The Disappointment of Free Enterprise Healthcare

What an unfortunate result! The Americans, alone in the Western World, decided to boldly embrace an alternative model of health care: free enterprise. There is no government plan, and very little government regulation. In theory, we were told, this would reduce the costs of health care because competition among doctors and hospitals would drive costs down.

It has had the opposite effect. The U.S. has the most expensive health care system in the Western World, and the worst results.

I am genuinely disappointed.  Look at the computer industry, and related technologies:  the bang for your buck has grown astronomically since the first PCs entered the market in 1981.  Today, you get fabulous technology, lavish memory, incredible capabilities, for a fraction of the cost.

Medical care, on the other hand, is absolutely through the roof.

It is also, to be fair, more effective– look at cancer deaths.

Doctors and hospitals, of course, don’t compete.  Just imagine if you had to take your broken computer somewhere and nobody would tell you what it was going to cost to repair, and may not even tell you what repairs are going to be done.  You will get a bill for $40,000.

The Cost of Warfulness

The New York Times has published an update on comments made by President Eisenhower in 1953, in what was known as the “Chance for Peace” speech, an appeal to the Soviet Union to not indulge in an arms race.   He compared the costs of some major pieces of military equipment with the cost of items with peaceful purposes, like roads and schools and asserted that every dollar spent on  weapons robbed the citizens of tangible peacetime benefits.  Yes, this was a Republican ex-General speaking.  Quite a contrast to the current crop of Republicans who have repeatedly insisted on giving the military more money than it asks for.

The U.S. was spending about 14% of GDP on defense in 1953, the height of the Korean War.  Today, that number is 4.3%.   1953 was a mere eight years removed from World War II, and the U.S. was still at war with Korea, so perhaps the numbers are skewed.  Perhaps we literally get better bang for out buck today.


Product Cost Equivalence
F84F Thunderstreak Fighter Jet (1953) $769K 170,000 bushels of wheat
F-22 Raptor (2012) $250 million 29,500,000 bushels of wheat
B54 Stratojet Bomber (1953) $1,500K 30 schools, 2 hospitals, 2 power plants, 50 miles of roads,
B2 Stealth Bomber (2012) $1.5 billion 99 schools, 19 Power Plants
6 hospitals
328 miles of roads
destroyer (1953) 8,000 homes
destroyer (2012) $1.5 billion 34,000 homes

It’s interesting to me how much the price of these objects of destruction have gone up.  A car cost about $800 – 1000 in the 1950’s and today it cost about 20 times as much.  But 20 times $1.5 million (Stratojet Bomber) is a hell of a lot less than $15 billion, which is about 1,000 times the 1953 cost.  That car should cost $1,000,000.

I firmly believe that cost escalation is a result of what Eisenhower called the “military-industrial complex”, that incestuous relationship between the government and business, between congressmen and lobbyists, and industries in the home district, that leads to vastly increased costs, including, famously, the defective F-35, which, it appears, will cost an infinite amount of money, and is necessary to defend us against no one.

University costs have climbed in a similar fashion.  I attended Trinity Christian College in 1974-75 to 1978-79 (I took a year off to work and travel Europe).  My cost the first year for tuition, room and board (on campus housing) was about $3100.  My parents were not wealthy so I received grants totaling about $1400 and loans from the Canadian government for about $1500.   My brother, who was a full-time mechanic, earned about $20,000 that year.  A new car cost about $3600, a gallon of gas was .42.

Here’s my table:

tuition/room & board 3100 35000 11 x
car 3500 19000 5.5 x
salary 17000 43000 3 x
gas 42 2.75 6 x
record (single) .99 .99 !
record (album) 4.99 22.00 4.5 x

It’s interesting that we are actually spending less of GDP on defense than we did in the 1950’s.  I believe that it’s not because our values or strategies have changed, though they have, but due to the fact that our society now produces an overwhelming volume of stuff, so that our defense spending is a smaller proportion of overall productivity.    But it leads me to wonder if the aspiration of peaceniks to reduce defense spending is not somewhat misplaced.  I don’t think cutting our military spending will reduce poverty: it will further enrich people who already manage to pay as little tax as possible.



The most effective weapon of World War II–on the ground, at least– was the German Tiger I and Tiger II tanks. A Tiger I cost about 800,000 Reichsmarks, and required the labour of 6,000 people working for one week, or the wages of 30,000 people for one week. Which leads one to wonder just how sustainable the 3rd Reich ever was. The V-2 rocket was also extraordinarily expensive. It killed thousands, but at a cost of millions of Reichsmarks per death.