This is the second of a three-part series that makes the case for leaving key health choices to individuals rather than relying on protective measures imposed by the state. You can read part one here.
In the first part of this series we saw that pandemics are awash with uncertainty, and that every measure aimed to combat them entails trade-offs. In addition, we must bear in mind that modern life is complex. Complexity is normally resolved in modern, successful societies by markets: markets of services, markets of products and markets of ideas.
A common misconception about complexity – an ever-growing feature of the modern world – must be laid to rest right away. Most people instinctively believe that the more complex a problem is, the more the justification to have a central authority (the government) organising, co-ordinating and imposing solutions on that problem.
That is breathtakingly wrongheaded.
Centralised control
The evidence that this approach of centralised control does not work in ordinary commercial markets is now well-nigh insurmountable. Virtually every attempt at regulating economic markets on a centralised basis has been a dismal flop. Centralised economic management has failed to encourage innovation, wasted resources, and resulted in shortages, slow service delivery, bad quality, and poverty. The reasons for these failures are multiple and varied, but the most important ones are:
- Governments do not have the same knowledge and understanding to handle supply and demand, and allocate resources, that ordinary people have in dealing with their own supply, demand and resources;
- Governments do not have the powerful incentives that private people have in solving their own problems;
- On the contrary, government officials have powerful incentives to use their power to serve themselves, as our corrupt government structures testify all too clearly;
- Importantly, giving government effective monopoly power to deal with any kind of problem causes competing products and services to be kept out of the way; and
- Without the incentive of competition and profit, much innovation and creativity fall by the wayside.
The most basic practical difference between central government management of the economy and the market, is the mechanism of price. And by price I do not mean the artificial setting of prices often indulged in by government monopolies or government regulators. I have in mind prices paid by ordinary people due to genuine market supply and demand. Such a price is a message: high prices signal scarce, valuable goods and services, low prices the opposite. That induces entrepreneurs to supply those goods and services that are in short supply and cut back on those in over-supply.
Trade offs
Price enables efficient value trade-offs. The profit motive (which is the desire to supply goods and services cost-effectively enough so as to generate a surplus) makes that possible. But it also encourages innovation, which is obviously essential in areas like health where cutting-edge technology holds sway.
Government, by contrast, has no sense of value, because it does not pay the price for it. When it pays, it pays with a seemingly unlimited supply of other people’s money and has no skin in the game. When it buys, it buys votes, not economic value for voters.
Humanity has never achieved a degree of mass co-ordination for the common good that can remotely match the commercial market.
The ability of ordinary people to solve complex problems by cooperating in a decentralised market, is nothing short of miraculous.
I, Pencil
Here is the story, originally written by Leonard Read under the title I, Pencil, as told by Milton Friedman. It gives us a sense of that miracle:
“Look at this lead pencil. There’s not a single person in the world who could make this pencil. Remarkable statement? Not at all. The wood from which it is made, for all I know, comes from a tree that was cut down in the state of Washington. To cut down that tree, it took a saw. To make the saw, it took steel. To make steel, it took iron ore. This black centre—we call it lead but it’s really graphite, compressed graphite—I’m not sure where it comes from, but I think it comes from some mines in South America. This red top up here, this eraser, a bit of rubber, probably comes from Malaya, where the rubber tree isn’t even native! It was imported from South America by some businessmen with the help of the British government. This brass ferrule? I haven’t the slightest idea where it came from. Or the yellow paint! Or the paint that made the black lines. Or the glue that holds it together. Literally thousands of people co-operated to make this pencil. People who don’t speak the same language, who practise different religions, who might hate one another if they ever met! When you go down to the store and buy this pencil, you are in effect trading a few minutes of your time for a few seconds of the time of all those thousands of people. What brought them together and induced them to cooperate to make this pencil? There was no commissar sending … out orders from some central office. It was the magic of the price system: the impersonal operation of prices that brought them together and got them to cooperate, to make this pencil, so you could have it for a trifling sum.”
The market is a miracle of spontaneous cooperation between millions of people. All those millions who are involved in the production of the pencil – the loggers, the iron ore miners for the steel and the steel mills to make the steel for the saws and the multiple vehicles needed, the massive organisations that operate graphite mines, the producers and distributors of the food ̶ these millions all need to live.The builders of the roads, rails, ships and planes they need to travel on or transport their goods and the creators of e-mail networks and computers on which they do their marketing and place their orders – for the most part don’t even do it with a pencil in mind, or with a view to the public interest, much less by any central direction. On the contrary, each of those millions works for his or her own interest, dealing with an infinitesimally small part of the puzzle, and yet somehow succeeds in cooperating with others to produce a pencil on time, cost-effectively, in the right place and perfectly suited to purpose.
To this, government co-ordination does not hold a candle. Not even close.
Competition
A crucial part of markets is competition. And that applies to markets in the commercial sense as much as in the intellectual/technological and scientific sphere.
Healthy competition is a very good incentiviser, but also a sorting process. It separates the wheat from the chaff. But in order to get the best result, competition must be free. Its outcome must be based on merit, in the sense that the best product, service, idea, invention or other solution wins. That can only happen if competition is free.
Why would international pandemics be different from other consumer demands? If they are more complex than most other problems (and they probably are, for all the reasons listed here and in the first part of this series) then they cry out for more decentralised solutions, not fewer.
Another misconception is the bizarre notion that risk can be eliminated, and as a corollary of that, that government can and must do it. The answer is no and no. Most economic value is provided by goods or services that address risk, and if successful, that satisfy the requirements of the buyer sufficiently so that he is prepared to trade off the reduction of that risk for the perceived increase of another risk. Mineworkers are prepared to do their dangerous jobs because they assess that earning a decent income to stave off starvation is preferable to avoiding the risk of dying in a rock fall in the mine. Businessmen and -women risk traveling by car, by rail and by air, in order to conduct profitable business in places away from home.
Reasonable man
Our law holds up the standard of care required in risky activities, of “the reasonable man” (or bonus paterfamilias), described as follows:
“The concept of the bonus paterfamilias is not a timorous faintheart, always in trepidation lest he or others suffer some injury; on the contrary, he ventures out into the world, engages in affairs and takes reasonable chances. He takes reasonable precautions to protect his person and property and expects others to do likewise.” (Herschel v Mrupe 1954 (3) SA 464 (A))
He takes reasonable chances, because he knows there are no activities free from risk. He engages in affairs, because he knows if he wants to improve his life, there is no other choice. He makes risk trade-offs. And he expects to have the right to decide those trade-offs for himself.
Another misconception is about the nature of knowledge. Knowledge is not simple, and scientific knowledge less so than most. People thus infer that knowledge should be the domain of “the experts”, and ordinary people should “follow the science”, which is often conflated with a notion that those in charge (government) know best.
This is a breath-taking leap of logic. There is no such thing as “the science” – at least not in the sense of a single monolithic body of absolute truths about which everyone agrees. Science has developed only by trial and error, by questioning, testing and retesting, and confirmation and refutation of countless hypotheses. The very essence of science is uncertainty and challenge.
That being so, there is no room for a conception such as “the science”. There is no room for any conception of scientific consensus. And above all, there is no room for the government being the manager, the keeper, the conductor, the funder, or the arbiter of scientific knowledge. Government’s role must be to protect the freedom of all citizens, scientists and lay people alike, to debate and question scientific theory, and to test it in practice. There is no room to censor or cancel those who are critical of mainstream theory.
Complexity
Complexity is best addressed by competition in the market of ideas and knowledge. To paraphrase Mao: Let a hundred flowers bloom. It is the very complexity of commercial interests that calls for diversity of solutions. There is no reason why health should be any different. The hellishly complicated nature of a pandemic cries out for a decentralised, differentiated, competitive, and localised market of solutions to problems.
A free society has multiple news- and other media that will disseminate information about how to stay safe, as they do in any event. Thousands of independent private doctors and scientists investigate cures to diseases on a daily basis and share that information. More important, the quality and variety of that knowledge will be orders removed from the situation where the government is a kind of gatekeeper that controls the narrative of “the science”, the “experts” and the “consensus”.
Another danger of centralised management of health is that mistakes are amplified many times over. All the health management eggs are in one basket, and if it falls, all the eggs break. And if that happens, there are no pockets where alternative solutions have been tried.
The problem with government control of scientific “knowledge”, is that it becomes a racket distorting all understanding. The moment that certain views become entrenched under government’s auspices as so-called “official policy”, “consensus” or “the science”, then incentives to pursue special interests, with unintended consequences, are created. Government-funded scientists want to protect their government funding, pharmaceutical- and other producers of medicines and the like, want to protect their government-aided markets, and politicians want to protect their votes – all in service of the scientific narrative that provides the best practical traction to those special interests. And the media play along.
President Dwight Eisenhower warned of this in his 1961 farewell address to the American nation: “In holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.”
The driving force with which all these interest groups protect their interests, is fear. They scare the public into feeling that they should follow the science at all costs or face absolute catastrophe.
Government control is the mechanism for all this. If government has the monopoly on regulation and to a large extent on scientific funding, the temptation of scientists and technologists to use it, and government to do the bidding of the scientific/technological complex, becomes almost irresistible.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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