy fits this best. We have a private market in health care, but it's very far from a free market. There is very limited competition in health care, as most people don't have the ability or the incentive to shop around for care. They don't know what their health care really costs, and they don't normally care. Even if they do know, most people are herded into an employer or government sponsored plan with little or no ability to purchase their own individual plans at anywhere near the same cost (eg, limited or no choice). This is why prices keep going up and the quality of care is mediocre (at best). But liberals see this as an example of the failure of the free market. I see it as not allowing the free market to work properly.
This is a common refrain I currently hear among the rightwing. "The problem with healthcare is that is that we don't let the invisible hands of free enterprise and capitalism work for the public good".

I have degree in economics and I have studied markets for sometime. Free markets generally are the best way to allocate resources. That is not be confused though with the statement though that "free markets are always best".

Its generally accepted in all countries that free markets don't work well in some sectors of the economy. The best example I can come up with is that of public utilities. We don't want twenty different natural gas companies all laying different pipelines through every city in this country. We don't want "fly by night" companies that ignore safety regulations and built dangerous gas delivery systems or companies that go out of business in January and stop providing service to their customers when they are needed the very most. This is why every state only allows one gas company in a service territory. That company is given a legal monopoly and no one can compete with it.

The free market has never been an absolute in the sense that legislative bodies have required licensing for many occupations and professions. Requirements vary, but you can't just go open up the business or profession of your choice anywhere, anytime you want too. The value that competition would provide is regarded in these occupations and professions as being "outweighed" by the cost to consumers who would be harmed by unlicensed dentists, electricians, and plumbers.

Economic theory and analysis generally demonstrates that competition works best in areas of the economy where: 1. There are very few barriers to entering a market; 2. Where consumers have excellent information about the products that are for sale and are able to make informed choices; 3. Where there are a large number of both buyers and sellers; 4. Where actual bargaining occurs over price and the quality of services to be provided.

Healthcare comes out badly in all of these areas. There are large barriers to any medical practitioner, clinic, or hospital attempting to enter the field. There are licensing issues, start up capital issues, and insurance issues to name just a few. Most consumers are very poorly informed about healthcare and often are unable to even name all the doctors they are seeing or all the medications they are taking. This falls far short of understanding the nature of the treatment they are getting and its efficacy. There are a large number of people who need healthcare, but often in many small communities the local hospital has a virtual monopoly. Virtually no bargaining occurs between consumers and healthcare providers over the cost of their services. Some insurance plans do have enough of a market share to force healthcare providers to bargain in a meaningful way. Individual consumers have no such power.

A dyed in the wool libertarian will always try to argue that we "just need to change all this". This kind of reasoning is simplistic and ignores the fact that no other first world country in this world has chosen to move in that direction with respect to healthcare. For example, eliminating licensing laws for providers would certainly increase competition. It would also dramatically increase malpractice and cost from injuries during medical procedures. Maybe in a sense, the problem is that we "want our cake and want to eat it too". I would like lower priced healthcare, but I don't want to be operated on by an unskilled physician. I don't want surgery in a facility that doesn't have to comply with rigid rules designed to reduce staphylococcus infections.

I have said a number of times on this forum that I don't think the "competition/free enterprise model" is suited for healthcare. I think we need some sort of government-regulated, universal healthcare. Call it "Obamacare" or whatever you want...

Individual healthcare plans have largely been a failure. Perhaps, the biggest reason they have failed is that they cost too much and have large deductibles. I won't say there is one single reason for this. However, a big reason is that only huge healthplans like Blue Cross or Kaiser have the ability to force healthcare providers to reduce costs. Blue Cross can tell a hospital that it won't reimburse at the rate it wants and will tell its patients to go elsewhere. Small healthcare plans don't have that kind of bargaining power and must offer less inclusive plans at higher prices.

I suspect we will continue to disagree on this issue. I think its time to recognize that the free market is a failure in the healthcare field and move onto something other countries are doing. Others, largely for ideological reasons, can't bare the thought that "capitalism" isn't the solution to everything. I would prefer to leave ideology behind and just focus on what works and what hasn't worked.
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Old 10-09-2011, 07:44 PM
 
766 posts, read 1,694,893 times
Reputation: 490
Quote:
Originally Posted by markg91359 View Post
This is a common refrain I currently hear among the rightwing. "The problem with healthcare is that is that we don't let the invisible hands of free enterprise and capitalism work for the public good".

I have degree in economics and I have studied markets for sometime. Free markets generally are the best way to allocate resources. That is not be confused though with the statement though that "free markets are always best".

Its generally accepted in all countries that free markets don't work well in some sectors of the economy. The best example I can come up with is that of public utilities. We don't want twenty different natural gas companies all laying different pipelines through every city in this country. We don't want "fly by night" companies that ignore safety regulations and built dangerous gas delivery systems or companies that go out of business in January and stop providing service to their customers when they are needed the very most. This is why every state only allows one gas company in a service territory. That company is given a legal monopoly and no one can compete with it.

The free market has never been an absolute in the sense that legislative bodies have required licensing for many occupations and professions. Requirements vary, but you can't just go open up the business or profession of your choice anywhere, anytime you want too. The value that competition would provide is regarded in these occupations and professions as being "outweighed" by the cost to consumers who would be harmed by unlicensed dentists, electricians, and plumbers.

Economic theory and analysis generally demonstrates that competition works best in areas of the economy where: 1. There are very few barriers to entering a market; 2. Where consumers have excellent information about the products that are for sale and are able to make informed choices; 3. Where there are a large number of both buyers and sellers; 4. Where actual bargaining occurs over price and the quality of services to be provided.

Healthcare comes out badly in all of these areas. There are large barriers to any medical practitioner, clinic, or hospital attempting to enter the field. There are licensing issues, start up capital issues, and insurance issues to name just a few. Most consumers are very poorly informed about healthcare and often are unable to even name all the doctors they are seeing or all the medications they are taking. This falls far short of understanding the nature of the treatment they are getting and its efficacy. There are a large number of people who need healthcare, but often in many small communities the local hospital has a virtual monopoly. Virtually no bargaining occurs between consumers and healthcare providers over the cost of their services. Some insurance plans do have enough of a market share to force healthcare providers to bargain in a meaningful way. Individual consumers have no such power.

A dyed in the wool libertarian will always try to argue that we "just need to change all this". This kind of reasoning is simplistic and ignores the fact that no other first world country in this world has chosen to move in that direction with respect to healthcare. For example, eliminating licensing laws for providers would certainly increase competition. It would also dramatically increase malpractice and cost from injuries during medical procedures. Maybe in a sense, the problem is that we "want our cake and want to eat it too". I would like lower priced healthcare, but I don't want to be operated on by an unskilled physician. I don't want surgery in a facility that doesn't have to comply with rigid rules designed to reduce staphylococcus infections.

I have said a number of times on this forum that I don't think the "competition/free enterprise model" is suited for healthcare. I think we need some sort of government-regulated, universal healthcare. Call it "Obamacare" or whatever you want...

Individual healthcare plans have largely been a failure. Perhaps, the biggest reason they have failed is that they cost too much and have large deductibles. I won't say there is one single reason for this. However, a big reason is that only huge healthplans like Blue Cross or Kaiser have the ability to force healthcare providers to reduce costs. Blue Cross can tell a hospital that it won't reimburse at the rate it wants and will tell its patients to go elsewhere. Small healthcare plans don't have that kind of bargaining power and must offer less inclusive plans at higher prices.

I suspect we will continue to disagree on this issue. I think its time to recognize that the free market is a failure in the healthcare field and move onto something other countries are doing. Others, largely for ideological reasons, can't bare the thought that "capitalism" isn't the solution to everything. I would prefer to leave ideology behind and just focus on what works and what hasn't worked.
Milton Friedman has refuted everything you said millions of times. That's ok it's your opinion. But the facts seem clear that limited competition in healthcare has done more harm than good in America according to Friedman and his colleagues.
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Old 10-09-2011, 08:01 PM
Status: "But in the aggregate..." (set 26 days ago)
 
Location: The Triad (NC)
31,331 posts, read 69,479,051 times
Reputation: 37326
The problem is attempting to address "healthcare" with a one size fits all approach.

There absolutely are aspects that call for a 100% actuarial base tax supported approach:
thins like the catastrophic and traumatic illness and and injury that no one can afford or even afford to insure against (even the insurance companies).

But we don't need that sort of overarching approach to the mundane and ordinary things that constitute what "healthcare" actually is for the other 95% of us (who aren't elderly or poor or unemployed or already diagnosed with something awful) for 95% of the remaining needs we have and which should be well within the ability of these people to pay their own way... and pay their own way to have some backstop insurance for the occasional budget hiccup that *will* happen very much like we do now for homeowners or auto insurance.
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Old 10-09-2011, 11:15 PM
 
2,409 posts, read 2,786,456 times
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Most Americans don't understand free markets let alone capitalism. You can have capitalism without a free market and you can have free markets without capitalism. They are not one in the same. The strongest economies in the world have a mixed economies. Germany has some of the strongest auto unions in the world. The Norwegian people own 70% of the natural resources in which the profit is directed to a national sovereign wealth fund that benefits all. Only 30% of their natural resources are in the hands of private capitalists. Americans have been brainwashed into believing in pseudo capitalism where wealth is concentrated increasingly in the hands of a few and that it will just "trickle down" into prosperity for everyone else. LOL and we wonder why our country is so screwed up.
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Old 10-10-2011, 12:01 AM
 
20,194 posts, read 21,503,459 times
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Quote:
Originally Posted by Libohove90 View Post
Milton Friedman has refuted everything you said millions of times. That's ok it's your opinion. But the facts seem clear that limited competition in healthcare has done more harm than good in America according to Friedman and his colleagues.
I am sorry but when you say "limited competition" in healthcare, it makes you seem pretty unintelligent... but then you are physics major and you don't know the healthcare macroeconomics... how is it in any way or form "limited competition"?
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Old 10-10-2011, 10:19 AM
 
Location: Business ethics is an oxymoron.
2,166 posts, read 2,600,866 times
Reputation: 4845
I am all for a set of mixed policies. On one front, I agree. The government has no business sticking its nose in our affairs and erecting impediments to free market function with things like Insider Trading laws, anti-trust laws, consumer protection laws, and pretty much any laws of any kind. But conversely, I do feel that they should step in and cover our losses in the event of a downturn with taxpayer dollars. That's about as fair of a give-and-take system there is. They give us free reign to make and take our profits. And we take them in the event they don't materialize of their own accord.

Signed,
Wall Street
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