10 February 2010

Of Wal-Mart, Health Care, & American History

Sometimes I get so burned out from reading talking about nothing but slavery and the poor treatment of Native Americans and women in the American History seminar I teach (I have to stick to the syllabus) that finally reach my limit and lash out.

Mind you, America is not perfect. The aforementioned Big Three sins were real. But they aren't all there is to American History. And it doesn't help that we are teaching practically nothing more than those three plus the British hobby horse (class warfare) to British freshers who hardly even know who George Washington was.

Just in case the supervising professor on my course (or anyone else from my university, for that matter) read this post let me say up front: I don't blame them; this is the state of academia.

Anyway, where was I? Oh yes, sometimes I reach my limit and go on an I-love-America-liberty-markets-free-trading-are-awesome rant.

Like yesterday. We reviewed a bunch of reading that characterized the increased interdependence, division of labor and specialization of the American economy in post-Reconstruction America as horrible because it made the rich richer and the poor poorer and so on and so forth. One article we read trumpeted "economic independence" as an ideal that was somehow lost or never was or some other such nonsense.

That is, in the New South, capitalists from the North built factories to process raw cotton and tobacco and mine and coal and extract and refine iron (later steel) because it was closer to the source (reducing transportation costs) and laborers in the South were much less likely to unionize, thus resulting in lower labor costs.

And all of this was bad, bad, bad.

Missing is the fact that all of these developments brought jobs to the South (where there had been, prior to the Civil War, a lack of industry) and a higher standard of living. The fact that there were now stores near every railroad depot (another feature of post-Reconstruction America) selling goods people hadn't even imagined before was not a good thing, it was bad because people went into debt to the bad Northern capitalists who produced these goods and duped the stupid poor Southerners into buying them.

The post-Reconstruction period in America is widely considered by economists to be a Golden Age of commerce. Standards of living increased significantly. But the historical narrative is one of worker exploitation, etc. etc.

So I took a moment and tried to teach something about the power of competition and how it both reduces prices and improves quality.

Now the Wal-Mart & Health Care part of the blog post title: Stephen Spruiell made the point last Friday at The Corner that the mere presence of Wal-Mart in the health care industry would improve quality and drive down costs--even for those who never went to Wal-Mart for their open-heart surgery. He's right. This, my friends, is the power of markets in health care.

Because other people would have to compete with Wal-Mart in supplying health services to individuals, the quality would go up (just as there is Nordstrom) and the price would go down (think of the many different price-comparison websites on the internet).

Unlike Europe, we ought not care about the difference in income between the richest and the poorest so long as the poorest can become richer and the richest aren't ensconced, by some government diktat, as the ruling class. Indeed, though the spread between richest and poorest may increase, America remains the country where the most people are able to move between the five infamous quintiles on the income scale. By and large, the poorest do not remain the poorest and the richest die like everyone else.

In Europe, regulation, law, and other preferential treatments have resulted in fairly static class organization. The middle class remain the middle class and the upper class remain in the upper class and this continues on, ad infinitum, generation after generation. The modern European welfare state has created, as I point out to my friends who will listen (or at least act as though they are listening) a permanent underclass. In France, for instance, this underclass is populated mostly by Muslim immigrants who, despite the ever-increasing benefits being thrown their way by the French liberal elite, continue to burn cars.

They burn cars not because they want another 10 Euros a week to pay their mobile phone bill, but because the barriers to getting a job and generally breaking into civilized French society (for instance) are for all intents and purposes, impenetrable.

The same is basically true, to a greater or lesser extent, in every other modern welfare Western European state.

This is essentially what liberal utopia (aka social democracy) looks like. The Great Society largely reversed several generations of gains by African Americans (from the Emancipation Proclamation through the Civil Rights movement). Thomas Sowell has shown how African Americans income, education, standard of living, etc., increased right up until liberal good intentions destroyed the African American family and made them America's permanent under class.

African Americans now vote, practically en masse, for liberal Democrats who, in turn, promise them an expansion of welfare programs which do nothing more than make them, as a people, more dependent on the state and the "good will" of liberal elites.

How to wrap this up? Eric Foner, of all people, wrote about Frederick Douglass's concerns regarding liberal paternalism in his article, "Rights and Black Life in War and Reconstruction."
Frederick Douglass himself had concluded in 1865 that the persistent question "What shall we do with the Negro?" had only one answer: "Do nothing.... Give him a chance to stand on his own legs! Let him alone!" Douglass realized that the other face of benevolence is often paternalism and that in a society resting, if only rhetorically, on the principle of equality, "special efforts" on the freedmen's behalf might "serve to keep up the very prejudices, which it is so desirable to banish."
America need not make the same mistake as our friends in Europe. Liberty and responsibility are inextricably tied together and our government laws and policies--whether health care or welfare or whatever--ought to reflect that relationship.

If you have tips, questions, comments or suggestions, email me at lybberty@gmail.com.