The Problem With Choice in a Free Society

The concept of choice pops up as part of many if not all libertarian debates on this board, consider the following key topics frequently bickered over:

  1. Health Care: should individuals get the choice whether or not to have insurance.
  2. Vaccinations: voluntary or not?
  3. Social Security: should individuals get the choice whether or not to save for retirement
  4. Cranick was given the choice to participate in a paid subscription for fire services.
  5. Ant v Grasshopper

Each case represents a struggle between government forcing a service on someone, versus an individual’s desire to choose for him/herself.

If you take any of them, pick SS for example: There is a case to be made, for freedom. Let people have that income, and choose how they want to save it. Let them avoid the bureaucracy and waste that goes with government.

But then what happens when they make the wrong choice? Does the government and/or society have obligation to that individual?

Two possibilities exist, a person either fails to save, or loses it all in bad investments. Either way, do we want a society where people work till they die? Does it benefit us?

If someone chooses not to get health insurance, then develops treatable, but costly, cancer. Do we let them die?

And lastly, in the cases of vaccinations and individual fire protection, what happens when society is impacted. Do we want uncontrolled fires and polio outbreaks? If we have neither social security or medicare, the financial pressure makes both more likely. If you think of all the choices a senior has to make now to make ends meet, should we add on another $75 a year for fire services?

For me, the obvious end results is that we can easily divide society into two groups: good decision makers (aka the exceedingly rich) and bad decision makers (aka those living in abject poverty). Of the 5 examples listed above, failing in any of them puts a person out on the street, and into a slum/shanty town. Conditions there simply make things worse, more outbreaks, more fires.

The only plausible conclusion is to mitigate the potential downside. Provide some retirement provisions, health care, social services. I think we’ve established that if left to their own devices, most humans can manage just fine. Perhaps just round off the edges a little.

For those wondering, the first two points were meant to be 1a and 1b.

You bring up a good point: If we’re not going to let old people starve to death, or let people die in the streets for lack of basic health care, then making it completely voluntary create a free-rider problem. Some people won’t save for retirement or health care, comfortable in the knowledge that in the end, other people will look after them anyway.

Hard-core libertarians need to realize that as a society we simply will not tolerate the complete lack of a social safety net. So instead of focusing on a pie-in-the-sky world absent of government, they need to look at how to best marry libertarian principles with the values of our society.

There are several ways to do that. One is to show that when government retreats, other mechanisms come into play. Before there was a mandatory government retirement program, old people generally didn’t starve. They didn’t starve because society was structured differently. People had more children, and the culture expected children to take part in the care of their elderly parents. It was common for Grandma and Grandpa to move in with the children when they got to the age where they couldn’t care for themselves or if they were no longer capable of generating an income. There were mutual aid societies, private soup kitchens and boarding houses, etc. It wasn’t necessarily pleasant, but it wasn’t starvation either.

The problem is that those structures no longer exist. When government takes over the role, the private sector recedes. The structure of society itself changes based on the new incentives. It’s entirely possible that we can never get back there, or that we’d even want to if we could.

So what else can we do? In my opinion, what we can do is work towards a hybrid system that offloads much of the current entitlements from government, while retaining a basic safety net.

As an example, the Social Security retirement age could be raised to 70. A private supplemental retirement plan could be put into place that would allow a person to retire at 65 by paying extra into a private, locked savings account. If people don’t pay it, it’s not the end of the world to keep working. If they can’t work for physical reasons, then they can go on welfare or disability.

In addition, Social Security and Medicare could be means-tested and turned welfare programs rather than being universal entitlements. Make the SS payment low enough that living on nothing but Social Security would be very unpleasant but do-able. De-list as many services from Medicare as possible consistent with basic quality care. Then give tax incentives for more private retirement savings. Make it clear that living on Social Security is not really what you want to be doing.

Of course, something like this would have to be phased in over a long enough period that people have time to plan for it - people within a few years of retirement need to get the benefits they planned for. But benefits could slowly be scaled back a bit at a time for people more than 10, 15, 20, 25, and 30 years from retirement, and the tax breaks and witholdings adjusted accordingly.

For health care, I’m a fan of catastrophic insurance. The government won’t let you be bankrupted by a chronic condition, but you should fully expect to pay your own way for routine medical care. Index the catastrophic cap to income to make it progressive - if you earn $25,000 per year, you pay the first $2000 of your health care per year. If you earn 250,000 per year, you might have to pay the first $100,000. The rich should be paying for the vast bulk of their health care out of their own pocket, but everyone should be paying enough that market forces start to work. We need to get off the 3rd party payment system, whether it’s the government or an insurance company acting as the 3rd party.

I’m sure gap insurance would become available for those who don’t want to risk even the $2000 bill. It would be much cheaper and less paperwork intensive because insurance companies would have their top-end liability capped. That’s the way it works with dentistry in Canada - if you have your jaw smashed or have oral cancer, the government will pay for it. But if you need a routine filling, or your kid needs braces, you’re gong to pony up for it. But dental insurance is so cheap that most people have some form of it. It’s cheap because the maximum coverage is capped.

To transition to that kind of system, you can set up tax-free health savings accounts. Maybe even set the default such that employers have to register their employees in one, and it’s up to the employee to take steps to opt out if they don’t want it (that would be Cass Sunnstein’s ‘nudge’ idea).

We need to gradually transition away from a system of government entitlements to one of self-reliance and personal responsibility, while still maintaining a minimal safety net. That has to be done slowly over time, to allow private institutions and market forces to pick up the slack. But we’ll never get to a purely private system.

In my experience, you have things backwards. Government did not “take over” the role of caring for the elderly. Rather, as society changed, people had fewer children, and those children became more mobile, ending up far, far away from elderly parents. Combine that with the fact that people started living longer. Significantly longer. The mutual aid societies, soup kitchens, etc. just could not keep up with this increased population of needy elderly.

It was due in part to pressure from those organizations that the government took over SOME of the care of the elderly; not because it wanted to, but because it HAD to. The “private sector” did not recede. Rather the charitable sector became overwhelmed.

You’re right in that we could never go back. Unless we want to mandate that children are now fully responsible for the care of their parents.

That’s a pretty wise set of principles, not just for libertarians but for partisans of all stripes: humans have a mixed set of moral intuitions, and it’s not possible to turn them all into a version of enlightened little you. I agree that libertarians need tactics that accommodate the fact that human empathy is strong enough that we’ll want to rescue people even if they obstinately persist in self-destructive behavior. So, instead of abolishing the welfare state wholesale, it makes sense to scale it back slowly so that social norms can adjust to help fill in the gaps. (This also has the virtue that absent a Ron Paul coup, any libertarian reforms (highly unlikely in any case, IMO) will have to be piecemeal simply due to political realities.)

But if you buy this, then you must take the next leap and say that we do need to protect people from stupid choices, and in many cases this supports a conservative viewpoint - “we need more social controls so people don’t have so much freedom that they screw up their lives and make us foot the bill.” Legalizing drugs, for example, is fine from a hardcore libertarian point of view - for harmless drugs, it’s an unalloyed good; for harmful drugs, people will be warned off after the first radical experimenters have bad experiences. But in real life, as a society we won’t tolerate people having their lives destroyed by drugs; we’ll spend lots of money on rehabilitation and welfare payments, and create several ineffective “wars on drugs” to boot. So the nominally libertarian policy of drug legalization actually leads to bigger government in the real world.

Similarly, making divorce easier in the '70s, while it had little effect on the well-being of comfortable middle and upper class whites, was terrible for the black community, which was then experiencing considerable upwards mobility. The results of the policy: unstable family structures and a ridiculously high rate out-of-wedlock births, a major contributor to poverty and crime. At which, responding to general empathetic feeling, there arose a huge government apparatus to both police and redistribute wealth to those same folks. Once again, giving people the wrong kinds of liberties can lead to bigger government and less freedom.

The hothead libertarian says “give people the right to make their own choices, and let them reap the consequences.” The wise libertarian realizes that in many cases the empathetic reflex means that the public will often not permit people to reap the consequences of their bad choices, and will end up growing government and subsidizing bad behavior. (Meanwhile the conservative sits on the side and says “See, we had a pretty good social system, and now you had to go screw it up.”)

So I’ve put a bit of thought into it, and I think the best solution I can come up with is to extend the concept used for public schools.

As a counter example, Canada has government run health care that specifically prohibits private health care–in this scenario the government completely removed choice from the equation. In the US, it’s almost entirely private, but then if you are really poor enough, you *might *qualify for Medicaid, and that might provide some health coverage.

In between the two extremes is the public school system. Universally accessible and tax funded, public schools for the most part are adequate. Not a lot of bells and whistles, but it gives kids a decent education. At the same time, the private option is there. Parents can choose a variety of other options including doing it themselves.

The only thing missing, and the only thing I would change, would be to provide some reimbursement for parents that pay privately. There needs to be enough tax revenue to pay for the system, but parents that pay for private school should get some of their tax money back, which in theory goes towards paying tuition. As a result of the reduce funding, public schools should be scaled back a bit, so they aren’t see as the default.

If I could change one more thing, it would be to further scale back the tax-based funding, and establish a co-pay. This is one step further towards a libertarian ideal, in that those without kids aren’t paying as much as those that are. But they are still contributing to the system. The old concept that an educated society makes us all better off, can be translated into a reasonable dollar value on a person’s income tax.

The challenge now is to figure out what government services (ie what individual choices) have the sort of affect on society that would require involvement:
health, education, housing, food/nutrition, fire, police, military, roads…

If we applied this to something like social security, what we would get is essentially a pension plan that provides a very modest level of income for everyone after they’ve reach retirement age. Essentially, everyone pays into it throughout their working life, perhaps as a percentage of income that never exceeds something reasonable, and then everyone gets the same pay out after retirement. Those that choose to save more will have more in retirement, but the option to “not save anything” is removed.

Thoughts?

In my system, this would not work (the reimbursing parents part). As it stands, ALL property taxpayers in my area pay for schools. Those without children are not reimbursed for the portion of taxes that goes towards K-12 education.

Private schools here are given funding by the local tax authority based on a head count - in other words, they get access to an amount of money based on how many kids are in their schools. This seems fair to me, and takes care of any inequities.

I’m not convinced this “two tier” system would work for healthcare though. In this arena we’re often talking about life or death consequences. Some of my acquaintances certainly want a two-tier system like this. They want it mainly so they can jump the queue and get treatment for non-life threatening illness sooner.

If this leads to those in the lower tier dying because of limited resources, while my acquaintances get faster knee surgery so they can play a full 18 holes of golf… I’m not so keen.

Right, I’m familiar with variations on that system.

I guess what I’m trying to achieve is that balance between freedom and government involvement (ie taxes). So I’m trying to essentially minimize taxation, while still providing that basic safety net.

As Sam Stone suggested, there needs to be a way for the government to step back and let people run their lives. But not step so far back that people fuck up their lives (or someone else’s). In taking his suggestions, I feel like there is one step up above, where society still provides the basics to those in need. My personal beef is with welfare programs that aren’t universal. If there was publicly funded education–if I’m funding public education–I want access to it. I don’t like that right now there is a Medicaid system I’m not allowed to use.

I propose we set up Medicaid (as an example) so that everyone has access to it. Figure out what that would cost, and establish a tax system to pay for it. The deal is though, that it’s just the basics, no frills, no perks, a yearly physical, emergency services, and catastrophic coverage.

Then, those that choose to get their own, based on what they can afford, can get some sort of credit back from their taxes, or it could go to the insurer.

Essentially, recognize that the choice of having no health insurance at all is simply retarded. And that those who make that choice end up costing society. Given that potential cost, it seems reasonable that a small amount of everyone’s taxes goes towards a simple but effective universal system.

Granted, this is still a work in progress, I might have to wait until 2011 to expect my Nobel prize.

An interesting concept…I see where it is similar to your public/private school example.

It’s my understanding that when the Medical Care Act was passed in Canada in 1966, the primary motivation was to essentially cover just what you describe -the basics, no frills, no perks, a yearly physical, emergency services, and primarily, catastrophic coverage.

Moving to a system like you describe would be a step up for the US. I especially think that you are correct here:

It would not fly in Canada though, at least not right now - it would be seen as a step backwards, and opening the door to one system for the poor and another for the rich. Possibly in the future though, if rising healthcare costs (for MRI’s valve replacement, transplants, expensive drugs, etc. etc.) threaten to cost way, way too much. We might have to make a difficult choice in the future if modern medicine simply becomes too expensive to provide to every single person.

Sounds good to me. Sign me up.

I’d also like to opt out of SS from now until I retire. I won’t ask for any of my contributions to ever be repaid. Just don’t take any more of my money.

It’s interesting the way you describe it in terms of stepping up and stepping down. And ideally, I’m also trying to figure out a way to avoid having a system for the rich and a system for the poor. But I’m pretty sure it’s inevitable, which is part of the reason why Canada works so hard to prevent private medicine.

Going back again to the example of Social Security, it’s an example that’s easy to visualize because my version involves a straight forward payout in retirement, right now it might be around $18k. Essentially, a person could exist on it. They wouldn’t starve or freeze to death, but they also wouldn’t be enjoying luxury they didn’t necessarily deserve. Because it’s a number, we’re able to say, “$6000 a year is way to low for anyone to reasonably live on, but $30k a year is too much for someone that is gaming the system.” We seek to arrive at a number that factors in cost of living and sufficient necessities, then stops.

Some how, there needs to be a way of establishing both a medical system, and an education system, that is able to be that same thing. Basic, complete, but without luxury.

I do a lot of work with a charity that feeds people living with chronic illness. For less than $1 per meal, we can provide really good, nutritious food. It’s not filet mignon, and it’s not cat food. It’s really good quality food, that meets an acceptable standard. Essentially, it’s food that anyone of us would eat, and enjoy. Further to that, if we were desperate, it would prevent starvation. But at the same time, we’d all probably say, “I’d rather spend a few dollars more to get better food.”

If we were to expand this concept, we could provide a system that would feed everyone in the US. A good quality assortment of food, universally accessible, and means no one starves. But it certainly wouldn’t be what anyone making more than $25k a year would want to live on. At some point, we’d all desire personal choice, and opt to fend for ourselves. The reason I bring this up, is that the meals are good enough that we’d all be willing to eat them. But still bad enough that we’d rather have more.

Now, as an aside, through a special grant, we’ve begun to integrate organic and local fruit, vegetables, and meats. When I told that to my wife she had a very typical libertarian reaction, “why are they eating better than I am?” Essential, she views organics as a luxury that she can’t afford, and thus a luxury that those living in poverty shouldn’t have.

From there, we’re left to question what parts of public education and UHC would be considered “luxury?” How do we create a system that is effective, but one that is NOT cat food.

I have snipped your post but that is very similair to the Australian way. We have a safety net old age pension. On top of this we have a “forced” savings system called superannuation and major tax incentives, theminimum is based on a % of your wage and of course you earn more you get more in retirement. You can choose to a degree how these funds are invested but most people just go with a large funds manager.

It has also given Australian companies access to a lot of capital which has been pretty good for infrastructure etc.

Social Security is means tested, good thing to.

Medicare is the base level and then via tax incentives I can get “better” cover by paying into a private health insurer. But if I am not able to or don’t want to then Medicare kicks in. Private is meant as an extra over above base care.

Downunder all schools get $X per head. If you are a private school you can charge parents directly and then go about building sports ovals, chapels and extra cirricular activities etc. Most public schools in Australia are pretty good and you can still get into the best universities even if you go to one.

As long as the base level curriculum is taught and we have decent systems for measuring a two tier system can work pretty well.

I know of very rcih people who’s kids go to public school and I know parents who work two jobs to afford private.

I’ve spent the past 5 years helping out at what could be considered a private soup kitchen in the US. And at first I kept wondering, “why are we needed?” As a Canadian the concept of a private soup kitchen was entirely foreign. And further to that, I kept wondering why no one else was providing our clients with food.

It seems entirely possible that nearly all of society’s problems could be solved by “family and friends.” And I’m often left wondering why family doesn’t seem to kick in when people are in need.

At this point I don’t have much more to add, but I have a feeling this theme of moving our dependence away from family and towards government has left us in a messy middle position. As we move further towards government involvement, what we are essentially saying is that YOU are responsible for ME. Not my family, not my friends, but YOU. Who ever you are, you are responsible for me now.

And if set up government revenue as a progressive system of income taxes, YOU becomes those with income, and ME becomes those without.

The end result is that we have a situation where those *with * become responsible for those without.

Private soup kitchens are not foreign to Canadians. My wife volunteered at one in Edmonton for several years.

There are always people who fall through the cracks, who refuse to take government help or lack the wherewithal to get it, or who chronically spend any aid money they get on drugs, alcohol, and cigarettes and wind up penniless with nothing to eat. There are plenty of homeless people in every country, regardless of how strong the social safety net is.

Again, in many places it does. My libertarian beliefs started at a very young age. I spent my summers in Saskatchewan as a kid, working on my grandfather’s farm. They were poor farmers, as were most of the farmers in the area. It was common for them to go to each other’s aid when financial hardship or crop failure or mechanical failure left someone in the lurch. It was also common to pool labor to help each other when necessary. Barn raisings, group harvesting and pooling of machinery, etc.

In that community, it is still common for the elderly to move back in with their children, or for children to live with relatives in the city when they go to college.

Not just that, but when aid came from family and friends, it put pressure on you get get off the aid, and to pay it forward when someone else was in need. There was a sense of community obligation.

Government charity changes community obligation into individual entitlement. It’s not a healthy change.

And where those without blame those who are not. Instead of hardship pulling communities together and strengthening social bonds, government entitlements pit citizens against each other.

Look at France. A wealthy society with much better social benefits than the U.S. or Canada. And yet, the people are rioting in the streets and screaming at each other. And why? Because they might have to work until 62 instead of 60. Oh the horror.

Are your clients not eligible for food stamps?

I think it’s a general rule of thumb that some people will bitch no matter what they have. We still need to decide as a society what the basic level will be for the social safety net, while recognizing that someone will not agree, and will complain about it.

For example, in New Zealand in the 80’s, there was no tuition for university students. This would seem like heaven to university students in North America. Even better, the government paid all students a monthly bursary to go to university. Most students thought this was great, but a few were quite vocal that the amount they were paid to attend university was not enough. They wanted more.

It’s human nature to want more. We need to strike a reasonable balance.

There is a point where the marginal returns are so small that its not worth the cost of trying to prevent that last little bit of suffering. The problem is that some people don’t think we should be spending the highly effective welfare dollars either

Oddly enough, what you just described doesn’t sound anything like libertarianism. Sounds like a group of people working together for the common good. From each according to his means, to each according to his needs…

But aside from that, I think we can all recognize that the term “community” is entirely arbitrary. Your scenario focused on a small farming community of a few hundred people. If that area was to suffer flooding or wide spread crop failure the “community” has to expand. Now it’s the area towns that stop in to help. When an entire province suffers drought, it’s other provinces that need to respond. The next logical step is that when a small country suffers from a massive earth quake, it’s a community of other countries that step in to help.

There is actually an economy of scale. We’re better off having a few high trained fire fighters than a hundred untrained volunteers. The US military realized they can do more with a small volunteer army than they can with a massive force of drafted personnel.

Again, not sure where I’m going with this. Except to say that there is no reason why a community couldn’t be forward thinking enough to require everyone to chip in a couple of dollars a year for future problems suffered by the community. Perhaps organized and collected by some central and elected office. It them seems to make sense to have both the payment and receipt of money means tested. There is no point charging everyone $100 when many can’t afford $10, and some could easily contribute $1000.

Sam Stone - I agree that when aid is provided directly by family, friends and the community rather than mediated through a third party (the government) its a healthier system. It puts the person receiving the aid in a position where they are imposing upon others they can directly see. Aid mediated through big government distances the giver and the givee so that the receiver feels less and less social obligation to lighten the load put on the giver. I can’t tell you how many times that I actually had to explain to people that welfare check money doesn’t come “from the government” as if it magically appeared, it’s taken from working taxpayers. To more educated people this is obvious, but some people literally have no concept of the fact that their “free money” is not really free. So of course they don’t spare a thought about the taxpayer who shells out money to support them. How can you feel compassion for someone so removed from you?

Another point is that people generally want to be at least recognized for their contributions. People don’t do good deeds for nothing, even if no reward comes into play, people still want the satisfaction of knowing that their generosity is witnessed and appreciated. When the giver and givee are so removed from one another as described above, that sense of appreciation is not there. Essentially you are paying to support someone who doesn’t know about you, doesn’t care about you and would not spare you a second thought if they cut you off in traffic. I think this is at the heart of alot of people’s aggravation with the welfare system: it makes the receiver completely socially unresponsible to the giver. People see this and say “Well if I’m just paying into the system, I may as well use it!” not realizing or caring that by using the system unfairly they are only compounding the problem. If the ship is taking water and you are trying to fix it but you see everyone around you jumping for the lifeboats instead, you are going to do the same. My mother recently wanted me to get food stamps because I am a “single” mother. Technically I am only unmarried as I am with the baby’s father and he supports us. We also have a very low-cost living situation. We are not struggling, so I asked my mom why she thought I should get food stamps. Her response: “Because you can. Everyone else gets them so you may as well get yours”

So my proposal is that we find a way to shift the responsibility of social welfare to the state, or even the community level.