This is a departure from my normal political topics. In the past few days I have described why the free market does not work with the healthcare system in the United States at least two times. Because both were sort of ad hoc, I decided to write one that is a little more complete. Neither of my readers will mind a change in subject and I get to review interesting stuff.
This article is based on classical economic theory. The Austrian school of economics will argue that some of the assumptions below, notably perfect knowledge, are not valid. The Heritage Foundation has published a refutation of the original argument at http://www.heritage.org/health-care-reform/report/compelling-evidence-makes-the-case-market-driven-health-care-system. I’ll come back to these later. Note that I am not a practicing economist so there will be valid disagreements with some of the items below. However, taken as a whole and observing the healthcare market, I believe the argument to be valid. Continue reading