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Friday, June 26, 2009

Logic and the Magic Negro

Obama demonstrates his logical incapacities:

“If private insurers say that the marketplace provides the best quality health care, if they tell us that they’re offering a good deal,” he asked, “then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical.”

It would not be logical if the government were competing on anything remotely resembling a level playing field. However, that's not the case with government, which has several advantages even when it doesn't make use of its ability to assert a monopolistic position. First, a government agency has no need to make money. Subsidized by the taxpayers and public debt, it can run at a loss for decades. It can therefore undercut private competition by any amount it chooses, thus creating demand for its services even if they are inferior. Second, a government agency is allowed to exclude itself from regulations that apply to private competitors, giving it further competitive advantages that don't necessarily show up on the balance sheets. For example, it is highly unlikely that one could successfully sue an employee at a government health care provider for malpractice. The Supreme Court upheld the Feres Doctrine in 1950, which prevents veterans from suing any Veterans Administration physician for malpractice. So, among other things, federal health care providers would not need to carry insurance due to their so-called sovereign immunity.

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