When Solutions are the Problem

People have a natural disposition towards being in control. We all feel safe when we have a tight leash on life and anything outside our control makes us fearful and uneasy.  Natural dispositions however can be misleading. Sometimes our own capable hands aren’t quite as capable as we may think. There is a trend among societies to attempt to fix or avoid problems by tampering with natural forces that they fail to comprehend. By looking only at the intentions and ignoring the invisible 3rd party these “fixes” tend to lead to disastrous results; Disastrous results that then need to be fixed Thus spurring society into action yet again inventing even newer solutions.

One such example of unintended consequences is American healthcare costs. Healthcare in the United States takes up a considerable chunk in the cost of living. One might blame the physicians or the insurance Companies, calling them evil crooks; and this might be partially true. However there was a time in this country when the exact opposite situation was the case. Up until the mid 1940s medical practice in the United States was a completely unlicensed profession. Anyone with the knowledge and truthfully I must say lack of knowledge could openly practice. Private medical schools flourished and the amount of physicians per capita was the highest it’s ever been. Through this competition health care costs were kept low. This was a system that obviously relied on reputation. There was also the practice of medical fraternities that offered community services and acted as a sort of cheap insurance system for the poor working man or immigrant. Now this wasn’t a perfect system. Bloodletting, leeches, and questionable tonics were widely used in treatment. But this slowly diminished as competing practices proved these methods ineffective (and down right dangerous).

In 1847 the American Medical Association was founded and soon found itself to be a giant among the lobbying force. The medical community organized in an attempt to completely eradicate unorthodox forms of medicine and to stabilize the Medical profession through control of the number of professionals through licensing. Medical practice became the prestigious career it is today through longer required education through “approved” schools, and the AMA also took action to eliminate fraternities and control physicians. Not only must they spend years at approved schools but also work at approved hospitals. The longer time and costs of education and internships has most definitely directly affected the cost of health care, driving it higher than ever before. Now I will make no claim that no good came out of organizing the medical profession. Medical care is now safer and the stringent controls keep unqualified doctors away. But we must surely measure the seen effects of licensing with the unseen effects being higher costs and limited physicians. We must also ask was it really the best way to accomplish the goal? The current attempt by the government to lessen the weight of high healthcare costs is in direct opposition of our past decision to drive them up.

Unfortunately healthcare Is not the only cost we face in our daily lives. Basic necessities such as food, gas, and shelter can drain our pocket books before even getting the opportunity to choose our insurance plans. As a sympathetic people with such a thoughtful government we aim to alleviate the poor of this burden as best we can through rent and housing controls. The State takes control of the cost of housing thus making homes affordable to even the poorest of Americans. But what are the effects of such price controls? By freezing the cost of rent below its natural value or forcing contractors to subsidize the poor by controlling the cost of construction the profit incentive of the renter/contractor is reduced. If there is no profit for building in a particular area than nothing gets built thus limiting the supply of homes and driving up the costs. The ghettos multiply with slums as renters abandon their property. Few people benefit at the cost of everyone else. Higher demand means higher prices. Higher prices means more incentive for producers to fill the demand thus alleviating any shortage. By controlling prices the incentive is gone and nobody fills the demand, thus making the shortage worse. By tampering with the price system society sends false signals to individuals who need to be filling demand. This principle is universal with all commodities.

Places with more rent control such as New York and California show staggeringly higher Costs of living. As where places with less such as Texas show a drastically lower cost of living.

Cost of Living

One final example of solutions that caused more trouble than the problem they were intended to solve is the Federal Government’s endless crusade in the war on Drugs. It’s no secret that violence and crime surrounds the drug market. But Why are there no Alcohol turf wars? One simple reason, Alcohol is legal. There is no doubt that drugs such as Marijuana, cocaine, Meth, etc. alter brain activity and personality. It’s also no secret that these drugs can be quite addictive and laws enforcing the prohibition of these drugs are all in good intention. But we again must measure the effects of the law and not only its good if but misguided intentions. Black markets are merely markets where no legal framework or recourse exists. When the wrongdoing of one cannot be legally compensated for there is only one action, An illegal one. The violence stems from this very premise. Let us not also forget supply and demand. Where there is demand someone will always attempt to fill that demand. While prohibition laws attempt to regulate behaviour they can not control the demand for the illegal substance. With the legal supply out of the way, the costs of the product rises thus incentivizing the supplier even more. This paired up with the fact there is no legal recourse in disputes leads to violence and crime in the fight over the market. The same effect was seen during the 1930s with the prohibition of alcohol.

Prohibition murder rate

In 2001 Portugal had actually Decriminalized all drugs. Surely Portugal is filled with crime, sex, and rampant disease with the end of their country looming thanks to drugged crazed psychopaths running around. Yet Portugal is still here. In fact with less Drug abuse than before, and of course much less drug related crime. This shows that there can be no doubt that substance prohibition is nothing more than feel good legislation with Devastatingly detrimental effects.

I hope if anything is taken from this it isn’t that all action is bad. That is not what is being implied. But rather that centrally planned choices by committees and academic elites can and will tamper with and mislead market signals which can be devastating to an economy. Businesses and people can work well in and adapt to market changes. It’s that people’s quick fixes and obsessive need to control and solve every single ill of society right here and now, without thinking about the possible consequences of their actions that leads to even worse problems arising.

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