Why Are Normative Healthcare Arguments So Confusing?

Normative approaches for the distribution of time based product, especially in its most basic constructs, don't work at the level of general equilibrium. These discussions can quickly turn into cultural quicksand, given the lack of thoughtful consideration re supply side architecture. Yet there's little incentive to make things less confusing, when policy makers need to please everyone and generate a one size fits all healthcare result.

Regular readers by now are familiar with my rationale in this regard. Why aren't normative arguments for healthcare "redistribution", a reasonable approach? One cannot redistribute a supply side factor that does not actually exist. And when institutions use the revenue of existing wealth to compensate time value as a random component of available skill capacity (as opposed to total time/skills capacity), the result isn't representative of time aggregate potential. Hence I have argued for local and decentralized time arbitrage systems, which would focus on the wealth generation potential of any entire set whose common component is human resource capacity.

I thought about the downfalls of a normative approach for general equilibrium healthcare, after noting some of the puzzled commenter responses to a recent post from Tyler Cowen in which he opened his argument with this:

1. The strongest argument for redistribution is when redistribution boosts economic growth and benefits all or most of society.

Since compensated skill (via general equilibrium distribution) is not representative of aggregate skill potential, even the "best" Obamacare result could not make a positive marketplace contribution. Based on what we surmise regarding resource utilization, when might government best contribute to citizen support and marketplace stability at the same time? After all, besides the logical public good of general equilibrium physical infrastructure, governments once held a larger role in the wealth creation of tradable sector activity; the success of which which has understandably reverted to private interests, since economies became vastly more complex.

The problem is that governments - so as to gain the support of their most successful constituents - have inadvertently undermined local economic settings where normative approaches have a reasonable chance of positive outcomes. Once Washington began to subsidize healthcare providers (with all the lack of redistributive transparency this implies), many onlookers concluded that healthcare now belonged to - and could be negotiated in - a broad normative platform.

Despite this extensive societal assumption and also paradoxically: Economists often approach public policy as though it should merely support a non-normative or spontaneous marketplace. But in doing so, they give up the possibility of contributing to effective normative institutional responses which might generate positive outcomes. Consequently, economists who reflexively defend the supply side as it already exists, give up the possibility of powerful and valuable input, into supply side organizational potential.

Meanwhile, healthcare would scarce appear any different should it devolve to state levels, so long as any legislation continues this unfortunate history of granting favours through limits on supply side production. What's interesting is that existing original limits on supply side sources, hardly even enter serious discussions. Meanwhile, as the effects of original sin limits spread across the larger political spectrum, the normative debates of philosophers, sociologists and others, only make the matter more divisive than it was to begin with. How could this be the level of discourse, where supposedly practical and results oriented economists, find it beneficial to engage?

And what our government has yet to recognize, is that by granting oft permanent institutional privileges to particular associations, the New World is following the same familiar path of hereditary advantage which was associated with the Old World. In the future, as governmental legislatures contemplate their participation in economic matters, they might recognize the extent to which they limit economic opportunity, and the future destinies of every citizen, whenever they are tempted to bestow permanent prestige on those they believe to be most deserving.