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This is the last installment in a nine-part series excerpting the chapter on medical care from the latest version of economist Thomas Sowell's "Applied Economics." The entire series can be read at IBDeditorials.com.A number of confusions plague discussions of the economics of medical care. A confusion between prices and costs has allowed politicians in various countries to be able to claim to be able to bring down the cost of health care, when in fact they only bring down the individual patient's out-of-pocket costs paid to doctors, hospitals, and pharmacies. The costs themselves are not reduced in the slightest when...

What is so wrong with the current medical system in the United States that we are being urged to rush headlong into a new government system that we are not even supposed to understand, because this legislation is to be rushed through Congress before even the Senators and Representatives have a chance to read it? Among the things that people complain about under the present medical care system are the costs, insurance company bureaucrats' denials of reimbursements for some treatments and the free loaders at hospital emergency rooms whose costs have to be paid by others. Will a government-run medical...

One of the strongest talking points of those who want a government-run medical care system is that we simply cannot afford the high and rising costs of medical care under the current system. First of all, what we can afford has absolutely nothing to do with the cost of producing anything. We will either pay those costs or not get the benefits. Moreover, if we cannot afford the quantity and quality of medical care that we want now, the government has no miraculous way of enabling us to afford it in the future. If you think the government can lower...

Yes, he has made millions of dollars from his documentaries which attack the profit motive of the capitalist system, and this does indeed look like the most embarrassing irony for him. But when you understand him, or at least when you understand his misunderstanding of capitalism, you will see that he is not in fact consciously contradicting himself. He is merely a victim of a common but very subtle economic fallacy that has afflicted societies since ancient times.

Although it is cheaper to buy a pint of milk than to buy a quart of milk, nobody considers that to be lowering the price of milk. Although it is cheaper to buy a lower quality of all sorts of goods than to buy a higher quality, nobody thinks of that as lowering the price of either lower or higher quality goods. Yet, when it comes to medical care, there seems to be remarkably little attention paid to questions of both quantity and quality, in the rush to "bring down the cost of medical care." There is no question that...

We are incessantly being told that the cost of medical care is "too high" — either absolutely or as a growing percentage of our incomes. But nothing that is being proposed by the government is likely to lower those costs, and much that is being proposed is almost certain to increase the costs. There is a fundamental difference between reducing costs and simply shifting costs around, like a pea in a shell game at a carnival. Costs are not reduced simply because you pay less at a doctor's office and more in taxes — or more in insurance premiums, or...

Many years ago, at a certain academic institution, there was an experimental program that the faculty had to vote on as to whether or not it should be made permanent. I rose at the faculty meeting to say that I knew practically nothing about whether the program was good or bad, and that the information that had been supplied to us was too vague for us to have any basis for voting, one way or the other. My suggestion was that we get more concrete information before having a vote.

Recently, I was at a boomer backyard barbecue in Boston.The males had Ivy League degrees and high incomes evident in subtle ways. The wives who were white had the perfect cheekbones and teeth that only generations of breeding and expensive maintenance can produce. The nonwhite wives had PhD’s instead. The host in a Yes We Can T-shirt sneezed. “Barack you!” said a preppie-looking man, and explained with a broad smile that it’s a new locution replacing “Bless you.” I walked up to the Obamapod and said, “I like your barackhlo line.” “It’s Barack you,” he said, with the typical linguistic...

Following is the third installment of a nine-part series excerpting the chapter on medical care from the new edition of Thomas Sowell's "Applied Economics." All installments can be found online at www.investors.com/IBDeditorials.Third-party payments are at the heart of much confusion about the cost of medical treatment— and are a major factor in the increased cost of that treatment. In government-run medical systems, the public pays in taxes for its medical care, either wholly or in part, with a share being paid directly by the individual patient. Political slogans about "bringing down the cost of medical care" are almost invariably about...

Many years ago, at a certain academic institution, there was an experimental program that the faculty had to vote on as to whether or not it should be made permanent. I rose at the faculty meeting to say that I knew practically nothing about whether the program was good or bad, and that the information that had been supplied to us was too vague for us to have any basis for voting, one way or the other. My suggestion was that we get more concrete information before having a vote. The director of that program rose immediately and responded indignantly...

Just one year ago, would you have believed that an unelected government official, not even a Cabinet member confirmed by the Senate but simply one of the many "czars" appointed by the President, could arbitrarily cut the pay of executives in private businesses by 50 percent or 90 percent?

Just one year ago, would you have believed that an unelected government official, not even a Cabinet member confirmed by the Senate but simply one of the many "czars" appointed by the President, could arbitrarily cut the pay of executives in private businesses by 50 percent or 90 percent? Did you think that another "czar" would be talking about restricting talk radio? That there would be plans afloat to subsidize newspapers-- that is, to create a situation where some newspapers' survival would depend on the government liking what they publish?

Just one year ago, would you have believed that an unelected government official -- not even a Cabinet member confirmed by the Senate, but simply one of the many appointed by the President -- could arbitrarily cut the pay of executives in private businesses by 50 percent or 90 percent?

Just one year ago, would you have believed that an unelected government official, not even a Cabinet member confirmed by the Senate but simply one of the many "czars" appointed by the president, could arbitrarily cut the pay of executives in private businesses by 50 percent or 90 percent? Did you think that another "czar" would be talking about restricting talk radio? That there would be plans afloat to subsidize newspapers – that is, to create a situation where some newspapers' survival would depend on the government liking what they publish? Did you imagine that anyone would even be talking...

Just one year ago, would you have believed that an unelected government official, not even a Cabinet member confirmed by the Senate but simply one of the many "czars" appointed by the President, could arbitrarily cut the pay of executives in private businesses by 50 percent or 90 percent? Did you think that another "czar" would be talking about restricting talk radio? That there would be plans afloat to subsidize newspapers-- that is, to create a situation where some newspapers' survival would depend on the government liking what they publish? Did you imagine that anyone would even be talking about...

To sue or not to sue? That is the question. After racist statements were made up out of thin air and then attributed to Rush Limbaugh, these were the options he had. It is easy for me to understand that these are not simple choices because I have faced those options as well. Recently there have been a number of columns made up by others and put on the Internet with my name on them. The things said in those bogus columns have nothing in common with anything that I have said, in my columns, in my books or anywhere...

It is understandable that many people do not pay nearly as much attention to political issues as they do to practical decisions that they have to make in their own lives. For one thing, they have only one vote among millions, so their influence on what policies the government will follow is in no way comparable to the weight of their decisions in their own personal affairs. One consequence is that politicians can get away with half-baked arguments that people would never accept in their personal lives, where they apply a lot more scrutiny. People who would never let some...

Back in the days of the Soviet Union, two Russian economists who had never lived in a country with a free market economy understood something about market economies that many others who have lived in such economies all their lives have never understood. Nikolai Shmelev and Vladimir Popov said: "Everything is interconnected in the world of prices, so that the smallest change in one element is passed along the chain to millions of others." What does that mean? It means that a huge increase in the demand for ice cream can mean higher prices for catchers' mitts, among other things....

Random thoughts on the passing scene: Upon learning that the Constitution requires a president to be a natural born citizen, a college student said: "What makes a natural born citizen any more qualified than one born by C-section?" Airlines that keep passengers trapped for hours in planes sitting on the runway should be prosecuted for unlawful imprisonment. When politicians propose some hugely expensive new program and are asked how the government is going to pay for it, a standard ploy over the years has been to claim that they will pay for it by eliminating "waste, fraud and abuse." At...

Recent videos of American children in school singing songs of praise for Barack Obama were a little much, especially for those of us old enough to remember pictures of children singing the praises of dictators like Hitler, Stalin and Mao. But you don't need a dictator to make you feel queasy about the manipulation of children. The mindset that sees children in school as an opportunity for teachers to impose their own notions, instead of developing the child's ability to think for himself or herself, is a dangerous distortion of education. Parents send their children to school to acquire the...

Many people, including some conservatives, have been very impressed with how brainy the president and his advisers are. But that is not quite as reassuring as it might seem. It was, after all, Franklin D. Roosevelt's brilliant "Brains Trust" advisers whose policies are now increasingly recognized as having prolonged the Great Depression of the 1930s, while claiming credit for ending it. The Great Depression ended only when World War II put an end to many New Deal policies. FDR himself said that "Dr. New Deal" had been replaced by "Dr. Win-the-War." But those today who are for big spending like...

Many people, including some conservatives, have been very impressed with how brainy the president and his advisers are. But that is not quite as reassuring as it might seem. It was, after all, Franklin D. Roosevelt's brilliant "brains trust" advisers whose policies are now increasingly recognized as having prolonged the Great Depression of the 1930s, while claiming credit for ending it. The Great Depression ended only when the Second World War put an end to many New Deal policies. FDR himself said that "Dr. New Deal" had been replaced by "Dr. Win-the-War." But those today who are for big spending...

There is so much for high school seniors and their parents to know about colleges that they not only need to get a lot of information but also need to make sure it is the right kind of information. A number of college guides have useful information but, unfortunately, the best-known and most pretentious of these guides — "America's Best Colleges"— is grossly misleading. There is no such thing as a "best" college, any more than there is any such thing as a "best" wife or a "best" husband. Who would be best for a particular person depends on that...

It is a good reflection on Americans that they tend to be on the side of the underdog. But it is often hard to tell who is in fact the underdog, or why. Many years ago, there was a big, lumbering catcher named Ernie Lombardi whose slowness afoot was legendary. Someone once said that not only was Ernie Lombardi the slowest man who ever played major league baseball, whoever was second slowest was probably a lot faster runner than Ernie Lombardi. When Lombardi came to bat, infielders played back on the outfield grass. That gave them more range in getting...

"Many years ago, as a small child, I was told one of those old-fashioned fables for children. It was about a dog with a bone in his mouth, who was walking on a log across a stream. The dog looked down into the water and saw his reflection. He thought it was another dog with a bone in his mouth -- and it seemed to him that the other dog's bone was bigger than his. He decided that he was going to take the other dog's bone away and opened his mouth to attack. The result was that his own...

Many years ago, as a small child, I was told one of those old-fashioned fables for children. It was about a dog with a bone in his mouth, who was walking on a log across a stream. The dog looked down into the water and saw his reflection. He thought it was another dog with a bone in his mouth-- and it seemed to him that the other dog's bone was bigger than his. He decided that he was going to take the other dog's bone away and opened his mouth to attack. The result was that his own bone...

“Hubris-laden charlatans” was the way a recent e-mail from a reader characterized the Obama administration. That phrase seems especially appropriate for the charlatan in chief, Barack Obama, whose speech to a joint session of Congress was both a masterpiece of rhetoric and a shameless fraud. To tell us, with a straight face, that he can insure millions more people without adding to the already skyrocketing deficit is world-class chutzpa and an insult to anyone’s intelligence. To do so after an analysis by the Congressional Budget Office has already showed this to be impossible reveals the depths of moral bankruptcy behind...

"Hubris-laden charlatans" was the way a recent e-mail from a reader characterized the Obama administration. That phrase seems especially appropriate for the Charlatan-in-Chief, Barack Obama, whose speech to a joint session of Congress was both a masterpiece of rhetoric and a shameless fraud. To tell us, with a straight face, that he can insure millions more people without adding to the already skyrocketing deficit, is world-class chutzpa and an insult to anyone's intelligence. To do so after an analysis by the Congressional Budget Office has already showed this to be impossible reveals the depths of moral bankruptcy behind the glittering...

Sowell flat out calls President Obama a "Liar" in his latest takedown of Zero. --- Key Excerpt: One plain fact should outweigh all the words of Barack Obama and all the impressive trappings of the setting in which he says them: He tried to rush Congress into passing a massive government takeover of the nation's medical care before the August recess-- for a program that would not take effect until 2013! Whatever President Obama is, he is not stupid. If the urgency to pass the medical care legislation was to deal with a problem immediately, then why postpone the date...

The most important thing about what anyone says are not the words themselves but the credibility of the person who says them. The words of convicted swindler Bernie Madoff were apparently quite convincing to many people who were regarded as knowledgeable and sophisticated. If you go by words, you can be led into anything. No doubt millions of people will be listening to the words of President Barack Obama Wednesday night when he makes a televised address to a joint session of Congress on his medical care plans. But, if they think that the words he says are what matters,...

BRITAIN'S release of Abdel Baset al-Megrahi -- the Libyan terrorist whose bomb blew up a plane over Lockerbie, Scotland in 1988, killing 270 people -- is galling enough. But it's even more troubling as a sign of a larger, growing mood: The West is surrendering on the installment plan to Islamic extremists. The late Aleksandr Solzhenitsyn put his finger on it when he said: "The timid civilized world has found nothing with which to oppose the onslaught of a sudden revival of barefaced barbarity, other than concessions and smiles." This administration epitomizes the "concessions and smiles" approach to our implacable...

Thomas Sowell: “What they are trying to do is create an America very unlike the America that has existed for centuries, the America that people have been attracted to by the millions from all over the world, the America that many generations of Americans have fought and died for. The thing associated with America, freedom, is precisely what must be destroyed if this is to be turned into a fundamentally different country, to suit Obama’s vision of a country and of himself.”

Britain's release of Abdel Baset al-Megrahi-- the Libyan terrorist whose bomb blew up a plane over Lockerbie, Scotland in 1988, killing 270 people-- is galling enough in itself. But it is even more profoundly troubling as a sign of a larger mood that has been growing in the Western democracies in our time. In ways large and small, domestically and internationally, the West is surrendering on the installment plan to Islamic extremists. The ostensible reason for releasing al-Megrahi was compassion for a man terminally ill. It is ironic that this was said in Scotland, for exactly 250 years ago another...

Britain's release of Abdel Baset al-Megrahi — the Libyan terrorist whose bomb blew up a plane over Lockerbie, Scotland in 1988, killing 270 people — is galling enough in itself. But it is even more profoundly troubling as a sign of a larger mood that has been growing in the Western democracies in our time. In ways large and small, domestically and internationally, the West is surrendering on the installment plan to Islamic extremists. The late Aleksandr Solzhenitsyn put his finger on the problem when he said: "The timid civilized world has found nothing with which to oppose the onslaught...

Many of the issues of our times are hard to understand without understanding the vision of the world that they are part of. Whether the particular issue is education, economics or medical care, the preferred explanation tends to be an external explanation— that is, something outside the control of the individuals directly involved. Education is usually discussed in terms of the money spent on it, the teaching methods used, class sizes or the way the whole system is organized. Students are discussed largely as passive recipients of good or bad education. But education is not something that can be given...

August 20, 2009, 0:00 a.m. ObamaÂ’s Bait and Switch As we argue about the uninsured, the single-payer camel pokes its nose under the tent. By Thomas Sowell Amid all the controversies over medical care, no one seems to be asking a very basic question: Why does it take more than 1,000 pages of legislation to insure people who lack medical insurance? Despite incessant repetition of the fact that millions of Americans do not have medical insurance, hardy souls who have actually read the mammoth medical-care legislation being rushed through Congress have discovered all sorts of things there that have...

The serious, and sometimes chilling, provisions of the medical care legislation that President Obama has been trying to rush through Congress are important enough for all of us to stop and think, even though his political strategy from the outset has been to prevent us from having time to stop and think about it. What we also should stop to think about is the mindset behind this legislation, which is very consistent with the mindset behind other policies of this administration, whether the particular issue is bailing out General Motors, telling banks who to lend to or appointing "czars" to...

Amid all the controversies over medical care, no one seems to be asking a very basic question: Why does it take more than 1,000 pages of legislation to insure people who lack medical insurance? Despite incessant repetition of the fact that millions of Americans do not have medical insurance, hardy souls who have actually read the mammoth medical care legislation being rushed through Congress have discovered all sorts of things there that have nothing whatever to do with insuring the uninsured— and everything to do with taking medical decisions out of the hands of doctors and their patients, and transferring...

When famed bank robber Willie Sutton was asked why he robbed banks, he said: "Because that's where the money is." For the same reason, it is as predictable as the sunrise that medical care for the elderly will be cut back under a government-controlled medical system. Because that's where the money is. My experience is probably not very different from that of many other people in their seventies. My medical expenses in the past year have been more than in the first 40 years of my life— and I did not spend one night in a hospital all last year...

There was a time when rushing a thousand-page bill through Congress so fast that no one has time to read it would have provoked public outrage. But now, this has been attempted twice in the first 6 months of a new administration. The fact that they got away with it before, with the "stimulus" bill, may have led them to believe that they could get away with it again. But the first bill simply spent hundreds of billions of dollars. The current "health care" bill threatens to take life-and-death decisions out of the hands of individuals and their doctors, transferring...

Random thoughts on the passing scene: Different people have very different reactions to President Barack Obama. Those who listen to his rhetoric are often inspired, while those who follow what he actually does are often appalled. New York and Chicago have both recently had their coldest June in generations. If they had had their hottest month, it would have been trumpeted from the media 24/7 by "global warming" zealots. But the average surface temperature of the earth has not changed in more than a decade, according to the Cato Institute. Many years ago, there was a comic book character who...

As someone who was once rushed to a hospital in the middle of the night, because of taking a medication that millions of people take every day without the slightest problem, I have a special horror of life and death medical decisions being made by bureaucrats in Washington, about patients they have never laid eyes on. On another occasion, I was told by a doctor that I would have died if I had not gotten to him in time, after an allergic reaction to eating one of the most healthful foods around. On still another occasion, I was treated with...

"Eternal vigilance is the price of freedom." We have heard that many times. What is also the price of freedom is the toleration of imperfections. If everything that is wrong with the world becomes a reason to turn more power over to some political savior, then freedom is going to erode away, while we are mindlessly repeating the catchwords of the hour, whether "change," "universal health care" or "social justice." If we can be so easily stampeded by rhetoric that neither the public nor the Congress can be bothered to read, much less analyze, bills making massive changes in medical...

"Eternal vigilance is the price of freedom." We have heard that many times. What is also the price of freedom is the toleration of imperfections. If everything that is wrong with the world becomes a reason to turn more power over to some political savior, then freedom is going to erode away, while we are mindlessly repeating the catchwords of the hour, whether "change," "universal health care" or "social justice." If we can be so easily stampeded by rhetoric that neither the public nor the Congress can be bothered to read, much less analyze, bills making massive changes in medical...

After many a disappointment with someone, and especially after a disaster, we may be able to look back at numerous clues that should have warned us that the person we trusted did not deserve our trust. When that person is the President of the United States, the potential for disaster is virtually unlimited. Many people are rightly worried about what this administration's reckless spending will do to the economy in our time and to our children and grandchildren, to whom a staggering national debt will be passed on. But if the worst that Barack Obama does is ruin the economy,...

After many a disappointment with someone, and especially after a disaster, we may be able to look back at numerous clues that should have warned us that the person we trusted did not deserve our trust. When that person is the President of the United States, the potential for disaster is virtually unlimited. Many people are rightly worried about what this administration's reckless spending will do to the economy in our time and to our children and grandchildren, to whom a staggering national debt will be passed on. But if the worst that Barack Obama does is ruin the economy,...

Many people hoped that the election of a black President of the United States would mark our entering a "post-racial" era, when we could finally put some ugly aspects of our history behind us. That is quite understandable. But it takes two to tango. Those of us who want to see racism on its way out need to realize that others benefit greatly from crying racism. They benefit politically, financially, and socially. Barack Obama has been allied with such people for decades. He found it expedient to appeal to a wider electorate as a post-racial candidate, just as he has...

Distracting the audience's attention is one of the ways magicians pull off some of their tricks. President Obama's televised news conference on medical care shows that he is something of a magician when it comes to politics. The big trick for the president is to convince the public he can add tens of millions of people to his government medical insurance plan without raising the costs. But an analysis by the Congressional Budget Office showed that ObamaCare would in fact raise the costs and increase the deficit by billions of dollars. With common sense and economic analysis saying Obama cannot...

Distracting the audience's attention is one of the ways magicians pull off some of their tricks. President Barack Obama's televised news conference on medical care shows that he is something of a magician when it comes to politics. The big trick for the president is to convince the public that he can add tens of millions of people to his government medical care plan without raising the costs. But an analysis by the Congressional Budget Office showed that Obamacare would in fact raise the costs and increase the deficit by billions of dollars. With both common sense and economic analysis...

Is there a coherent argument for government-controlled medical care, or are slogans and hysteria considered sufficient? We hear endlessly about how many Americans don’t have health insurance. But, if we stop and think — which politicians hope we never do — that raises the question as to why that calls for government-controlled medical care. A bigger question is whether medical care will be better or worse after the government takes it over. There are many available facts relevant to those crucial questions but remarkably little interest in those facts. There are facts about the massive government-run medical programs already in...