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A Command and Control Economic Program Always Hurts The Intended Beneficiaries

It seems that the British National Health System is facing a cost crisis due to rapidly increasing rates of childhood obesity. They may not be facing it yet, but they have smart people working for them, maybe even a Evil ORSA or two, who have drawn them a picture of what’s approaching down the pike. The British government has seen this picture and judged it ugly enough to qualify as a modern art masterpiece. The growing threat of childhood obesity has spurred the British government into action.

Like most governments, the British one annoys us with its inefficiency, but really becomes a threat when it gets down to business in a ruthless manner. Local Council chiefs are now threatening to take obese young children away from their parents. It’s the compassionate thing to do for the poor things; they’ve been neglected.

I work for the US government and I practice the nefarious, black arts of operations research and data analysis. The person making this decision may or may not be a decent human being, but I’ve worked long enough in government cost shops to know the following. The data driving the decision had nothing whatsoever to do with the welfare of these poor not-so-little Dearies.

This decision was driven by what US DoD ORSAs, working in the “Five-Sided Puzzle Palace” refer to as Unfunded Requirements (UFRs). Childhood Obesity represents a grave cost threat to the British National Institutes of Health. They don’t have the budget to treat millions of new Type II Diabetes cases that start in childhood and involve chronic recurrent symptoms over a decades-long time horizon.

In the context of a military program, the UFRs become a problem for that program, rather than the US military as a whole. That’s because the Pentagon manages portfolios of similar programs, aimed at providing certain combat capabilities. No one program is considered the ultimate goal.

If a Program Manager wastes the funding, their program can be popped like a zit. Just ask people who worked on Crusader or Comanche what happens if you get on the dark side of Darth Cheney’s force.

Unfortunately, the British healthcare system doesn’t have that flexibility. They have to care for anyone who gets in the line and waits there. At least they have that mandate out to the capability frontiers of their agency.

No matter how poorly these individuals have cared for their children, or no matter how poor a set of health decisions a given patient has chosen to make, the British Government has to fix their problems and eat the cost. As Karl Marx once described this arrangement; it’s “…to each according to their needs.”

The problem the Britsh face with childhood obesity is similar to the problem that the US will have to face with Social Security and Medi-pander. The noble, good intentions of philanthropic socialism eventually run afoul of the John Glenn Law of Astrophysics. No economist has ever identified a meaningful incentive to curb the demand for a free good or service provided by the state.

As a result of so-called progressive taxation, Britain, the US and any other Western Democracy that charges wealthier taxpayers higher rates for the same level of service in the name of ‘fairness’, suffer from a massive free-rider problem. The more that the government makes available; and the more ‘progressively’ that society taxes, the less the vast majority of the people care about reasonable conservation.

To understand this in simple, human terms, compare your driving habits when gasoline costs $3.45 a gallon to your driving habits about three years ago. Now imagine a world where wealthy drivers paid $3.45 a gallon, and poor drivers paid $1.45 per gallon. The people paying the higher price would care a whole lot more about the current energy debate.

The national health system, the tax system and the lack of private health insurance, prevents the market in Great Britain, from disciplining parents who let their kids slack in front of the idiot box instead of sending them outdoors to run off a few calories. In the US, if my boy weighs 200lbs by his 10th Birthday, I’m going to be fined for my poor parenting when I get my next health insurance bill.

The actuary, who will send me that bill for my failures as a Daddy, may truly care less whether my cute, little tyke gets raped by a Doberman Pincher. This is the classic example of Adam Smith’s old maxim.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

The insurance company sees that one of the dependent Social Security Numbers on my account belongs to a kid who weighs 200lbs by his 10th Birthday. They cross-reference this to some medical chart that predicts that I’ll have to claim his first arthroscopic knee surgery or a major trip to the Chiropractor before the young lad turns 15.

The insurance company then begins to amortize the expected value of all that medical care that wouldn’t be necessary if I were parenting properly in the first case. I get the horrendous insurance bill in the mail and have to hock my TV at the local pawn shop. Thereafter, my offspring has to go outside and play.

In Great Britain, that just doesn’t happen. The same smart people gather the same vital data about the condition of everyone the National Health System covers. They see the same rancid effluvium of unnecessary costs coming to swamp them as more and more children grow up obese. They just have no means of amortization.

This brings us back to the fundamental paradox of paternalistic socialism. There are only two ways to optimize the distribution of goods and services in a national economy. You can trade or you can forcibly redistribute.

When the US health system needs to redistribute cost risk, it uses the evil, greedy insurance companies to stick those who engage in high-risk behaviors with higher bills. This rations health care and kicks free-riders off the trolley with ruthless efficiency.

In Great Britain, there is no insurance market for pediatric healthcare. You bring your damaged kid, you stand in line and eventually your child gets fixed. If a parent abuses this system, that parent can’t be fined via higher insurance costs.

That parent has to be relieved of duty in much the same fashion that General Tommy Franks relieved Saddam Hussein. That’s why obese children in Great Britain are now in line for the Elian Gonzalez treatment of their obesity problem.

If there’s an abiding moral to this sad tale of good intentions and the road they pave for us, it would be this. When the paternalistic daddy-state gets ripped on the wormwood spirits of equalitarian redistribution, and goes on a wife-slapping bender, it’s always the children that suffer the most.

Just in case anyone thinks insurers don’t penalize the obese….They sure do in Alabama!

Cross-Posted At: THE MINORITY REPORT

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