Saturday, July 11, 2009

Adam Smith Is Dead

President Obama held a press conference recently, and he covered a number of

subjects including Iran, Energy Legislation, and Health Care Reform. The questions on

Iran were predictable. "Why haven't you been tougher in your remarks? Are you sounding

tougher now because the Republicans accused you of being soft and timid?" These and other

questions were generated for the corporate media by the regressives and their echo machine.

Very effectively, Obama reminded them that while they operate on a 24 hour news cycle;

he is President, and has to take a longer more measured view and response. There were

no questions on energy reform (why not?). However, there were numerous questions on

health care reform and those questions weren't just surprising, they were shocking.

It seems that the major health insurance companies have sent a letter to the Senate

claiming that if the President gets his way, and establishes a public option for health care

services, it will dismantle the private health insurance industry. The President was then

asked his reaction to such a claim.

This is an extraordinary moment. This is creative disequilibrium (trying to hold

two contradictory thoughts at the same time) at its best. The regressives claim that a

public option amounts to socialism if not communism. They claim that a government

sponsored health insurance plan (Medicare anyone?) is un-American. They try to frighten

Americans with claims that the government will drive off their doctor, ration their care,

deny them life saving technology and, their greatest sin, will destroy the free market for

health care driving all the private insurers out of business. At the very same time, as the

regressives in Congress make the socialism argument, along come the health insurance

companies who claim that a public option would be unfair competition. A public option

would wipe them out. A public option would drive many of them out of business. So,

which is it? Is a public option wrong because it would socialize medicine or is it wrong

because it would be unfair competition? Does a public option violate the free market

ethos of these modern day Adam Smiths, or is it too competitive and too attractive to

many Americans who don't have insurance or who want a better deal?

This is extraordinary. For years we have been told that the free market is all

any economy needs. We are told that a free market will destroy inefficient companies

and reward those who are innovative and efficient. When the President unveiled new

rules to regulate the financial markets, the squealing could be heard from New York

to Paris to Bonn and back. New regulations will stifle creativity. New regulations will

hurt innovation. New regulations won't let the free market work it's magic. Tighter

regulation will reward those who play it safe and punish risk takers.

When Adam Smith wrote about capitalism, he wrote about the"invisible hand"

of the free market which rewards some and destroys others. The ultimate disciple of

Adam Smith and the free market, Milton Friedman, felt that the market would always

correct itself without any government interference. The now disgraced Alan Greenspan,

who fought every attempt to regulate or rein in credit default swaps and other exotic

financial instruments, and who missed entirely the dot-com bubble and the housing market

meltdown, is a Ayn Rand disciple and a champion of a free market which would always

reward and punish with that famous invisible hand.

Now we find out that the free market may not be a good idea for private health

insurance companies. Now they claim they cannot compete. In their letter they say that

the public option will be able to produce services, cover more people, and be less expensive

than what they can provide. It appears that the invisible hand will slap them silly and

drive them out of business. They don't want to compete. All of a sudden, to hell with

Adam Smith and the free market, protect us.

I sat in stunned silence as the President was asked to comment. What would

he say? Would he point out the inherent hypocrisy of the letter? Would he jump on the

double standard that these regressives are offering? No regulation, except where it will

hurt a business, and then the role of government is to reduce competition? Will he point

out and deliver the obituary of Adam Smith once and for all? Will he finally say that the

true economic system in this nation is one in which the rich and powerful try to eliminate

all competition and garner the lion's share of economic benefits for themselves?

The President didn't disappoint me. He looked at the reporter and replied that

his question didn't make any sense. The public option would be one option in a market

place of options ( a free market place). Americans and American businesses could pick

from any options available in this market place. If the public option is cheaper because

the government controls administrative costs better (Medicare devotees just 3% to

administrative costs while private insurance companies spend as much as 20%), if the

public option is more attractive because they offer lower deductibles, if the public option

offers coverage that the private insurers won't offer, and therefore people pick it over

them; isn't that how the market, the free market, is supposed to work? If private insurers

can't compete, isn't the "invisible hand" supposed to destroy them and drive them out of

business? The President said that a public option would force the private insurance industry

to get leaner and more efficient or die. Isn't he speaking in the grand tradition that Smith,

Rand, Friedman, and Greenspan have championed?

If you ever needed a reason to support a public option for health insurance, the

insurance companies themselves have given it to you. They are scared they can't compete.

In order to stay in business they will have to change and innovate; and they don't think

they can, so they are turning to "free market" regressives in the Congress to protect them

from competition. The socialist-in-chief (according to Hannity/Limbaugh, et al.) is

actually proposing a free market solution to health care, while the progeny of Adam Smith

try everything they can to wreck that market and pressure the monopoly that health

insurance companies currently enjoy. Who da thunk it?

Wherever Adam Smith is buried there is a cool breeze emanating from his grave;

a breeze caused by the speed with which he is twirling as he watches his disciples mangle

and manipulate his precious system of capitalism.

The President is on board about a public option. The Congress is balking. Will

the same forces that elected Obama rise up now and put pressure on Congress to establish

a real free market of options for health care? What do you think? I welcome your

comments and rebuttals. Please send them to


  1. This is an interesting evening. Every time I refresh my browser there is another new post from the Lion of the Left. It's fun to imagine these well-written essays being read over the air. To get the full effect, I insert a few meaningful pauses in the imagined oration. There are very few radio personalities who can comfortably and effectively work dead air into their presentation.

  2. the issue is greed and our worship of it. love the conservative connection, but if they were true conservatives the would not be expansive, allowing an unbribled military complex, to stopping people who love each other from commitment

  3. I think that a free market option for health care is a very good idea. I am an American in Eastern Europe and see the results of a health care system that for many years did not have a choice. Now we have public and private insurance. I think it is because the poor get insurance but the rich and option (but I am not fully convinced either).
    That being said, Your title is very eye catching. I wrote something to counter the idea that is the trend about Smith trashing. Adam Smith was not saved by Insurance I think anything the government can do, the market can do better. With very few exceptions, this is why I am not fully excited about national insurance in the USA, not would not rule it out. I would not 100% rule out some form of government medical insurance,as it does help the poor, but after seeing Eastern Europe's state run insurance, I am not thrilled about it.