“We’re From the Government and We’re Here to Help”

James Poulus observes:

I’ve said elsewhere that our vision of politics is being corrupted by a well-meaning but misguided epistemology of compassion: increasingly, we consider the person or group demanding a right to be the most trustworthy source of information about whether they deserve it. Anyone aggrieved, we think, must really be suffering grief, and since suffering is the worst thing and cruel is the worst we can be, justice is served when the law — that is, judges — fast-track the claims of the aggrieved and grant them instant — that is, legislature-circumventing — relief.
This is pretty transparently a medical way of viewing social relations. But our big medical brains are wired into big therapeutic hearts. And so what is happening in ‘politics’, which is actually the evacuation of politics by law on the one hand and desire on the other, is happening in medicine itself.

This leads into an observation by Keith Hennessey on private industry competing with government (ie; as proposed in the proposed health care reform):

I think that government cannot compete on a level playing field with the private sector. Government always has advantages because of its sovereign power. I also think that in most markets there is a range of private health insurance plans competing for business, and so the addition of one more plan is not worth the downsides of government involvement. (I believe that competition is flawed because for most people their employer shops for health plans. I prefer a system in which individuals are shopping for health plans.)
The government cannot compete on a level playing field with private firms:
* Fannie Mae and Freddie Mac had competitive advantages relative to their purely private counterparts. They leveraged those advantages to the gain of their management and shareholders until they collapsed and jeopardized the entire financial system.
* Ford Motor Company was not bailed out. It is now disadvantaged relative to GM and Chrysler, which benefited from government oversight, funding, and effective rewriting of bankruptcy rules.
* Government-provided terrorism reinsurance is preventing private reinsurance from returning to the marketplace.
* Most physician- and hospital-reimbursement structures are based on the methodologies of the largest payor in the market, Medicare.
* Government-run direct student loans are now crowding out the guaranteed student loan program, in which private banks and financing firms offer loans. The government advantage comes from control over small details of the program that give direct loans a competitive advantage.
The ultimate fear of having a government-run “public” option is that it will crowd out private health insurance, and that ultimately most Americans will be getting their insurance from the government.

In other words, when government is involved–whether as a service provider itself or with a vested interest in particular entities within a given business sector–private companies without government help are at a disadvantage. Yet, some may welcome government intervention, according to Poulos:

Big Pharma has a vested interest in comprehensive government regulation, too, you know — the better to squeeze out competition, get institutionalized with an unkillable monster of market share, and permanently hedge, by way of unremittant lobbying and revolving-doorism, against market risk or corporate accountability.

What both illustrate is that the while government doesn’t always actively pick winners, its insertion into markets results in preferred policies and “suggestions” that ultimately lead to losers: Either businesses that don’t benefit from government largesse (Ford) or consumers who are affected as services are adjusted to comport with the new business model.

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