Re: TownHall.com – 3/6/2008 – “The Planning Fallacy” – David Strom

While it is certainly true that the free market has proven to be a much better judge of customer desires than any planners (government or corporate), the free market has also been proven to be a notoriously poor allocator of scarce commodities and, ironically, the free market is also notoriously inefficient in allocating “free” (non-monetized) items. While I would not want to replace the free market with “experts”, I welcome the attempt of those same experts to fully monetize costs so the free market can make even wiser allocations of economic resources.

If the future costs of fueling inefficient automobiles were adequately understood by consumers in the past, they would have been buying more of the most efficient vehicles and less of the gas-guzzlers (like I have) --- of course, that’s just my opinion, but one that is supported by the increasing efficiency of autos offered and selling on the free market. Unfortunately, market hysteresis makes for violent swings in supply and demand when purchase decisions are made based on current conditions rather than over the expected lifetime of the item purchased.

One way in which monetization would greatly assist the free market in improving healthcare is recognizing and making public the real cost of providing and not providing adequate healthcare to people with insufficient financial resources to purchase the care on the free market. Lost productivity is one obvious cost of not providing such health care, but there are others including negative effects on the productivity of family members saddled with providing “free” care, and the long term productivity of children hurt by the family’s social and financial hardships due to untreated medical conditions. Replacing health payment incentives for business with health payment incentives for individuals would be a start. Requiring government drop a “promise now, worry later” healthcare payment system with one with some balance between health care financial benefits and the finances to supply the benefits over the long term would also help.