Position Critique of Libertarian Party Presidential Candidate Jo Jorgensen

Jorgenson is correct to focus on the problem industries of health care, education and energy, but her solutions are disappointing. The devil is in the details.

The key question is whether Jorgenson will do anything to end the government-created monopolies and oligopolies (i.e., limited numbers of sellers) that dominate the U.S. economy, especially (1) the medical profession oligopoly in health care where they and not insurance buyer monopolies control most of the outrageous costs, (2) non-profit public and private schools that continue to receive preferential subsidies, regardless of the founding of the Department of Education, while offering outrageously expensive and poor quality K-12 and higher education, and (3) the public electric utilities and utility spin-offs in electricity generation whose monopolies would likely be strengthened even more by picking nuclear power as the winner and continuing the Price-Anderson Act that caps liability for nuclear accidents.

1. HEALTH CARE

a. BUYER (INSURANCE) MONOPOLIES. Jorgenson claims the cost of health care can be reduced 75% by allowing real price competition and by substantially reducing government and insurance company paper work. She claims control must be put back in the hands of the patient by eliminating employer insurance and having insurance companies cover only unexpected costs. She claims the U.S. is the only industrialized country to have health care tied to employment, and this makes no sense. She claims the costs of Lasik and plastic surgery have gone down and their quality has improved, in large part because they are not covered by insurance, unlike other procedures.

Employer insurance covering all costs was created in markets during the 1930s when costs were much more reasonable than today. Health insurance with rationing and excessive paperwork became necessary about two decades after the “health care cost crisis” started in 1965. Still, the net cost of health insurance is only about 7 percent of total health costs. Many employees would be unhappy about having their market-based insurance eliminated by a government led by libertarians. The left claims the United States is also the only industrialized country in the world that does not have Universal Health Coverage for all citizens, but it is doubtful Jorgenson is promoting that. It is invalid to compare the cost inflation of vanity procedures (e.g., plastic surgery) with necessary procedures (e.g., heart stents) because consumers can simply elect to forgo the vanity procedures if costs get too high for them.

b. PROVIDER MONOPOLIES. Although not mentioned in her health care issues, Jorgenson wants to end occupational licensing.

Jorgenson offers nothing to control the runaway charges by health care provider monopolies.  The “health care cost crisis” started in 1965 after the government increased demand with the passage of Medicare and Medicaid while restricting the supply of doctors and hospitals. Doctors and hospitals account for most of health care costs, and their prices have inflated the fastest. Moreover, limiting the supply of physicians and other practitioners that work for hospitals and other institutions can limit the volume of patient care rendered and thus the extent to which competition for patients occurs between institutions. European countries with the best and most economical health care, like Germany and France, have many more physicians and hospital beds per population than the U.S. She doesn’t even mention eliminating the licensing of medical practitioners likely because that would be unpopular with most voters who want to know their doctors are trained. Even if medical licensing could be ended, preferential subsidies for training only students favored by medical schools will limit the supply of trained doctors.

c. DRUG REGULATION. Jorgenson proposes to remove regulations enforced by the CDC and FDA, including getting rid of the efficacy requirement of the FDA, if not the FDA entirely, so consumers can get treatments and test products as quickly as possible. She notes it takes up to 10 years and costs over a billion dollars to bring a drug to market. She also notes the response of the CDC and FDA to the coronavirus failed, while South Korea succeeded.

It is doubtful many voters want to be sold drugs that aren’t proven to work. Eliminating the FDA entirely would result in also eliminating drug safety regulations, which would be even more unpopular and likely why she won’t say it directly. Reducing regulations would likely be helpful but, like Trump, she makes no attempt at the very difficult task of determining which regulations should be eliminated. The surest way to improve drug development and reduce costs would be to create health care competition by increasing the supply of doctors and hospitals, since most of the cost of drug development is due to the high costs of working with the outrageously expensive U.S. health care delivery system during clinical trials. While the CDC and FDA clearly botched the response to the coronavirus, it should be noted that the response of South Korea was also government-led.

2. EDUCATION

Jorgenson seeks to eliminate the Department of Education and return control of education to parents, teachers and students. She claims that since the founding of the Department of Education, government spending on education has skyrocketed, while the quality of education has declined.

But the cost and quality problems started long before the Department of Education was founded in 1979. Government spending has been driven by the assumed and likely legitimate market imperfection that children and young adults are often unable to educate themselves, pay others to teach them, or rely on their parents to pay for their schooling. Both the political left and right have caused the outrageous costs and dubious quality of America's elementary and secondary (K-12) and higher education by awarding preferential subsidies to non-profit schools. The left backs the use of taxpayer money for public schools, while the right supports reducing taxes by funding non-profit private schools of religions and the rich through tax breaks. Non-profit public and private schools, who are supposed to serve society to justify receiving special benefits, have used subsidy advantages to gain oligopolies and restrict competition, especially from for-profit companies. Non-profit schools lack the profit motive and competitive pressures to expand supply to educate enough students, especially from low- and middle-income families, compete on price and quality, and innovate with new educational technology. If all subsidies were to follow students in the form of vouchers like recommended by Nobel Prize winning economist Milton Friedman, students could receive an inexpensive or even free education while competition puts downward pressure on prices offered by schools. 

3. ENERGY (AND ENVIRONMENT)

Jorgenson claims the most important aspect of a Libertarian environmental solution is not being in the business of picking winners and losers. She says competition and innovation can help create cleaner energy. She wants to end all subsidies and level the playing field. But she also wants to replace coal and oil burning power plants with nuclear and off-grid solar power. She wants the U.S. Nuclear Regulatory Commission to streamline its regulations to allow for more nuclear power plants.

While she implies that she will not pick winners and losers, she picks nuclear and off-grid solar power over coal and oil power plants. She offers no policies on natural gas even though it is the prominent fuel source. She claims that she supports competition but says nothing about advancing stalled deregulation efforts to eliminate electricity generation monopolies (i.e., public electric utilities in regulated states and utility spin-offs in so-called deregulated states). Rather, she would likely end up strengthening their monopolies even more by reducing safety regulations on nuclear power. Contrary to libertarian principles holding producers legally responsible for environmental damages, she fails to oppose or even mention the Price-Anderson Act, which subsidizes nuclear power by providing a cap against liability claims arising from nuclear incidents.


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  • Mike Holly
    published this page 2020-09-26 14:22:07 -0500
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