Cuba banned Michael Moore’s 2007 documentary, Sicko, because it painted such a “mythically” favourable picture of Cuba’s healthcare system that the authorities feared it could lead to a “popular backlash”, according to US diplomats in Havana.

The revelation, contained in a confidential US embassy cable released by WikiLeaks , is surprising, given that the film attempted to discredit the US healthcare system by highlighting what it claimed was the excellence of the Cuban system.

But the memo reveals that when the film was shown to a group of Cuban doctors, some became so “disturbed at the blatant misrepresentation of healthcare in Cuba that they left the room”.

Castro’s government apparently went on to ban the film because, the leaked cable claims, it “knows the film is a myth and does not want to risk a popular backlash by showing to Cubans facilities that are clearly not available to the vast majority of them.”

The rest of the Guardian’s story is here.

UPDATE: Moore replies:

Sounds convincing, eh?! There’s only one problem — the entire nation of Cuba was shown the film on national television on April 25, 2008! The Cubans embraced the film so much so it became one of those rare American movies that received a theatrical distribution in Cuba. I personally ensured that a 35mm print got to the Film Institute in Havana. Screenings of ‘Sicko’ were set up in towns all across the country. In Havana, ‘Sicko’ screened at the famed Yara Theater.

The lesson? Be skeptical of anything originating within the U.S. government.

As we see in Moore’s new movie, Capitalism: A Love Story, Moore is offended by some truly offensive things: banks engaging in wild speculation without concern for the risk, taxpayer bailouts for banks and other businesses, cozy relations between Wall Street and Washington, politicians getting favors from companies that want benefits from government, and big institutions pushing less powerful individuals around. True, he’s offended by some inoffensive things as well, such as the cut in the 90 percent top income-tax rate years ago. But by and large, what he rails against should be railed against.

Had he called his movie State Capitalism: A Love Story, I might be applauding (with some reservations). But he’s targeting the more ambiguous “capitalism,” which he uses interchangeably with “the free market.” He can be forgiven for this, however. Most people would say that the current U.S. economic system is capitalist. Moore has probably heard that all his life. He’d hear it if he watched a Fox financial program. Would Ben Stein or Lawrence Kudlow disagree? Moore has also heard Republican politicians—George W. Bush, for example—praise the existing system, with all its deep government interventions, as capitalist. Bush did this even as he and Treasury Secretary Henry Paulson, former chief of Wall Street behemoth Goldman Sachs, stampeded Congress into passing the $700 billion TARP bailout last year. Moore takes such people at their word: The free market is capitalism, and capitalism is what we have today.

Vulgar Libertarianism

Can we blame him for thinking this way?

Yes, it’s sloppy thinking, and had he been more curious and read beyond the confines of “Progressive” literature, he could have gotten the straight story. But many knowledgeable advocates of the free market contribute to the confusion by exhibiting what Kevin Carson calls “vulgar libertarianism,” or what Roderick Long describes as “the tendency to treat the case for the free market as though it justified various unlovely features of actually existing corporatist society.” How often have you heard a free-market advocate condemn pro-business intervention in one breath, then defend existing dominant corporations in the next—as though they did not arise in the interventionist environment just condemned? Pro-market is not the same as pro-business. If some market advocates don’t understand that, why should Moore?

This may go a long way in explaining Moore’s aversion to profit—at least other people’s. He associates profit with business, which he associates with (state) capitalism. So for him, profit per se is suspect. But he should see a problem here. Does he think he’s exploiting moviegoers when his production company ends up with a profit? Do the co-ops and worker-owned firms he loves exploit their customers when they sell their products for more than their money costs?

Cornered like this, Moore might say he’s only against the excessive profits that capitalist market power permits. But now we’re back where we started. To the extent that intervention hampers competition by erecting barriers to entry—which is the usual effect, intended or not—protected firms are free to charge higher prices and reap more profits than would have been the case in an open market. Corporate power and privilege derive from political power and can’t exist without it. In contrast to existing capitalism, the truly free market would have no legal barriers to competitive entry, assuring that prices and returns are economically justified and not the fruits of privilege. Only the State permits business to make profits by withholding benefits from consumers.

But Moore doesn’t know this. What he “knows” is that the choice is between the current corrupt system—and it is corrupt—and some vaguely defined scheme of control by benevolent politicians, which he calls socialism and democracy.

In his movie Moore expresses affection for socialism, but he’s not clear what he means. He never advocates collectivization of the means of production or the abolition of markets. Instead he suggests that socialism means workers having a say in how the companies they work for are run. But why assume that’s anti-free-market? He praises worker-owned companies and notes that hundreds of them exist in the United States today. He might be surprised to learn that these things are entirely compatible with the free market. In fact, it’s a perfectly libertarian intuition to abhor being subject to the arbitrary whim of anyone—yes, even a private employer. If government regulatory and tax obstacles to new competition and self-employment did not exist, workers would have their maximum bargaining power and widest array of alternatives. I imagine we’d see more departures from the traditional firm. People used to get their “social insurance” from mutual aid societies. Maybe in a true free market, we’d see a bigger role for the employment counterpart to these public, yet not governmental, organizations.

What would Moore think about a system in which no one could collude with politicians to legally plunder the rest of us for his or her own benefit and everyone was free to enter into any cooperative arrangements to produce and offer goods to others in voluntary exchange? Michael, that’s the free market!

The Nirvana Fallacy: A Love Story

Of course, Moore naively looks to government to provide things. His movie laments that FDR died before he could see his Second Bill of Rights enacted. Roosevelt wanted government to guarantee everyone a good education, job, home, health care, and so on. Has Moore ever wondered where government would get the resources for this? He can’t really believe that somewhere there’s a massive pot of collective wealth waiting to be distributed. He must realize that the tax system would provide the money. But how can he not know that if government appears to penalize wealth creation with confiscation, less wealth will be created?

Moore is unaware that he commits the “Nirvana fallacy.” This is the erroneous idea that our choice is between the admittedly imperfect world we’re bound to live in if government leaves us alone and an imagined utopia in which benevolent and all-wise rulers oversee and regulate everything. Of course that is not the choice. Moore’s preferred system, whatever he calls it, would be run by individuals whose insights into the public interest would be no sharper and whose motives no purer than other people’s. However, since they would wield political power—which is the legal authority to compel obedience—they would be far more dangerous than anyone in a free market could ever be. He knows how corrupt politicians are. Why does he think different people would run things in his utopia? Does he really want them in charge of everyone’s job, education, health care, housing, pension, and the rest? It’s hard to understand why he isn’t uncomfortable with the idea of the people being tenants and employees of the State.

Whether he realizes it or not, Moore favors a system in which an elite necessarily would make critical decisions for the rest of us. He’d be incredulous to hear that, but if he ever comes to understand it, libertarians might end up with an unlikely ally.

As we see in Moore’s new movie, Capitalism: A Love Story, Moore is offended by some truly offensive things: banks engaging in wild speculation without concern for the risk, taxpayer bailouts for banks and other businesses, cozy relations between Wall Street and Washington, politicians getting favors from companies that want benefits from government, and big institutions pushing less powerful individuals around. True, he’s offended by some inoffensive things as well, such as the cut in the 90 percent top income-tax rate nearly 30 years ago. But by and large, what he rails against should be railed against.

(Update: Moore gets the tax-rate story wrong, and I let it get by me. The 91 percent top marginal rate fell to 77 in 1964 and 70 in 1965; this was the Kennedy tax cut — I wonder why Moore didn’t say that Democrats John Kennedy and Lyndon Johnson were the rate cutters. Under Republican Ronald Reagan, whom Moore wishes to demonize for cutting taxes for the rich, the rate dropped to 50 and eventually to 28 percent. HT: Gary Chartier.)

Had he called his movie State Capitalism: A Love Story, I might be applauding (with some reservations). But he’s targeting the more ambiguous “capitalism,” which he uses interchangeably with “the free market.” He can be forgiven for this, however. Most people would say that the current U.S. economic system is capitalist. Moore has probably heard that all his life. He’d hear if he watched a Fox financial program. Would Ben Stein or Lawrence Kudlow disagree? Moore has also heard Republican politicians, George W. Bush, for example, praise the existing system, with all its deep government interventions, as capitalist. He did this even as he and Treasury Secretary Henry Paulson, former chief of Wall Street behemoth Goldman Sachs, stampeded Congress into passing the $700 billion TARP bailout last year. Moore takes such people at their word: The free market is capitalism, and capitalism is what we have today.

Can we blame him for thinking this way?

Yes, it’s sloppy thinking, and had he been more curious and read beyond the confines of “Progressive” literature, he could have gotten the straight story. But many knowledgeable advocates of the free market contribute to the confusion by exhibiting what Kevin Carson calls “vulgar libertarianism,” or what Roderick Long describes as “the tendency to treat the case for the free market as though it justified various unlovely features of actually existing corporatist society.” How often have you heard a free-market advocate condemn pro-business intervention in one breath, then defend existing dominant corporations in the next — as though they did not arise in the interventionist environment just condemned? Pro-market is not the same as pro-business. If some market advocates don’t understand that, why should Moore? Vulgar libertarianism is a disconnect that makes the free-market philosophy look like a corporate apologetic. It’s done incalculable damage to the cause of freedom, in part by alienating potential allies. Who knows, maybe even Michael Moore.

Aversion to Profit

This may go a long way in explaining Moore’s aversion to profit — at least other people’s. He associates profit with business, which he associates with (state) capitalism. So for him, profit per se is suspect. But he should see a problem here. Does he think he’s exploiting moviegoers when his production company ends up with a profit? Do the co-ops and worker-owned firms he loves exploit their customers when they sell their products for more than their money costs? When two people barter, are they mutually exploiting each other because each gets more value than he gives up? To consistently oppose profit, one would have to oppose all human action, since every action aims at a surplus of subjective benefit over subjective opportunity cost.

Cornered like this, Moore might say he’s only the against excessive profits that capitalist market power permits. But now we’re back where we started. To the extent that intervention hampers competition by erecting barriers to entry — which is the usual effect, intended or not — protected firms are free to charge higher prices and reap more profits than would have been the case in an open market. Corporate power and privilege derive from political power and can’t exist without it. In contrast to existing capitalism, the truly free market would have no legal barriers to competitive entry, assuring that prices and returns are economically justified and not the fruits of privilege. Strictly speaking, entrepreneurial profit in a true market gets competed away because the very process of capturing them reveals valuable information to others and invites imitation. It takes innovation and efficiency — that is, superior service to consumers — to create new profits. Only the State permits business to make profits by withholding benefits from consumers.

But Moore doesn’t know this. What he “knows” is that the choice is between the current corrupt system — and it is corrupt — and some vaguely defined scheme of control by benevolent politicians, which he calls socialism and democracy.

In his movie Moore expresses affection for socialism, but he’s not clear what he means. He never advocates collectivization of the means of production or the abolition of markets. Instead he suggests that socialism means workers having a say in how the companies they work for are run. But why assume that’s anti-free market? He praises worker-owned companies and notes that hundreds of them exist in the United States today. He might be surprised to learn that these things are entirely compatible with the free market. In fact, it’s a perfectly libertarian intuition to abhor being subject to the arbitrary whim of anyone — yes, even a private employer. If government regulatory and tax obstacles to new competition and self-employment did not exist, workers would have their maximum bargaining power and widest array of alternatives. I imagine we’d see more departures from the traditional firm. People used to get their “social insurance” from mutual aid societies. Maybe in a true free market, we’d see a bigger role for the employment counterpart to these public, yet not governmental, organizations.

What would Moore think about a system in which no one could collude with politicians to legally plunder the rest of us for their own benefit and everyone was free to enter into any cooperative arrangements to produce and offer goods to others in voluntary exchange? Michael, that’s the free market!

FDR’s Second Bill of Rights

Of course, Moore naively looks to government to provide things. His movie laments that FDR died before he could see his Second Bill of Rights enacted. Roosevelt wanted government to guarantee everyone a good education, job, home, health care, and so on. Has Moore ever wondered where government would get the resources for this? He can’t really believe that somewhere there’s a massive pot of collective wealth waiting to be distributed. He must realize that the tax system would provide the money. But how can he not know that if government appears to penalize wealth creation with confiscation, less wealth will be created?

Moore is unaware that he commits the “Nirvana fallacy.” This is the erroneous idea that our choice is between the admittedly imperfect world we’re bound to live in if government leaves us alone and an imagined utopia in which benevolent and all-wise rulers oversee and regulate everything. Of course that is not the choice. Moore’s preferred system, whatever he calls it, would be run by individuals whose insight into the public interest would be no sharper and whose motives no purer than other people’s. However, since they would wield political power — which is the legal authority to compel obedience– they would be far more dangerous than anyone in a free market could ever be. He knows how corrupt politicians are. Why does he think different people would run things in his utopia? Does he really want them in charge of everyone’s job, education, health care, housing, pension, and the rest? It’s hard to understand why he isn’t uncomfortable with the idea of the people being tenants and employees of the State.

Whether he realizes it or not, Moore favors a system in which an elite necessarily would make critical decisions for the rest of us. He’d be incredulous to hear that, but if he ever comes to understand it, libertarians might end up with an unlikely ally.

Advocates of liberty face an invisibility problem, first identified by nineteenth-century French libertarian Frédéric Bastiat in the appropriately titled essay “What Is Seen and What Is Not Seen.” Through a simple story, Bastiat exposed the fallacy that later underlay Keynesian economics.

A young boy breaks a shopkeeper’s window, initially sparking outrage from the townspeople. When the locals begin to discuss the incident, they conclude that there is a positive side. The glass will need to be replaced, making work for the glazier. The glazier will spend the money he makes on bread. The baker will then spend that money, and so on. The townspeople offer consolation to the victim: “It’s an ill wind that blows nobody some good. Such accidents keep industry going. Everybody has to make a living. What would become of the glaziers if no one ever broke a window?”

Wait! Bastiat says. “Your theory stops at what is seen. It does not take account of what is not seen.” The mistake in their reasoning is that the townspeople do not consider what use the shopkeeper would have put his money to had he not spent it fixing the window. Perhaps the shopkeeper would have purchased a new hat, giving work to the local haberdasher, or placed the money in a bank, which would then lend it as capital for an entrepreneur. The poor reasoning of the townspeople has become known as the broken-window fallacy.

The Persistence of the Fallacy

Critical reflection should make it clear what is lost through the youth’s vandalism, and yet the broken-window fallacy seems ever present in our society. Paul Krugman even used it to suggest that the September 11 attacks would boost economic growth because of the costs of reconstruction. (“The driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I’ve already indicated, the destruction isn’t big compared with the economy, but rebuilding will generate at least some increase in business spending,” “Reckonings; after the Horror,” New York Times, Sept. 14, 2001; http://tinyurl.com/32h7hy.)

Bastiat’s title clearly identifies what lies behind the persistence of this fallacious reasoning. The importance of visuals for argumentation has only grown since Bastiat’s time. Much effort has been expended by libertarians in making the case for how the market could address any number of potential problems. This is important work, but presenting a brilliantly argued case for libertarianism only means success in a world of completely rational people. If we were living in that world, libertarianism would have prevailed long ago. The charts and graphs (the seemingly lone visual aids) trotted out by economists to make the case for laissez-faire economics are more likely to put audiences to sleep than inspire them to action. Defenders of the free market need new visual rhetorical strategies that highlight the human costs of intervention.

Emmanuel Lévinas, a French philosopher who wrote extensively on ethics, rooted the ethical obligation between human beings as one that stems from direct viewing of the human “face.” The case of Jessica McClure seems to confirm Lévinas’s theory. Jessica fell into a well in 1987. Her plight drew massive attention and resources that could have saved countless more lives if put to other uses. The visual image of a child stuck at the bottom of a well created an irrational prioritization of her case. A review of the relevant psychological literature by Paul Slovic, president of Decision Research, offers a more comprehensive confirmation. He found that individuals were more likely to donate money to individuals rather than groups, and smaller groups rather than larger ones. Researchers attribute this to human beings having an easier time empathizing with small groups, combined with smaller groups contributing to a stronger feeling of being able to create actual change. Slovic also found individuals were much more willing to donate money to a cause if a picture of those suffering was available. He concluded his review of the literature by saying that statistics of human suffering have had and will continue to have a terrible track record of promoting action. As Stalin is often alleged to have said, “One death is a tragedy; a million is a statistic.” The innate human desire to prioritize the visual gives a strong rhetorical edge to opponents of the free market.

Modern-day statists seem incredibly adept at commanding the attention of the public. Have you ever noticed how there exists an unending stream of documentaries criticizing the free market? Roger and Me, Wal-Mart: The High Cost of Low Price, This Is What Democracy Looks Like, and Sicko are some of the titles that immediately pop to mind. I can’t remember ever seeing a libertarian documentary being widely promoted, despite the fact that libertarians make up roughly 13 percent of the American population, according to research by David Boaz and David Kirby.

Is there an American over the age of 25 who does not remember the terrible images from the Exxon Valdez oil spill? These images evoke strong anti-corporate feelings even though the company has now spent over $3 billion to alleviate the environmental impacts and has paid restitution to the affected fishing industry.

How many individuals have seen pictures, much less heard of, the Milwaukee disaster? Over 400 times as much pollution was knowingly dumped in Lake Michigan in 2004 by local governments that understood they would not be held accountable. Americans have been inundated with pictures of melting icecaps, but have they seen pictures of the children starving because of our energy policies? Numerous studies show that government policies pushing ethanol as a solution to global warming act to raise food prices, leaving the world’s poorest to starve. This on top of the fact that most scientists believe the corn ethanol being pushed by the government will have no effect on warming. Many Americans have been confronted with images of children working in factories; however, they do not see the images of the 5,000 Nepalese girls forced into prostitution because of U.S. trade sanctions against child labor. These facts are not secret, but their lack of visual presence means they are all but invisible to most Americans.

The Effectiveness of Imagery

Imagery is effective, especially when combined with skillful storytelling. If you can honestly tell me that you watched Roger and Me without being overcome with deep grief and anguish, then you must have a heart of stone. And recall what images stay with you from Roger and Me. Although Michael Moore offers statistical representations of the economic downturn of Flint, Michigan, it’s the images of individuals evicted from their homes that haunt me. It is only by removing myself from the movie and viewing it in the larger context of the positive effects of outsourcing that I can see the flaws in Moore’s logic. Unfortunately, I don’t think most Americans have the patience or a strong enough background in libertarian thought to be able to take on this task. (I know I didn’t until many years after seeing the film.) Libertarians can cry “unfair” and write all the scathing reviews they want, but both history and the relevant scientific data indicate that it will do little good.

Instead they need to take up the tactics long deployed by the statists. Although we have a late start, we also have the enormous advantage of having a much stronger position to advocate. Historically, libertarians have used this great strength against themselves by assuming that truth alone would be enough to win the day. Libertarians must learn a lesson that the marketplace has taught the business community over and over again: having the best product is not enough. This does not mean ending the scholarly work that delves into the nitty-gritty of what a world free of statist policies would look like. Nor does this mean ending the statistical work that so effectively makes the case for free markets. (Both of these things were instrumental in converting me and many others to libertarianism.)

Instead it means recognizing that a comprehensive case is not always as valuable in swaying public opinion as having effective case studies that take visual form. This sad fact has been proven time and time again when isolated incidents of highly visible “market failure” (Enron, Exxon Valdez, and so on) are taken as opportunities to usher in sweeping regulation. Initial forays into visual argumentation by libertarians have already proven largely successful, whether Ron Paul’s enormous presence on YouTube or John Stossel’s investigative journalism on “20/20.” Libertarians need to open a third front that tackles the statists in the visual realm, where they have too long held a dangerous monopoly.

Works Used

1. Frédéric Bastiat, “What Is Seen and What Is Not Seen,” (1850), http://tinyurl.com/ydasa2.
2. David Boaz and David Kirby, “The Libertarian Vote,” Policy Analysis no. 580 (2006), http://tinyurl.com/y4wfby.
3. Paul Krugman, “Reckonings; after the Horror,” New York Times, Sept. 14, 2001.
4. Emmanuel Lévinas and Seán Hand, The Levinas Reader, Translated by Seán Hand and Michael Temple, Blackwell Readers. Oxford, UK; Cambridge, Mass.: B. Blackwell, 1989.
5. Phil McKenna, “Corn Biofuel ‘Dangerously Oversold’ as Green Energy,” New Scientist (2007).
6. Johan Norberg, In Defense of Global Capitalism, Washington, D.C.: Cato Institute, 2003.
7. James R. Otteson, Actual Ethics, Cambridge, UK; New York: Cambridge University Press, 2006.
8. C. Ford Runge and Benjamin Senauer, “How Biofuels Could Starve the Poor,” Foreign Affairs (2007).
9. Paul Slovic, “ ‘If I Look at the Mass I Will Never Act’: Psychic Numbing and Genocide,” Judgment and Decision Making 2, no. 2 (2007): 79–95.

Leaving aside for a moment whether the health-care industry is really dominated by the profit motive (given that almost half of U.S. health-care expenditures are paid for by the federal government, it is not clear which motives dominate) and whether Moore knows better than millions of individuals what their health-care needs are, the claim that a “motive” is a root cause of social pathologies is worthy of some critical reflection. The critics seem to suggest that if people and firms were motivated by something besides profit, they would be better able to provide the things that patients really need.

The overarching problem with blaming a “motive” is that it ignores the distinction between intentions and results. That is, it ignores the possibility of unintended consequences, both beneficial and harmful. Since Adam Smith, economists have understood that the self-interest of producers (of which the profit motive is just one example) can lead to social benefits. As Smith famously put it, it is not the “benevolence” of the baker, butcher, and brewer that leads them to provide us with our dinner but their “self-love.” Smith’s insight, which was a core idea of the broader Scottish Enlightenment of which he was a part, puts the focus on the consequences of human action, not their motivation.

What we care about is whether the goods get delivered, not the motives of those who provide them. Smith led economists to think about why it is that, or under what circumstances, self-interest leads to beneficial unintended consequences. It is perhaps human nature to assume that intentions equal results, or that self-interest means an absence of social benefit, as was often the case in the small, simple societies in which humanity evolved. However, in the more complex, anonymous world of what Hayek called “the Great Society,” the simple equation of intentions and results does not hold.

As Smith recognized, what determines whether the profit motive leads to good results are the institutions through which human action is mediated. Institutions, laws, and policies affect which activities are profitable and which are not. A good economic system is one in which those institutions, laws, and policies are such that the self-interested behavior of producers leads to socially beneficial outcomes. In mixed economies like that of the United States, the institutional framework often rewards profit-seeking behavior that does not produce social benefit or, conversely, prevents profit-seeking behavior that could produce such benefits. For example, if agricultural policy pays farmers not to grow, then the profit motive will lead to lower food supplies. If environmental policy confiscates land with endangered species on it, owners of such land who are driven by the profit motive will “shoot, shovel, and shut up” (that is, kill off and bury any endangered species they find on their land).

The same issues can be raised in the health-care industry. Before blaming the profit motive for the problems in the industry, critics might want to look at the ways in which existing government programs like Medicare and Medicaid, the interpretation of tort laws, and regulations such as those that limit who can practice what sorts of medicine might lead firms and professionals to engage in behavior that is profitable but unbeneficial to consumers. Labeling the profit motive as the source of the problem enables the critics to ignore the really difficult questions about how institutions, policies, and laws affect the profit-seeking incentives of producers and how that profit-seeking behavior translates into outcomes. Placing the blame on the profit motive without qualification simply overlooks the Smithian question of whether better institutions would enable the profit motive to generate better results and whether current policies or regulations are the source of the problem because they guide the profit motive in ways that produce the very problems the critics identify.

For example, high medical costs may well be a result of profit-seeking providers’ recognizing that government programs are notoriously bad at pricing services accurately and keeping good track of their expenditures. Ignoring the way institutions might affect what is profitable is often due to a more general blind spot about the possibility of self-interested behavior generating unintended beneficial consequences. Before we attempt to banish the profit motive, shouldn’t we see whether we can make it work better?

Placing blame for social problems on the profit motive is also easy if critics offer no alternative. What should be the basis for determining how resources are allocated if not in terms of profit-seeking behavior under the right set of institutions? How should people be motivated if not by profit? Often this question is just ignored, as critics are merely interested in casting blame. When it is not ignored, the answers can vary, but they mostly invoke a significant role for government. The interesting aspect of such answers is that critics do not suggest that we somehow convince producers to act on the basis of something other than profit, but that instead we replace them with presumably other-motivated bureaucrats or have those bureaucrats severely limit the choices open to producers. The implicit assumption, of course, is that the government personnel will not be motivated by profits or self-interest in the same way as the private-sector producers are.

How realistic this assumption is remains highly questionable. Why should we assume that government officials are any less self-interested than private individuals, especially when the door between the two sectors is constantly revolving? And if government officials do act in their self-interest and are motivated by the political analogs of profits (for example, votes, power, budgets), will they produce results that are any better than the private sector’s? If blaming the profit motive entails giving government a bigger role in solving problems, what assurance can critics of the profit motive provide that political officials will be any less self-interested and that their self-interest will produce any better results?

One will look in vain in Sicko, for example, for any analysis of the failures of state-sponsored health care in Cuba, Canada, Great Britain, or anywhere else. To blame the profit motive without asking whether an alternative will better solve the problems supposedly caused by the profit motive is to bias the case against the private sector.

How Will They Know?

Even this argument, however, does not go far enough. We are still, after all, focused on intentions and motivation. What critics of the profit motive almost never ask is how, in the absence of prices, profits, and other market institutions, producers will be able to know what to produce and how to produce it. The profit motive is a crucial part of a broader system that enables producers and consumers to share knowledge in ways that other systems do not.

Suppose for a moment that we try to take the profit motive out of health care by going to a system in which government pays for and/or directly provides the services. Suppose further that we could, somehow, ensure that the political officials would not be self-interested. For many critics of the profit motive, the problem is solved because public-spirited politicians and bureaucrats have replaced profit-seeking firms.

Well, not so fast. By what method exactly will the officials know how to allocate resources? By what method will they know how much of what kind of health care people want? And more important, by what method will they know how to produce that health care without wasting resources? It’s one thing to say that every adult should, for example, have a checkup every year, but should it be provided by an MD, an LPN, or an RN? What kind of equipment should be used? How thorough should it be? And most crucially, how will political decision-makers know if they’ve answered these questions correctly?

In markets with good institutions, profit-seeking producers can get answers to these questions by observing prices and their own profits and losses in order to determine which uses of resources are more or less valuable to consumers. Rather than having one solution imposed on all producers, based on the best guesses of political officials, an industry populated by profit seekers can try out alternative solutions and learn which ones work most effectively. Competition for profit is a process of learning and discovery. For all the profit-critics’ concern—especially but not only in health care—that allocating resources by profits leads to waste, few if any understand how profits and prices signal the efficiency (or lack thereof) of resource use and allow producers to learn from those signals. The most profound waste of resources in the U.S. health-care industry stems from the incentives and market distortions created by government programs such as Medicare and Medicaid.

Thus the real problem with focusing on the profit motive is that it assumes that the primary role of profits is to motivate (or in contemporary language “incentivize”) producers. If one takes that view, it might seem relatively easy to find other ways to motivate them or to design a new system where production is taken over by the state. However, if the more important role of profits is to communicate knowledge about the efficiency of resource use and enable producers to learn what they are doing well or poorly, the argument becomes much more complicated. Now the critics must explain what in the absence of profits will tell producers what they should and should not do. Eliminating profit-seeking from an industry doesn’t just require that a new incentive be found but that a new way of learning be developed as well. Profit is not just a motive; it is also integral to the irreplaceable social learning process of the market. Critics may consider eliminating the profit motive the equivalent of giving the Tin Man from Oz a heart; in fact it’s much more like Oedipus’ gouging out his own eyes.

This ranking is curious because the actual life expectancy of the average American differs very little from that of the average European. At birth, average life expectancy in the European Union is 78.7. For the average American it is 78. And this doesn’t adjust for factors that can affect the averages which are unrelated to health care, such as lifestyle choices, accident rates, crime rates, and immigration. Health isn’t entirely about longevity but it certainly is a major component. 

What is not mentioned by Moore, or others citing the WHO report, are the measures being used to rate the various countries and who is doing the measuring. There are many ways to nudge ratings in one direction or another that are not directly related to the actual item being measured.

For instance, one might produce a study on transportation. The purpose of transportation is to get people from where they are to where they wish to be. You might rate how quickly people can move, how cheaply they can move relative to their income, how conveniently they can move, and how free they are to move. 

You would think the United States would rate high in such a study. Americans tend to be wealthier than the rest of the world. There is widespread ownership of cars. Gasoline prices are lower than in most other countries. On average, the typical American can travel quicker, cheaper, and more conveniently than people in most parts of the world. But what if this index included other factors as well? For instance, if a major component was the percentage of commuters who use public transportation, that would push the United States far down in the ranking. A larger percentage of the people in other countries have no other option but public transportation. 

In 2000, when the report was issued, WHO was run by Gro Harlem Brundtland, a former prime minister of Norway and a socialist. She doesn’t think the results of a health system alone are important. Rather, she wants to know if the system is “fair.” In introducing the WHO report she wrote that while the goal of a health system “is to improve and protect health,” it also has “other intrinsic goals [that] are concerned with fairness in the way people pay for health care.” She is clear about the ideological factors she thinks are important: “Where health and responsiveness are concerned, achieving a high average level is not good enough: the goals of a health system must also include reducing inequalities, in ways that improve the situation of the worst-off. In this report attainment in relation to these goals provides the basis for measuring the performance of health systems.”

True to her ideological roots, Brundtland prefers socialized medicine over private care. Drawing her first conclusion about what makes a good medical system, she declares: “Ultimate responsibility for the performance of a country’s health system lies with government. The careful and responsible management of the well-being of the population—stewardship—is the very essence of good government. The health of people is always a national priority: government responsibility for it is continuous and permanent.”

One WHO discussion paper states, regarding “fairness” in financing, “we consider only the distribution, not the level, as there is no consensus on what the level of health spending should be.” Equal results, not necessarily good results, are the focus. 

When Moore or others refer to the WHO index as proof that private health care doesn’t work, they aren’t being totally honest because they fail to disclose that the index lowers the scores of systems that don’t satisfy socialist presumptions.

A Second Rigged Study

The New York Times in August editorialized that American health care “lags well behind other advanced nations.” The newspaper relied in part on the WHO rankings as proof. For the rest, it relied on a more recent study by the Commonwealth Fund. But that study, which compared the United States to five other wealthy countries, has weaknesses similar to the WHO study.

The Commonwealth Fund marked down the United States partly because “All other major industrialized nations provide universal health coverage, and most of them have comprehensive benefits packages with no cost-sharing by the patients.” Again the American system loses points because it doesn’t provide socialized medicine. And the Times neglected to note that “no cost-sharing” means the people have paid through taxes whether they receive the care or not. 

Non-Emergency Visits

The United States also was penalized because seeing a physician for non-emergency reasons is harder to do on nights and weekends than in the other five nations. The Fund said “many report having to wait six days or more for an appointment with their own doctors.” 

The survey didn’t look at the treatment of serious conditions. Waiting weeks or months for chemotherapy is not held against a health-care system, but waiting a few days to have a check up is. Waiting time for “elective” surgery is counted (the United States was a close second to Germany), but waiting time for non-elective, serious surgery did not count, though that is precisely where socialist systems do the worst.

This issue is not unknown to the Commonwealth Fund. In 1999 it published The Elderly’s Experiences with Health Care in Five Nations, which found significant delays for “serious surgery.” Only 4 percent of the American seniors reported long waits for serious surgery. The rate was 11 percent in Canada and 13 percent in Britain. For non-serious surgery the differences were more obvious: 7 percent in the United States, 40 percent in Canada, and 51 percent in Britain. 

In the latest survey, the United States came in dead last for health “safety,” but many of the scores were only a few points apart. For instance, 15 percent of American patients said they “believed a medical mistake” had been made in their treatment within the last two years. Notice this is merely patient perception and nothing objective. But the best score was in Britain, where 12 percent said this.

The United States is also marked down because 23 percent of patients report delayed or incorrect results on medical tests they took. That is far worse than the best country, Germany, at 9 percent. But what constitutes a delay? If a result is expected in a week but takes two, that is a delay. But if it is expected in three weeks and arrives then, that isn’t a delay. Thus what constitutes a delay depends on expectations, leading to counter-intuitive results.

The United States also lost credit because fewer Americans report having a regular doctor for five years or more. But Americans are more mobile than many other people. CNN reports that Americans move every five years on average. In comparison, Britain has a moving rate of 10 percent a year, or an average of once a decade. And 60 percent of those move about three miles.

Freer to Change Doctors

Americans are also freer to change doctors if they wish. Britain requires patients to sign up with physicians, and once they do so, they are pretty much stuck unless they want to end up on the waiting list of another physician. Patients often have to wait to get on the books of a physician and only then can they be treated; that is, they wait to get on a wait list. This is true even for heart transplants. The inevitable waiting is a disincentive to change doctors.

Another measure used by the Commonwealth Fund is centralization of medical records. If a country has a system that allows doctors anywhere to tap into the patients’ records, it is rated higher. The United States has no centralized database and so is rated lower. Many Americans may prefer to have their records private and dispersed. When the Clinton plan was proposed in 1993, one of the rallying points that helped defeat it was the centralization of health records.

Out-of-pocket expenses were counted against a system as well. In socialized health care these expenses are zero or very low but are replaced with taxes. Taxes, however, don’t lower a country’s score because the care “is free.”

Countries were also judged on the number of patient complaints. But different cultures have different attitudes toward complaining. Jeremy Laurance wrote in the Belfast Telegraph recently that the National Health Service needs “a healthy dose of American belligerence.”

Finally, the United States is ranked last among the six nations surveyed  in infant mortality. What is not discussed is that nations define infant mortality differently. Any infant, regardless of size or weight or premature status, who shows sign of life is counted as a live birth in the United States. Germany, which ranks number one in the Commonwealth Fund survey, doesn’t count as a live birth any infant with a birth weight under 500 grams (one pound). How valuable is a comparison under those circumstances?

One could easily design a survey that would rank American health care high and other nations low. But this does not mean the American system is what it should be. Its successes and innovation can be attributed to the vestiges of freedom, but government has saddled the system with so much intervention that it is far from market oriented. Instead of worrying about irrelevant international rankings, we should be working toward freeing the medical market.

Moore added, “I watch your show and I know where you are coming from. . . .”

He knows I defend limited government, so he tried to explain why I was wrong. He began in a revealing way:

“I gotta believe that, even though I know you’re very much for the individual determining his own destiny, you also have a heart.”

Notice his smuggled premise in the words “even though.” In Moore’s mind, someone who favors individual freedom doesn’t care about his fellow human beings. If I have a heart, it’s in spite of my belief in freedom and autonomy for everyone.

Doesn’t it stand to reason that someone who wants everyone to be free of tyranny does so partly because he cares about others? Wishing freedom to one’s fellow human beings strikes me as a sign of benevolence. But Moore and the left don’t see it that way.

Moore thinks respecting others’ freedom means refusing to help the less fortunate. But where’s the connection? All it means is that the libertarian refuses to sanction the use of physical force (which is what government is) to help others. Peaceful methods—like voluntary charity—are the only morally consistent methods. I give about a quarter of my income to charities because I’ve seen that private charity helps the needy far better than government does.

Moore followed up with a religious lesson. “What the nuns told me is true: We will be judged by how we treat the least among us. And that in order to be accepted into heaven, we’re gonna be asked a series of questions. When I was hungry, did you feed me? When I was homeless, did you give me shelter? And when I was sick, did you take care of me?”

I’m not a theologian, but I do know that when people are ordered by the government to be charitable, it’s not virtuous; it’s compelled. Why would anyone get into heaven because he pays taxes under threat of imprisonment? Moral action is freely chosen action.

If Moore’s goal is to help the less fortunate, he should preach voluntary charity instead of government action.

Surprisingly, he did show an understanding of the importance of the libertarian philosophy to America. “John, your way of thinking actually was great for this country. I mean it; it helped to found the country. It helped build us into one of the greatest nations, perhaps the greatest nation, that the earth has ever seen. Limited government, pull yourself up by your bootstraps, every man for himself, forward movement, pioneer spirit. That’s why a lot of people in these other countries really admire us, because there’s this American get up and go.”

I interrupt here to point out another smuggled premise. Did you catch that “every man for himself” line? America was never about every man for himself. A free society is about voluntary communities cooperating through the division of labor. Libertarianism is far from “every man for himself.”

After acknowledging that limited government helped make America great, Moore went on to say, “But I don’t think that what you believe is what’s going to allow us to survive.”

He means that if government does not assure people health care and food, our society will disintegrate.

But why would a philosophy that was good enough to build a successful society be unsuited to sustaining that society? Individual freedom, with minimal government, made it possible for masses of people to cooperate for mutual advantage. As a result, society could be rich and peaceful. As the great economist Ludwig von Mises wrote, “What makes friendly relations between human beings possible is the higher productivity of the division of labor. . . . A preeminent common interest, the preservation and further intensification of social cooperation, becomes paramount and obliterates all essential collisions.”

Freedom and benevolence go hand in hand.