More Sowell, and then some

More great thoughts and liberating ideas from one of the greatest economists, historians and philosophers of the past hundred years, Thomas Sowell.

Something for nothing. Dr Sowell ponders the reality of “free stuff” from the government. http://www.LibertyPen.com​. Suppose you received a gift of a million dollars, yet all that money had to be spent on tickets to watch professional wrestling. What would the million dollars be worth...to you? If you were a wrestling fan, it may be worth something, but probably not a million dollars of unencumbered cash. What if your could "cash in" the million-dollar gift for $100,000 you could spend as you wish? Would you take that deal? Unless you decided to hold out for an obsessive wrestling fan to pay you something closer to the full million dollars, you'd probably take the $100k.

For me, this reminds me of one of the two tenants of finance. That is, is money in your pocket worth more than even more money in someone else's pocket, with that someone else promising to pay you that higher amount at some time in the future. This represents both risk and the time value of money.

For Sowell, this is the contrast between money "with strings attached," versus money "without strings attached," the latter being much more valuable than the former. The problem is that providing money to people with no strings attached can produce irresponsible behavior and expenditure of the money, especially if the person is already the recipient of free or subsidized benefits to provide for the basics. This illustrates the problematic nature of the concept of a 'universal basic income.' 'Free' or no strings attached money on top of a significant amount of free stuff, e.g., education, healthcare, unemployment benefits, food stamps, public housing makes little or no sense. In contrast, targeted vouchers that require people to apply the gifted feds to their real needs, like medical treatment insurance (okay, healthcare) or education. Even then, food stamp vouchers are like that money for wrestling tickets. There is always someone who will give you discounted face value cash for food stamps. For example, the received $400 a month in food stamp vouchers yet you'd prefer cash. Someone might pay you $250 for your food stamps, defeating the entire purpose of a targeted voucher intended to satisfy a critical basic need.

'Free' rights to...you name it. Healthcare is just one of those 'rights' that surfaced over the last twenty-five years, although there is still no practical definition as to what is covered under this right. Cosmetic surgery? Healthclub memberships? Sex change operations? Instead, plans like Obamacare prescribe what items are included on their list -- not your list -- of healthcare needs and rights. These prescribed rights are free or heavily subsidized to the recipient of the medical procedure, therapy, drug, wheel chair or other 'healthcare' right, but they are never free in any real sense of the world. Worse, by dictating the subsidized cost, the medical or the patient are constrained in both their options and their costs, and taxpayers are left with any difference between what the government pays, the provider receives, and the cost the patient pays.

Healthcare may be a human right, but unless there is (1) a clear definition of what's part of 'health care,' (2) a single world government as the universal funding source, and (3) an unlimited budget, don't expect this lofty philosophical concept to be achieved. Economics explains as much life as does biology. And the concept of scarcity and the knowledge that 'people respond to incentives' are the human and economic elements that remain immutable.