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Right-Wing Obamacare

Whether it’s called Obamacare [1] or Romneycare [2], and whether it’s right-wing or left-wing, the further cartelization of the healthcare system is a very bad idea. In exchange for extending coverage to high-risk individuals, the insurance industry is promised guaranteed profits from a consumer base — that is, people like you and me — that is legally compelled to purchase its product. As with any massively centralized compulsory system, no one can know how it will all work out: perhaps the insurance companies really will lose money in the end. But as we move further away from a free market, the usual kinds of competitive pressures that keep costs down and quality high will be further attenuated; the only sure losers here are the consumers.

Although it doesn’t matter whether a bad idea is right-wing or left-wing, it might as well be pointed out that Obamacare has a great deal in common not only with what Mitt Romney did in Massachusetts but also with what George W. Bush wanted to do with the Social Security system [3]. Remember how Social Security “privatization” was supposed to work: it was not a just chance to opt our of a federal Ponzi scheme that transfers wealth from the young and poor to the old and affluent — which is what Social Security does — but rather Bush’s plan offered as the alternative to having all of your payroll taxes go to Social Security the prospect of having a small percentage of those taxes go into a “private” (but of course, government-approved) retirement fund. In short, it was a choice between an old-fashioned wealth transfer and a newfangled forced-savings scheme [4], one that would have involved the same cartelization risks as Obamacare does.

Just as Obama and the Democratic Congress are forcing Americans to buy insurance, Bush and the Republican Congress were going to force people to buy into retirement funds if they partly exited Social Security. No wonder, then, that the GOP has put up such feeble resistance [5] against the individual health-insurance mandate: for 20-odd years the putatively free-market Right has wanted the federal government to compel individual citizens to buy another kind of product. The roots of Obamacare are not to be found among Marx, Lenin, or the European Left, but with Bismarck, Milton Friedman, and the state-capitalist Right [1]:

The Chicago boys’ proudest achievement is Chile’s privatized pension system. Its main architect was José Piñera, now a scholar at the Cato Institute. Before the Pinochet regime, Piñera recalls, only workers in government industries, public servants, and the military had pensions. Pinochet—like Otto von Bismarck before him—decided that all citizens should have pensions, and so in 1981 then–labor minister Piñera created a sophisticated system that gave Chileans the choice between a state or a private pension. The state deducts a compulsory 10 percent from each worker’s wages—or as much as 20 percent, if the worker requests it—which he can invest in either the public or the private system. Nearly everyone picks the private pensions, which are managed by six private investment companies, each offering a mix of safer and riskier investments; the Chilean state also regulates these companies and their investments.

Movement conservatives and beltway libertarians have lauded the Chilean retirement system for decades. What can they do when a Democratic administration applies the same principles to another field, healthcare? They can hardly say that what’s good for retirement savings is not good for health insurance, nor that one is a necessity and the other a luxury. Cartelization and corporatism are the philosophy and program of our right-wing policy wonks no less than of our left-wing “Obamunists.”

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#1 Comment By Walter On March 21, 2010 @ 5:53 pm

Ehh… I usually agree with you but not on this one. Milton Friedman or even Friedrich Hayek, and the less purist libertarian school of “free market based reform” never advocated anything close to Romneycare or Obamacare. The Cato Institute for instance advocates means-tested Medicare vouchers with an allowance of opt-out, and temporary Medicaid voucher assistance if you are looking for a job and only for a maximum of 2-years. This wouldn’t be purist free market, but it would severely reduce the federal government’s obligations, strongly limit the welfare state, and reduce the incentive on dependency on the federal government. The same thing with social security private accounts.

I think what you should be concentrating on the American Enterprise Institute, David Frum, the neoconservatives and the Heritage Foundation, the last of which actively supported Romneycare in Massachusetts as a free market plan, and which was obviously not supported by Milton Friedman (Friedman’s views on the matter are apparent – he takes the Sally Pipes, Jon Goodman, David Granzer, Michael Cannon, Michael Tanner approach of free market based reform).

#2 Comment By Barney Rebble On March 21, 2010 @ 6:14 pm

My Dad says that as of 20 years ago, Bonneville Power (Government employees) were urged that Social Security is a scam, and most of them were signed up to put an equal amount between social security and also a private, personally chosen, retirement plan. Most of those now retired, now report that they receive about 4 times the return on investment from the private plan, than they do from the social security scam.

This is only information for those not embarrassed by facts.

#3 Comment By Chris F On March 21, 2010 @ 6:35 pm

Hi Dan,
Thanks for your work at American Conservative. However, in this case I think you might be a little off base here. While there are similarities as you pointed out, the difference is one of direction: moving to a Chilean system would be an incremental step towards more freedom for SS “contributors”, while this ObamittCare is a step in the other direction, towards further state control.
I understand the inherent ‘pax on both your houses’ inclination. I also hope the Republicans who voted for Romney AND are simultaneously bothered by this legislation really think about this when the 2012 primaries roll around…
Peace be with you.

#4 Comment By Thomas O. Meehan On March 21, 2010 @ 7:48 pm

It would be interesting to learn just how well the Chilean pensioners made out on the private portion of their retirement accounts. I suppose it all depends on the managers. One shudders to think what our social security status would be if the Wall Street “banksters” had been in control for some time. Of course Social Security is bankrupt in any case but it would be interesting to see how Chilies system worked so far.

#5 Comment By TomB On March 21, 2010 @ 11:00 pm

Obviously I know of the common phenomenon of erroneously projecting one’s own sensibilities onto the public at large. And I’ll absolutely admit that may be the case here, and am looking forward to people telling me if I am in error. But to me at least I sense something very different about the debate over the economics of this health-care thing, which of course is at the very heart of it, and I wouldn’t be surprised if this change isn’t something we will now see across the entire spectrum when it comes to matters of economics in the future.

Again, maybe I’m wrong, but the sense about the health-care debate that I get correlates precisely how I feel which is that it’s downright embarrassing now to argue about the glories of the free market and the wreckage that government meddling in same will cause in the aftermath of all of what’s happened of late with the bailouts and etc. And thus, that except for a few rabble-rousers like, say, Limbaugh or Hannity and the like talking about “socialism,” opponents of Obamacare just aren’t doing so very much if at all. Instead the opposition to it just seems much less programmatic and more opportunistically focused on picking out this or that aspect of it to attack.

While I am well aware that the principles of economics haven’t been repealed and that the road to socialism is a road to less wealth, to be frank as a *political* matter I think that argument is just mostly lost now, with much *political* justice. The Limbaughs and the Hannitys and the like are getting exactly what they deserved when they didn’t scream like crazy at Mr. Bush’s spending and his prescription drug benefit and then the utterly game-changing bailouts he pioneered.

I.e., in the wake of AIG and the banks and all that I really can’t help but laughing now at anyone telling me how the executives of the health-care companies or indeed any companies are going to serve me better than some bureaucrats. And this is because I can’t help but now laugh at anyone essentially telling me that Republicans are going to stand for keeping companies under free-market discipline by enforcing and insisting on competition between them. When they had the chance to let competition weed out the morons at the banks and at AIG, or indeed to even week out those who had essentially been outright frauds, that’s not what they did. What they did was bail them out. Not even insist that after bailing them out they went into orderly bankruptcy but instead give them the equivalent of a full pardon with a gift of billions on top of it, and screwed every other competitor who had *not* been stupid or fraudulent and who would have stepped into the gap.

In short I think the debate’s kind of over and Mr. Bush’s term just utterly and totally changed the terms of future economic discussions: No longer, I think, will those terms be between “socialist/big-government types” and “free-market folks” because what Mr. Bush and the Republicans did under him was to just totally eviscerate *the* most important component of what makes free markets work which is of course competition. Perfectly fine maybe for corner-store plumbers to compete against corner-store plumbers and the losers to fall. But, for the Republicans now especially, not with the big boys; they can never fail. Big banks can gobble all the smaller ones they want, and then even if the big boys fail and make room for other smaller competitors to step in, forget it, the Republicans will be right there shoveling taxpayer money at the big guys, propping them up. And then no doubt, just as they did under Bush, simultaneously figure out how to make it worse for the little guy as for example they did before Obama came in when they deprived ordinary folks who failed of the historic right of Bankruptcy to get a fresh start and instead, doing the bidding of the credit-card companies, essentially turned the Bankruptcy courts into what amounts to collection agencies for those companies, keeping those customers in a kind of involuntary servitude so as to squeeze every last drop of their money out of them.

Like I say maybe that’s not what’s going on, but it’s my sentiments now at least. Don’t care now if Obamacare is a step towards socialism, since there’s no real free-market Republican alternative. Hard to condemn a *general* welfare state when the only alternative that is offered is instead a welfare state for big corporations only, and a “screw-you state” for everyone else.

#6 Comment By publius cato On March 22, 2010 @ 1:22 am

TomB, although I respect your general sentiment and sympathize with it, your overall assessment is off target. The fact that the “Republicans” have burned all their bridges during the Bush administration doesn’t discount the fact that conservatives like the authors and editors of the American Conservative as well as Ron Paul and his supporters weren’t right to be opposed to Bush’s foreign policy or the present administration’s domestic policy.

BTW dont worry about the Chapter 13 bankruptcies, when you hyperinflation kicks in, you’ll have other problems to worry about.

#7 Comment By daddysteve On March 22, 2010 @ 1:25 am

Nice speech TomB. That torpedo hit the good ship Republicrat square amidships

#8 Pingback By Is ‘ObamaCare’ Actually Right-Wing? : Post Politics: Political News and Views in Tennessee On March 22, 2010 @ 6:47 am

[…] McCarthy makes some interesting points: Although it doesn’t matter whether a bad idea is right-wing or left-wing, it might as well be […]

#9 Pingback By The Dumbest Thing You’ll Ever Read on Healthcare Reform | FrumForum On March 22, 2010 @ 7:15 am

[…] did I, until I read the American Conservative this morning! Movement conservatives and beltway libertarians have lauded the Chilean retirement […]

#10 Comment By Leon Hadar On March 22, 2010 @ 10:12 am

Dan, you raised an interesting point which suggests that notwithstanding Reaganism, Thatcherism, etc. much of what had taken place in the 1980’s was a limited reform of the welfare state and not a “capitalist revolution.” My guess is that if healthcare reform had passed in, say, 1933-1965 — looking like the British or Canadian systems — the outcome of an effort to reform that imaginary system would have probably looked like Obamacare.

#11 Comment By AngelaTC On March 22, 2010 @ 11:21 am

Looks like you’ve struck a nerve with Frum. Congratulations.

#12 Comment By Charles Davis On March 22, 2010 @ 12:33 pm

Regarding the Frum post, I love how the author derides this post for supposedly seeking to “settle scores from 1981” — all I read was an apt historical analogy — when neoconservatives never tire of telling us that we are living in 1938 all over again.

#13 Comment By KelleyV On March 22, 2010 @ 2:56 pm


You said, “Most of those now retired, now report that they receive about 4 times the return on investment from the private plan, than they do from the social security scam.”

I don’t want to risk being “embarrassed by facts,” but i was wondering if that informal survey was taken before or after the stockmarket crashed? Sure, they were all encouraged to go private, — we all were back in the 90’s and 2000’s. And then we got whacked. Hard. I’m with TomB: “in the wake of AIG and the banks and all that I really can’t help but laughing now at anyone telling me how the executives of the health-care companies or indeed any companies are going to serve me better than some bureaucrats.”

#14 Comment By ken mcintyre On March 22, 2010 @ 3:51 pm

Any criticism by David Frum or any person associated with David Frum should be worn as a badge of honor. As Daniel Larison points out today, Mr. Bush and his warfare-state cronies (including the egregious foreigner Frum) are by and large responsble for the huge Democratic majorities in both houses which led to this latest surge in dirigisme.

By the way, the fellow on the FrumForum accusing Mr. McCarthy of heterodoxy is one T. Joseph Marier, described on the site as a longtime Catholic church musician, and a human resources professional. Well, that’s where I go to get my hot political opinions: the HR department.

#15 Comment By Jack Tracey On March 23, 2010 @ 7:28 am

This and other recent fiascos were created by the communitarian lie that any business, industry, product or service that is too big or too important to the public good for it to be “allowed to fail” would truly fail without the support of the state. The truth is that if you are delivering value (as a business or as an individual), you don’t need to be propped up.

There is a moral consequence to large businesses and the state claiming that their collusion and other anti-free market activities are in line with free market principles. That consequence is the discrediting of the natural principles of human action that are legitimately described as a “free market”.

Liberals, progressives or whatever you want to call them are smugly pointing out the failures of the free market, perhaps themselves ignorant of the fact that private, for-profit ownership of some business does not make a market free.

Then they protest the hypocrisy of the red party and complain about how the people in for-profit business and the red party don’t care about taking care of them. Whereas the blue party really cares and should be trusted, regardless of their means, because they have the right end in mind– a world without care.

#16 Comment By TomB On March 23, 2010 @ 9:27 am

Jack Tracey wrote:

“There is a moral consequence to large businesses and the state claiming that their collusion and other anti-free market activities are in line with free market principles. That consequence is the discrediting of the natural principles of human action that are legitimately described as a ‘free market’.

It’s not just a “moral consequence” though Jack, just like terming same a “moral hazard,” is that it doesn’t really even begin to describe it. Indeed it’s like saying that the victim of a prolonged chain-saw attack suffered some cuts and scratches.

Remove competition from capitalism and you’ve rendered people unto slavery essentially. As Adam Smith himself would admit the *only* thing that keeps capitalists from making you their captive slave is competition, because it is that which allows you to go elsewhere.

Since, at least vis a vis the big banks, the removal of their competition was exactly what was done via the bailout, that slavery pit is exactly the one Mr. Bush and Mr. Obama have thrown us into. Leaving maybe our only modern cry being “give me socialism or give me death,” because at least under socialism I have someone who at least *purports* to be looking out for me. Under capitalism sans competition, I’m a captive piece of dogmeat.

#17 Comment By Jack Tracey On March 23, 2010 @ 3:19 pm

The moral (as in moral of the story) consequence I was describing is that when someone lies their about their bad behavior– calling it something else– their bad behavior and that something else both become discredited. Unfortunately, many minds have been tricked into seeing only the false choice between communitarian statism and corporatist statism mislabeled as “free market solutions”. The corporatists/fascists are losing their argument that theirs is the path to freedom and prosperity, and so they are helping the communists sully the good name of liberty.

#18 Comment By Chris Moore On March 24, 2010 @ 9:21 am

So just like Social Security, the new Obama health care scam amounts to “a federal Ponzi scheme that transfers wealth from the young and poor to the old and affluent.”

Why am I NOT surprised that it is the Baby Boomer generation of leadership that is engineering this latest sham? As ever, they’re doing nothing but take, take, take their entire way through the system. I guess they’ve calculated they’ll be dead by the time the country finally collapses, but, given the increased life-span of the average person, maybe upon national bankruptcy they’ll just end up getting wheeled from their nursing homes and dumped onto the street or a snow bank.

Sad, although at that point it will be hard to argue against the mob that that’s not exactly what they deserve.

#19 Pingback By The American Conservative » AEI’s Individual Mandates On March 26, 2010 @ 9:21 pm

[…] “conservative, Republican, and generally pro-market circles”? Well, of course it does, as I argued last Sunday — which funnily enough earned me a rebuke from one of Frum’s minions, who declared the […]