What to Do About Economic Perversity
I agree with the Providence Journal that it is “perverse” for the CEO of a health insurance company to make one-and-a-half times the entire payroll of a 2,000-employee hospital. Considering how often Republicans and conservatives are saddled with the ideological blame for these supposed excesses of the free market, that admission may surprise some readers. We’re not talking an ideological paradox — or even run-of-the-mill self-contradiction — though.
Such stark comparisons should actually lead one to question whether we’re seeing evidence of capitalism unbound or capitalism unwisely bounded. The fundamental differences between modern economic philosophies (e.g., between Keynesianism and supply-side economics) sometimes seem to come down to conflicting opinions about how to get the rich to keep their money moving (e.g., as corporate profits or as private income) — indicating a general understanding that those who control wealth will tend to try to take as much as possible for themselves. It is reasonable to suggest, therefore, that the encouragement of competition is perhaps the most effective means of placing natural, market-driven limits on the amount of wealth that it is reasonable for the rich to siphon away from productive ends. Try to grab a $100 bill from somebody, and he’ll hold it out of reach, dodge left, dodge right, and run you in circles; offer somebody else a profitable opportunity while the first guy is hoarding his cache, and that $100 bill might not be so difficult to liberate.
The healthcare industry is plainly not an example of a free market, what with regulations, coverage dictat’s, and the insurer/customer relationship’s being all tangled up with the customers’ unrelated careers. as much money as $124 million might be, throwing it away is apparently not a competitive handicap in the face of high barriers to entry and high costs of doing business once a company has entered the industry.
So no, I don’t support a system of such gargantuan inequalities. I support a system in which competition puts the avaricious in danger of eating themselves.