Economic myth of the day (oh hell, make that “of all time”) — UPDATED

Government monopoly buying power can bargain prices down from health care providers better than the free market can

This is a myth easily believed by anyone not well informed on basic economics.  The truth is that a government monopoly is so infected with the politics of special interests it lacks the efficiency and effectiveness of a free market. The politics of special interests will always drive the government monopoly away from the sort of unbiased behavior that makes a free market so effective.  A government monopoly simply cannot marshall all the information that is necessary to manage the distribution of scarce resources.  This flaw is more likely to push prices in the wrong direction because the daily decisions made by a multitude of consumers operating in a dynamic free market is replaced by the decisions of a few bureaucrats operating in a stagnant political environment. A government monopoly does not really “bargain” at all. Government power is not based on bargaining; it is based on the ultimate power to force people into arrangements not of their own choosing.  Those forced to live under the yoke of government mandates will always and everywhere seek whatever relief they can find, thus making decisions they would never make in a free market.  The result is waste, chaos, increasing costs and eventually, complete break down.

Free market efficiency resolves problems caused by government inefficiency.

Vermont’s Single-Payor Dream is a Taxpayers Nightmare-Bloomberg Review “Yes, yes, there may be fabulous cost savings from using the government’s monopoly buying power to bargain prices down with providers.”

To believe this is true you must also believe that erecting a gigantic government bureaucracy between patients and health care providers will somehow reduce costs. That is the essence of magical thinking.

UPDATE: Another reason government monopoly buying power can’t do for the economy or any sector of the economy all the wonderful things a free market can do:  Government monopoly on anything quickly becomes crony capitalism [i.e., governmental decisions favoring “cronies” of governmental officials; corporate welfare] which always and everywhere means that government is not making rational buying decisions as consumers would do; instead the politicians and bureaucrats are favoring certain sellers over others based not upon which ones are offering the best value but which ones are making political campaign contributions and generally supporting the existing political establishment, making them “cronies” of government officials.  For example, the crony relationship of Barack Obama and Jeffrey Immelt of General Electric, or Obama and Solyndra LLC and the dozens of similar companies engaged in renewable energy scams getting $$$millions in government guaranteed loans they will never pay back.  It’s not just Obama; there are dozens if not hundreds of similar examples throughout American history, and it’s worse still in every other country in the world.