Prepare for drug shortages

The Globe and Mail reports that,

Provinces will begin bulk-buying several different generic drugs as part of the first steps Canada’s premiers are taking to make health care less costly and more efficient for Canadians.

This means that the monopsony model used for provincial health insurance plans will now be used for generic drug purchases. It's unclear whether provinces will be providing the drugs through provincial insurance plans or simply re-selling them to pharmacies.

Once this policy goes into effect, there will be more shortages of certain types of generic drugs. Worse, you'll end up paying more on average for those drugs that suffer shortages. If provinces let generic drug prices fluctuate, the price of drugs that suffer shortages will rise consistent with increased demand. If provinces fix the prices of generics, then you will have to pay for the more expensive brand names when generics experience shortages. This, however, is better than our provincial health insurance plans for doctor and hospital services. Because provinces ban private delivery, when shortages occur (i.e. waiting-lists), your only option is to wait.

The reason there will be shortages of certain types of generics is that monopsonies are a form of central-planning and therefore suffer from the knowledge-problem. When there is one purchaser in a market, they need to know what everyone will need in the future. This is impossible because they cannot gather knowledge of 'time-and-place' -- i.e. the circumstantial knowledge of particular people in the economy. In healthcare, this would be a patient's knowledge of his or her particular ailments and the doctor's knowledge of how different kinds of people react to different treatments. This type of information can only be transmitted through prices that arise from a market with multiple buyers and sellers. One buyer can drive down the price, but they do so at the expense of the efficient aggregation of information.

There are market-failures in health-care, which I have addressed elsewhere, but ceteris paribus, the allocation of prescription drugs in Canada is about to get worse.

Guns and violence

The disorder that this Globe and Mail editorial decries is part of a society that guarantees the final protection against tyranny: civilian arms.

The idea that allowing civilians to possess arms is insane and indifferent to killings is, in truth, a value judgement that better protected liberty is not worth additional disorder.

This is a value judgement that is not applied in other areas. Legal rights and due process similarly increase disorder by seeing criminals go free on rights violations. Yet, we tolerate this disorder knowing that legal rights and due process protect the liberty of the innocent. And we value the liberty of the innocent more than increased order.

So why permit disorder for legal rights and due process but not guns? The assumption is that Western liberal-democratic states can be entrused to protect liberty but that they could never turn tyrannical and deny it. The idea that liberal democratic states will never stop being liberal reflects an obedience to authority that is far scarier than the American willingness to let the people, not just the rulers, be armed.

Natural-rights help the nanny state

Natural-rights thinking contributes to nanny-state restrictions for the simple reason that weighing of rights is not possible. Many petty restrictions are seen as justified because they prevent a small number of people from harm or death. Smoking bans, seat-belt laws, gun-control, etc.

I suspect natural-rights libertarians will object that this is because the rights in question aren't rights. None of these violate property-rights, which are the only natural-rights. Even if it's true that these restrictions don't violate property-rights, it means that that natural-rights thinking is only valuable in arguments against petty restrictions in an ideal society where everyone recognises that our natural-rights consist only of property-rights. That makes natural-rights libertarians' thinking pretty limited in our modern context of value-pluralism.

The alternative doesn't have to be a utilitarian framework where odd rights violations follow, e.g. society is justified in executing curmudgeons because no one likes them around. (That said, I think that overall, utilitarianism would lead to more a liberal society under value-pluralism than natural-rights.) Rather, a contractarian society can allow for weighing of rights without utilitarianism's bizarre rights-violations. The reason is that it permits probability calculations in its thought. In a contractarian framework, you can say, for example, that gun-rights will be permitted even though more people will be injured or die because the deaths will only affect a few people and chances are it won't be you. Alternatively, many will receive additional utility from the option of owning and enjoying firearms and chances are that will include you.

A quick thought on Mill and liberty

Is John Stuart Mill responsible for most nanny statism even though he wanted to create a new sphere of individual liberty against the civil societal majority above and beyond that enjoyed against the state?

I don't have in mind the usual conservative objection that a civil societal sphere of liberty requires a welfare state, the idea that people free from customs will necessarily suffer consequences that only societal alms can remedy.

I mean many petty restrictions on liberty are defended by recourse to harm to others. If by contrast we justify all restrictions by recourse to Hobbes' concept of peace -- lack of a known disposition to contend by force -- I think the remaining liberty is closer to what most liberals have in mind.

Is there a right to arms in Canada?

As Canadian courts like to tell gun owners petitioning for their rights, there is no right to arms in Canada. They're right. Legally, there isn't. You may have that right morally, but legal bodies -- Parliaments, courts, etc. -- aren't bound to acknowledge it.

Canada does have a right to arms from the English Bill of Rights 1689, but this bill only guaranteed rights against the monarchy. It doesn't apply to Parliament or other democratically elected bodies. As such, Parliament, or your provincial legislature, is free to regulate, even prohibit, firearms. Just so long as the Queen doesn't initiate the legislation, there is no violation of our Constitutional framework.

To argue that there is a right to arms in Canada, one would have to make a case under §7 of the Charter. One would have to argue that firearms are essential to liberty. That when democratic and speech rights are obstructed, one can only guarantee one's liberty with arms and, as such, your right to liberty must include a right to arms.

There would rightly be suspicion of this idea as American because only the Americans have applied the right to arms against legislative bodies. Nations in the British tradition -- UK, Canada, Australia, New Zealand, Jamaica, etc. -- only apply it to the Crown. You can correctly argue that when the right to arms passed in the British system only the monarch was a threat to liberty, but that won't establish a right against legislative bodies. We've had plenty of opportunity to apply the right to arms to legislative bodies since the Americans first did so in 1789 and we haven't.

That said, one would have a strong case for contending that the right to liberty includes a right to arms based on Canadian history alone. There are many cases where rebellion has been used to secure or defend liberal democratic rights: Upper Canada Rebellion (democratic, language, and minority rights), Lower Canada Rebellion (democratic rights), Red River Rebellion (democratic, minority, and native rights), and Oka (native land claims).

So no, there is no legal right to arms in Canada but a case could be made that it's part of our right to liberty. Given that §1 limits §7 and that legislative bodies can use §33 to override §7, even if one successfully made the case, gun controls would still be permissible -- the only difference being they couldn't be as severe.

A brief thought on morality

The more moral and political philosophy I read, the more I think that morality, more often that not, is detrimental to well-being. It tries to restructure some relationship of concern, finding displeasure in the fact that it, like nearly all human relationships, is a game, or series of games, of partial-conflict. The restructuring seems to always be an attempt to reduce whatever harm one one party causes to another by securing a benefit from interaction. The restructuring usually takes the form of changing the game of partial-conflict to one of positive-sum. The reason this is detrimental to well-being is that games of partial-conflict tend to have much higher net payoffs than positive-sum games. To put it in plain language, society is better off when one party, in part, exploits another.

ONE MORE THOUGHT: Put differently, moral value undermines well-being by undermining economic value.

The economics of Canadian healthcare

This is a column I wrote for my local paper, the Morinville Monday Morning News:

A persistent difficulty with Canadian healthcare is waiting-lists. In Alberta, the waits from the time a doctor recommends the patient see a specialist to actual treatment range from 6 months to 3 years. In this column, I will address the cause of waiting-lists and propose a possible solution.

The cause of waiting-lists is that our public, single-payer model of healthcare is a form of central-planning and all central-planning suffers from a knowledge-problem that makes efficient deployment of resources, in this case tax-dollars, impossible.

The reason our healthcare system is a form of central-planning is that decisions about which procedures, equipment, and other healthcare goods will be bought or provided are made by a central body, viz. provincial health ministries.

That central-planning suffers from a knowledge-problem that prevents efficient resource allocation was first indentified by Nobel Laureate economist F.A. Hayek. He argues that central planners cannot allocate resources efficiently because they cannot accommodate the quickly changing ‘circumstantial’-knowledge individuals possess in their allocation decisions. Basically what this means for healthcare is that provincial funding decisions cannot take account of fast changing, individually-based information like the patient’s awareness of their condition or the doctor knowledge’s of how general treatments apply to particular patients. As such, provincial funding never aligns with patient needs and waiting-lists form.

The main solution to overcoming the knowledge problem is a market. In a market, individuals choose what treatments to consume or provide to others or based on their circumstantial knowledge. The knowledge they require in addition to their own to make such decisions is conveyed to them by prices, which reflect the information other patients and practitioners hold.

The main objection to creating a market for healthcare is the well-known problems of the United States healthcare system. These are two. The first is the producer-demand failure. Doctors know more about patients’ health than patients do and therefore have an incentive to sell them more services than they need. The second is insurance-agent problem. Since an insurance company is paying rather than the patient, the patient tends to choose more expensive treatments which insurance companies pass on as higher premiums.

If our single-payer healthcare suffers from an irreconcilable knowledge problem and the common solution – a market – produces the failures of the United States, what can we do? In short, we allow a market in healthcare, but, unlike the United States, we encourage government to correct the two failures. Many European countries have pursued this strategy successfully. My preferred example is Switzerland. They mandate that insurances companies offer everyone basic coverage at no profit. This corrects the failure of producer-led demand by precluding over-charging. It also removes the increasing costs that insurance companies pass on to consumers. To ensure that insurance companies are still viable, though, the Swiss allow insurance companies to allow for-profit services over and above the basic plans.

Next time someone mentions private healthcare, don’t get up in arms. It can produce better outcomes than what we enjoy now as long as we correct the problems the Americans won’t.