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F. A. Hayek: ObamaCare’s Defender

Written by Gary North on July 12, 2013

“There is little doubt that the growth of health insurance is a desirable development. And perhaps there is also a case for making it compulsory since many who could thus provide for themselves might otherwise become a public charge. But there are strong arguments against a single scheme for state insurance; there seems to be an overwhelming case against a free health service for all.” — F. A. Hayek.

Hayek wrote this on page 298 of his magnum opus, The Constitution of Liberty (1960). We could put this another way.

This isn’t about putting government in charge of your health insurance; it’s about putting you in charge of your health insurance. Under the reforms we seek, if you like your doctor, you can keep your doctor. If you like your health care plan, you can keep your health care plan.

These words may sound familiar. They are from President Obama’s 2009 speech calling on Congress to pass ObamaCare.

But if Hayek was willing to surrender the moral case against ObamaCare, what about the welfare state in general? Hayek favored this surrender.

In the Western world some provision for those threatened by the extremes of indigence or starvation due to circumstances beyond their control has long been accepted as a duty of the community. . . . The necessity of some such arrangement in an industrial society is unquestioned — be it only in the interest of those who require protection against acts of desperation on the part of the needy.

These are the opening words of chapter 19, “Social Security.” He spelled out the implications of this position on the next page.

Once it becomes the recognized duty of the public to provide for the extreme means of old age, unemployment, sickness, etc., irrespective of whether the individuals could and ought to have made provision for themselves, and particularly once help is assured to such an extent that it is apt to reduce individual’s efforts, it seems an obvious corollary to compel them to ensure (or otherwise provide) against those common hazards of life. . . .Finally, once the state requires everybody to make provisions of a kind which only some had made before, it seems reasonable enough that the state should also assist in the development of appropriate institutions. Since it is the action of the state which makes necessary the speeding up of developments that would otherwise have proceeded more slowly, the cost of experimenting with and developing new types of institutions may be regarded as no less the responsibility of the public than the cost of research for the dissemination of knowledge in other fields that concern the public interest. . . .

Up to this point the justification for the whole apparatus of “social security” can probably be accepted by the most consistent defenders of liberty. Though many may think it unwise to go so far, it cannot be said that this would be in conflict with the principles we have stated. Such a program as has been described would involve state coercion, but only coercion intended to forestall greater coercion of the individual in the interest of others; and the argument for it rests as much on the desire of individuals to protect themselves against the consequences of the extreme misery of their fellows as on any wish to force individuals to provide more effectively for their own needs.

He wrote: “The necessity of some such arrangement in an industrial society is unquestioned — be it only in the interest of those who require protection against acts of desperation on the part of the needy.” Let me summarize his position: “Voters should surrender to violence-prone blackmailers. This surrender is both moral and institutional. This policy of surrender is consistent with liberty.” Let me identify where this road is headed: to something worse than serfdom.

Sixteen years after the publication of The Road to Serfdom, Hayek pulled the moral rug out from under the fledgling libertarian movement that his earlier book had helped to launch. The Road to Serfdom became a best-seller for the University of Chicago Press. It was summarized in 1945 in Reader’s Digest. This book, along with Hazlitt’s Economics in One Lesson (1946), probably contributed more to an understanding of the dangers of central planning than any other book that was widely read, and has remained widely read, ever since the mid-1940s.

Nevertheless, Hayek’s work has always been a liability in the areas of morality and epistemology. He was never as committed to the free market as his mentor was: Ludwig von Mises. Mises was hard-core in his defense of free market principles. Hayek never was.

(For the rest of my article, click the link.)

Continue Reading on www.garynorth.com

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9 thoughts on “F. A. Hayek: ObamaCare’s Defender

  1. Texas Chris says:

    Hayek tries to make unquestionable the point that government must be responsible for those who make poor decisions. That is his major flaw in thinking; moral hazard.

    If removed, then no defense of government safety nets can be made.

  2. The words you can keep your own insurance will live in epiphany forever. Much like the rest of the political lies we have been told. The democrats in particular, but not without help from the republicans. If we truly have a government with checks and balances, we would never find ourselves in the condition we are in.
    I know that we have a vote but that is to appease the masses and make them think they have a voice. The only voice the politicians hear is the voice of the lobbyist. I call it bribery, I could be wrong but I doubt it. That was something Obama said there would not be during his reign. Somebody lied.
    We do not want or need a government telling us what to do and when to do it. The federal government should be for national defense and then only through the joint agreement from the states. why would we want the federal government to do anything, when every time they do something things are worse than before?

  3. albertmaslar says:

    Everything is connected but government divides issues, multiplies regulations, adds bureaucracies and caveats with contradictory "ifs ands and buts," and generally subtracts relevance from the issues at hand. Consequently nothing fits into the gear box which grinds uselessly. A real fix for the perpetual related problems of HealthCare,Taxes, Deficit, and Debt, is to change the tax structure: Install a 3% National Sales Tax with NO exemptions or exceptions, not even for non-profits or government. 1% dedicated to current budget expenditures; 1% dedicated to reducing National Debt; 1% dedicated to Universal Medicare that would cover all legal residents of the US. Income or not, All residents would be required to file a simple tax return each year, that would be used to determine eligibility and the amount or percentage of co-pay. To make sure that there were sufficient funds for the transition, a revised Income Tax Table applying to business as well as individuals would reduce income taxes to a graduated 20% maximum. Stock market transactions would be subject to a 1/2 percent transaction tax. That might put the brakes on HFT High Frequency Trading that adds to the problems connected with artificial volatility that gobbles up normal investor profits in the blink of an eye, while causing havoc in the market.
    The beauty of the NST is that everyone, legal or not, illegal income or not, welfare income or not, would pay 3% of their spending or benefit for support of the country including automatic Universal Medicare for ALL LEGAL residents of the USA. The NST could replace the need to rely entirely on the income tax that under this plan would be reduced to a graduated tax with a single tax-table for all entities, personal, business, and Not-For Profit entities with a maximum GRADUATED rate of 20% summarized as follows:
    Effective tax rate on Taxable Income of $100,000 2.74%
    Effective tax rate on Taxable Income of $1 Million 7.47%
    Effective tax rate on Taxable Income of $1 Billion 19.88%

    The present income tax code is too cumbersome and complicated and is beyond fixing its over 76,000 pages. Even the IRS does not understand its own conflicting rules and regulations.
    Revenue from the new income tax would make up any budget shortfall not paid by 1/3 of the 1% NST with any excess dedicated to further reduction of the National Debt.
    Copy of plan available from albertmaslar2@gmail.com

  4. Jeanne Stotler says:

    A sales tax would be OK, BUT I do not want the Government telling my doctor how to treat me. We are complex, no 2 ofusare alike and each responds to treatment in a differerent way, , It's the "practice" of Medicine, a joke among us professionals, "We are still practicing" . We had a good system going for years, sure some went uninsured, BY CHOICE, others went to free clinics or where on Medicaid. There are some among us who have Insurance and yet NEVER go to a doctor UNTIL they have serious issues, When Heal Insurances first came on the scene, there were a few companies and Insurance was for HOSPITAL care, Emergencies, WE PAID for routine care, well baby, prenatal, etc. out of pocket, REMEMBER the more you want your insurance company to PAY, THE MORE YOU WILL PAY. The Government cannot take care of themselves, they hae dozens of employees that are deliguent on taxes, $133,000 WH employees alone, Medicare payments are behind, Veterans wait over a year for their benefits to start, andyou want to trust these same people to assure your health care, NOT ME.

  5. Government cannot out perform the private sector at any level whatsoever!! Government has NO INCENTIVE for efficiency and is exactly why everything that government has taken over becomes a financially disaster and a failure!!!
    For elected megalomaniacs (the public equivalent of a "temp" employee) to insert themselves into the private sector is an absurditiy in and of itself; these are people bent on "competing" with the private sector, but they can't because they do not understand the concept of "initiative".
    The Founders made a huge mistake in assuming that Government would stay within the defined limits of the Constitution, but then they never figured that the criminal Hugo Black would lead the Supreme Court in reversing the context of the Bill of Rights to be prohibitions upon t he People and not upon Government!! One disaster after another has followed ever since!

  6. This is a very interesting concept, and one that might work well. I don't know if the sales tax rate would be high enough to really be helpful, but I like the basic idea, especially of the transaction tax, which, as you pointed out, might help curb stock market volatility. Might it also be extended to commodities, too, to help contain those prices?

  7. The excuse for obammiecare was to cover the 30 Million uninsured residents (notice I didn't say "citizens.) Now, we are told that there still are 30 Million uninsured! And, 26,000 pages have been added AFTER the bill was passed! Can any of us imagine what has been added, (everything thing the libs have ever wanted!) None of these additions were approved by Congress..

  8. Bill McCroskey says:

    The government should ONLY be involved in providing anything the public sector absolutely cannot (i.e. the military, roads, fire & police protection note: police protection is suspect imho) Railroads, parcel delivey, health care, business loans, education, ad nausem can and should ONLY be allowed to operate in the private sector for the reasons you state. NO INCENTIVE to cut costs, then work hard & smart to build a 'better mouse trap' to compete for yours or my business.

  9. I agree that the government should only provide what the PRIVATE sector can't. (I think that is what you intended to say. Government IS the public sector.) I would dispute that the public sector can't provide roads as well, if not better than government. I have lived in several communities in which the local reads were owned and maintained by the homeowner's association, and they were in AT LEAST as good shape as the 'public' streets.