Friday, September 24, 2010

Regulation Insidiousness

There is a common perception that low wages are the driver for outsourcing.  I do not agree.  It is the death by a thousand cuts of regulation.

Regulations rise and VCs exit health care:
As many as three-quarters of venture capitalists are exiting the health care field as the total pool of venture capital decreases and regulatory hurdles increase, said Kevin Wasserstein, managing director of Versant Ventures (Menlo Park, Calif.) which focuses on health care.

The problem with command and control hierarchies and over-reaching regulation is that it destroys the market.  In other words, it destroys the complex system out of which all adaptability, evolution and innovation springs. The organism adapts even if that means withdrawal.

The EPA significantly changed the business rules in the USA forever.  So did the Department of Education and the DOE.  These are innovation killers.  These are impediments that make it ever more difficult or impossible to advance with some prospect of success.  Investment ceases.  The economy slows.  The bureaucracy is successful only to the extent that the current state of commerce remains in place, frozen in time, until asset decay due to insufficient maintenance causes further decline.

The prospect must be taken seriously that health care costs are close to twice as high as a free market would decree.  It is impossible to estimate with surety, since no one can predict consumption if costs had been declining and supply was ever more innovative and available as it has been in the food industry for the last 50 years.

That technology is driving health care costs up is most assuredly a gross mistake.  Technology is driving costs down in every other industry not controlled or heavily regulated by the government.  Only an industry where supply, demand, information, and delivery is regulated can costs increase while quality and innovation are stifled.  That is what we have in health care, and have had for a generation.

Obama care is the worst of both socialist solutions and a 'free market' in health care.  It actually could hardly be worse.  It is certainly worse than either more pure solution.  But all socialist solutions in other countries are going bankrupt.  Why not try the other?

Other Resources
The Doom of Medical Progress
American Health care Fascialism

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