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Many aspects of US society today are organized under the assumption that if every individual pursues what is in his/her best financial interest, the "invisible

• TallGuyShort 13y ago
  I don't think many people believe that having every individual pursue what's in their best interest in a purely financial sense will result in the best possible outcome in every other sense. I always understood it as pursuing the best economic/financial result for you will result in the best economic/financial result overall, and even then, I think most reasonable individuals don't see that as an absolute law without exceptions.
  • gxs 13y ago
    This is exactly right. Why do people corner themselves into mutually exclusive, absolute truths, with absolutely no room for compromise? It just doesn't make any sense. When I was in 4th grade I wrote a country report on the US. When I got to the economics portion of the encyclopedia, I still remember the opening line.. "The United States is a mixed economy operating predominantly under capitalistic principles.." Why settle for one when you pick the best from both worlds? Unbelievable how much this affects people's lives..you can ONLY like Go or C++..you can ONLY like Apple OR non apple products..you either watch Art House Cinema or you watch Hollywood blockbusters, absolutely not allowed to watch both..you're either 100% capitalist or 100% socialist. The idea of the "truth lies somewhere in the middle" is at least as old as the Greeks (that quote was attributed to Aristotle when I first read it), and yet every single day, the same people regurgitate the same tired arguments to the point that I'm starting to sound like a broken record myself in response.
    • jjoonathan 13y ago
      It's not just the encyclopedia entry on the US. In "The Wealth of Nations" Adam Smith himself argues that the market isn't suited to some economic sectors. I believe his examples were infrastructure, police, fire, and military, but education and health care wouldn't exactly be outliers and I'm sure if he were alive today he'd give the arguments for a single-payer system due consideration.
    • TallGuyShort 13y ago
      To answer the question, "why do people corner themselves?", I think it's because there is value in categorizing things. Unfortunately, this will eventually introduce negative consequences as well, as you describe. It's like the difference between voting for a candidate or party vs. voting on individual issues. Sadly, I think it is the nature of populations and the growing nature of our digitized world to clump ourselves into groups.
    • araes 13y ago
      This has a lot in common with the "Being Alone" topic that's trending on HN right now. Being alone fills you with anxiety, with isolation, and with uncertainty. By establishing hard lines, and an aggressive stance, you align yourself with a group and gain peers. You have allies, friends, and a social tribe that you can look out on the world with. Your anxiety lessens and you feel more secure. I'm not sure if we're hardwired for it, but we as humans have a strong tendency towards categorization and "ingroup" / "outgroup" classification of our peers. There's a deep rabbit hole at: http://en.wikipedia.org/wiki/Anxiety/uncertainty_management http://en.wikipedia.org/wiki/Anxiety/uncertainty_management Particularly relevant: "Axiom 20: An increase in perceiving that we share superordinate ingroup identities with strangers will produce a decrease in our anxiety and an increase in our ability to predict their behavior accurately."
  • yequalsx 13y ago
    From my listening to talk radio and reading conservative American news articles I have come to a different conclusion than you. As a matter of policy many people spout out and believe such things as the "magic of free markets" and support policies which ultimately boil down to every man for himself in the pursuit of profit. However, I do believe if you talked to such individuals and probed what why really want it's more inline with what you wrote. Unfortunately there is a disconnect in the U.S. between what people really believe to be just, moral, and good governance and what they vote for.
• Spooky23 13y ago
  There's an "invisible hand" but it isn't omniscient, and doesn't work when you don't have a market. We need to figure out a way to get out of the binary thought process where you are either a market guy or a communist.
• k2enemy 13y ago
  Invisible hand of the free market. Healthcare is not even close to a free market.
  • scarmig 13y ago
    The market doesn't fail, it can only be failed.
    • 001sky 13y ago
      This makes no sense. Market failure is masked by survivorship bias. Failed markets are invisible. Healthcare is both blatantly obvious (as a "market") and as a rigged regulatory "game".
  • vacri 13y ago
    Healthcare cannot be a free market. For a true 'free market', you need to have perfect information. Healthcare is the most complex field in the human condition, and you could have a dozen specialist consultants and still not have perfect information - a layperson can't possibly have anything close to perfect information.
• GFischer 13y ago
  The invisible hand operates under the assumption that there are no information assymetries. http://en.wikipedia.org/wiki/Invisible_hand http://en.wikipedia.org/wiki/Invisible_hand This is obviously not the case in patient-doctor relationships. The standard Austrian response for those information assimetries are that an independent third party will arise that will offer an unbiased opinion (usual example is Underwriters Laboratory or UL). A more government-based approach would say that more regulatory oversight is needed. However, in practice, I haven't seen this happening, I'm not an economist but I see there are agency problems, regulatory capture problems, etc.. Stiglitz said: "the reason that the invisible hand often seems invisible is that it is often not there. Whenever there are "externalities"—where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated—markets will not work well... recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always"
  • Retric 13y ago
    There are always information asymmetries. Walmart knows a lot about it's suppliers, but the suppliers still know more about what there selling and how much it costs them to make it. A better breakdown might be insurance as it completely destroys the concept of a market though a dramatic subsidization of coverage. It would be like your company buying your car for you sight unseen. Sure, you want a nice car(heath outcome) but you have a lot less incentive to research BMW vs Acura resale value as your not paying full price for it. So after minimal research your far more willing to go along with what the sales guy(doctor) says.
  • netcan 13y ago
    This isn't quite a straw man, but it is a little straw man-ish Adam Smith coined the term invisible hand, so lets use him to take the place of the strawish man. Apart from 'Wealth of Nations' he also wrote 'A Theory of Moral Sentiments.' He was a moral philosopher at least as much as he was a economist. The invisible hand does not assume people are profit maximising robots in a theoretically perfect world. Since Smith was very much talking human beings, he dealt with all sorts of motivations: selfishness, selflessness, empathy and a bunch of socially mitigated motivations like the desire to be held in esteem. He uses words like "often" not "always" to describe helpful outcomes from self interested motives. He isn't a fundamentalist at all. So from a Smithian perspective I would say that immoral doctors are arseholes. Honestly, I think this case just shows that nothing is perfect.
• nostromo 13y ago
  The invisible hand is there all right. It's just not creating value for customers but creating value for the medical establishment due to perverse incentives.
• comrade_ogilvy 13y ago
  Yes and no. The idealized invisible hand is built on the axiom that information flows, and the decision makers have feedback to learn from their own mistakes and the mistakes of others. When the axiom happens to be mostly untrue, then problems arise. Medicine is an area where the individual patient can very often not provide useful feedback to themselves or others. It is too technically hard because anecdotes can easily fool individuals, even expert individuals. Adam Smith himself was both a moralist and an economist. He had a nuanced understanding of the topic, and recognized the tendencies of the invisible hand to go the very bad places, under some scenarios.
  • tsotha 13y ago
    Yes, there's the famous quote "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Markets in medicine suffer from three problems. One, that the doctor knows so much more than the patient it's hard for the patient to know whether or not he's receiving good care. Two, that it's not practical to shop around in emergency situations. If I'm having a heart attack I'm not going to drag out the yellow pages and call around to find the best deal. And three, many people will never make enough money to cover their own medical care. Sometimes because they have some expensive condition, and sometimes because they just don't have much money. While I'm pretty comfortable saying people who can't afford wide screen televisions should have wide screen televisions, I'm not at all comfortable saying people who can't afford and appendectomy should find a comfortable spot to die.
• pbreit 13y ago
  Well, the conservative argument, which probably has some merit, is that patients are disconnected from the economics and thus don't play their role in the invisible hand theory. But I still don't see why insurance companies with a little help from patients aren't able to reel in costs.
  • c0ur7n3y 13y ago
    Insurance companies do reel in costs. They often pay far below the "public" rates for services. However, they don't pass that difference on to consumers. They keep it for themselves as profit.
    • pbreit 13y ago
      Then why don't employers/patients influence costs down?
      • comrade_ogilvy 13y ago
        Because, while not bosom buddies, the medical professionals and insurance companies are better at working together to influence costs up?
• Nicholas_C 13y ago
  I broke my pinky toe when I was younger. The first doctor I went to said I needed to have surgery to place a pin in my toe and then have it taken out a month later, being relegated to walking on crutches for a whole month. I was told that if I didn't get the surgery/pin then my toe wouldn't heal properly and it could hurt for the rest of my life. I went to a second, more reputable doctor and he told me to just wear a boot for a week or two and start wearing shoes when the pain subsided. My toe is completely fine now and I have had zero problems. Since then I have definitely been wary of doctors.
  • k-mcgrady 13y ago
    I've never been a fan of the US health care system (I much prefer a public system) for ethical reasons (I think everyone should have access to free health care). I never imagined stories like yours happening in either system. With things like that happening how can anyone support a private system with no free, public alternative?
  • smtddr 13y ago
    To pile on to this, when my daughter was born the doctors were going on and on about how her Frenulum[1] was too short and our daughter wasn't going to be able to talk properly. They brought in some Stanford research paper and everything, saying "It hasn't been approved yet, but it's Stanford." That's when my nonsense-detector kicked into overdrive and I just gave them a blank, non-smiling, stare. Of course I did not do it, and now our 3 year old daughter is talking up a storm just fine and clear to everyone. To this day, I suspect that lady(or her son/daughter in med school) just needed some test subjects for some medical research paper or something and all the medical staff involved knew they were just trying to make our daughter a test-subject. 1. http://en.wikipedia.org/wiki/Frenulum_of_tongue http://en.wikipedia.org/wiki/Frenulum_of_tongue
• fthssht 13y ago
  Car sales people also talk people into spending too much on cars. It's the myth that doctors aren't in business and the interference with that market that has created the nightmare of our current system. Did you notice how difficult it is to determine the price of medical services? You call this a free market?
• bhauer 13y ago
  This particular invisible hand has been hamstrung by malignant forces. Notably, the payer in a typical healthcare transaction is not the same as the recipient, splitting the typical buyer role into two. Because health insurance is now commonly provided by employers because of World War II price controls, and because we have become accustomed to using health insurance to pay for all matter of health care, including routine visits, consumers are often ignorant of health care costs. Customer A: My insurance will pay? Fine, let's do this. Cha-ching, price rises. Customer B: My insurance will pay? Fine, let's do this. Cha-ching, price rises. Customer C: Oh, insurance won't pay? How much? Whoa! How did the price get so high? It's no surprise then that the invisible hand works in a way that appears flawed when one of its inputs (the buyer's sensitivity to price) is frustrated. People of my persuasion often make the case that if automobile insurance worked the same as health insurance, and we used insurance to pay for oil changes, the price of oil changes would shoot up wildly. Reason being that you would no longer care what it costs. Obviously the seller (the doctor in the case at hand) wants the price to be as high as possible. The invisible hand can't keep this in check—it cannot discipline the seller with lost sales—when so many buyers do not act with actual price sensitivity.
  • nsxwolf 13y ago
    Just imagine what a hamburger would cost if you could only purchase them through some kind of hamburger insurance. You would hand over a small copayment and get your burger. Months later, you would receive a really confusing looking Explanation of Benefits from your burger insurance provider with multiple pages of line items - full of really high prices for pickles, pickle slicing fees, etc... ending with an "Amount You May Owe Provider" that would be many times more than we pay for hamburgers on our current free market system. We'd then demand a huge law be passed that would slightly decrease out of pocket costs for some, increase them for others, and force everyone to buy burgercare. And when it caused even more problems, we'd throw up our hands and finally adopt a single payer burger system. In the end, we'd have long forgotten and laugh at anyone who suggested that burgers were once far cheaper, and that it was therefore a lot easier to buy a burger for someone who couldn't afford one.
    • 13y ago
• spikels 13y ago
  You misunderstand the absolutely beautiful concept of the The Invisible Hand. It refers to the self organizing (emergent) behavior of the economy and it's many benefits. The concept itself makes no assumptions about perfect information, quite the opposite - it describes the coordination of individuals with vastly different information sets (as well as resources, capabilities, etc.). Did you ever think about the absolutely enormous amount of coordination required to product the computer you type on? Most of that is the invisible hand. It is very much a real world concept as comes from Adam Smith's observations of the world around him. You might want to reread the Wikipedia article you linked. The debate is all about when, how and for some even if the invisible hand can be improved on. Medical care should be a particularly difficult area for the reasons you list among many others. At least so far the results of efforts to improve on the invisible hand in US medical care have been mixed as the examples in the OP point out.
• samolang 13y ago
  This is why we have laws. The "invisible hand" drives people to still too. We make it illegal to deter people from stealing. Ordering unnecessary surgeries should be illegal too.