A letter in the Boston Globe recently (Not-so-healthy profits, November 20, 1996) suggested what a terrible thing it is that some people profit from the health care needs of others. Although not a part of the health care system, I wish to point out the utter folly of that viewpoint.
First of all, there is nothing dishonorable about profit. A 9-to-5 wage earner can work a couple of hours at an evening job to earn a little something extra, whether it is a more lavish vacation or merely toys for the kids at Christmas. Why are the wages thus earned any more respectable than the family members who scrape together their savings to open a small business, in hopes of making a profit? What about the unrelated investor who postpones buying something, to provide some more capital for such a venture; to invest, in other words, in hopes of a profit? Foregoing other use of that money, and taking a risk of losing it, is only compensated for by the prospect of a profit. And where would society be, without the venture capital that exists only because of profits?
Not only that, but what is the alternative? We have a lot of people, especially in Massachusetts, who are unable to learn from the tragic experience of others, and who envision Socialism as a utopian condition in which all of us are kindly and altruistic, and toil earnestly for the benefit of society. Unfortunately, few of us are as saintly as Mother Teresa, and therein lies the flaw in that vision. A worker who is toiling for the benefit of society, but who can count on being taken care of by society whether he toils or not, will sometimes work with a little less diligence. He might leave work a little earlier, or let a defect slip by, or fail to suggest an improvement that he might have suggested if it more directly affected his compensation. The supervisor, similarly, might be slightly more inclined to pass slipshod work, especially if he has a deal under the table for delivering the best of the product to his black market outlet. And so on up the line, wherever the people of less than sterling character are employed. Of course, we have many Russian immigrants who can fill in the details of this picture far better than I can.
But the biggest danger is at the top of the system, where somebody has to make the decisions of what "for the benefit of society" means. Throughout history, positions of power have drawn the corrupt, and have even corrupted the initially pure of heart. If somebody has to make a decision whether to pursue a cure for this illness or that degenerative disease, how long can we guarantee such decisions are made for the benefit of society, and not for the benefit of the decision-maker's relative, or lover, or briber? I submit that no person can or should be trusted with that kind of power. But it's not necessary, in the free-market system. We have companies like Apple, Microsoft, Bertucci's, and Staples, founded by people who pursued their own visions and were successful, and of course countless others who pursued their own visions too, but were less successful. But even those who failed had the freedom to follow their own dreams, and were not proscribed by some bureaucrat from even the chance to try. The free market tests various alternatives, and not only does it generally make decisions wiser than any single person of power could consistently make, but also it improves the eventual winner by competitive pressures.
To be specific about health care, if we forbade profits, how many drug researchers would instead go into chemical research for industrial products? How could we have developed CAT, PET, ultrasound, and MRI scanners? Some dedicated people would still seek cures for the diseases that afflict us, but their numbers would be vastly smaller and their research would go largely unfinanced.
A profit motive for health care? Why, yes, it's the only reliable way to get it done.