Be Your Own Boss
Libertarian ideas to escape the grind, find decent health benefits, and maybe even retire one day M. Harrison, for the editors
There is little love lost between progressives and Big Corporations. Many Big Corporations, such as Wal-Mart and about a thousand others, are burnt at the rhetorical stake for their failure, inter alia, to provide great (or any) medical and dental benefits or a high-growth 401(k). Progressives generally believe that the market is to blame for this undesirable deprivation of basic freedoms, and that the only solution is more progressive regulation.
The problem with these objections is that businesses should never have been expected to be interested in offering such benefits in the first place. One wonders, why should your boss tell you how to dictate your future, stifle your independence, and peremptorily decide what kind of relaxing, leisure life is good for you? Expecting company-centric benefits smacks of Quasi-Government Bureaucracy, Inc., hearkening back to the Good 'Ol Days of the company town, the lifetime employer, and the 80-hour work week. Who wants that?
As William F. Buckley once wisely said, "I will not cede more power to the state. I will not willingly cede more power to anyone, not to the state, not to General Motors, not to the CIO. I will hoard my power like a miser, resisting every effort to drain it away from me." The man speaks the truth.
The choice of health insurance - and a doctor, for that matter - should always be a patient's, and never an employer's. Likewise, the choice of a financial strategy for retirement should be between the investor and his advisor, and this relationship is not most effectively dictated by a supposedly omniscient corporation.
The provision of health and retirement benefits is also a complex, cost-ineffective endeavor for the company. Certainly, no reputable economist has ever predicted that businesses would be efficient at providing services that have absolutely nothing to do with the corporation's core business purpose.
It's really ironic that progressives blame the market itself for the failures of Corporate America. First, they expect the market to function like a government, providing health care, retirement, and other goodies without regard for market efficiency. Then, they harp on the market when it performs these tasks like...well, an inefficient, bureaucratic government. Surprised?
The Solution
The libertarian, of course, is not surprised, and has a market-based policy solution for this so-called market failure. It's called: Stop expecting your employer to act like a government, and give employees free choice to let the benefits market actually function. How do we do this? Glad you asked, grasshopper.
First, privately-controlled and nationally-implemented Health Savings Accounts should be the source for every American's health care spending. The accounts should be independent of one's employer. Employees should also be able to choose the insurer of their choice and retain insurers when they change jobs. This process would cause insurance companies to compete to attract individual patients, instead of businesses looking to minimize costs and increase efficiency. This so-called "de-linking" of health benefits and employment would also open up the insurance market to greater consumer demand and competition. Employers would pay a specific percentage of an employee's salary into this savings account, but employees would be able to modify the contribution percentage as necessary to cover any insurance premiums, expected co-pays, and other expenses. The insurers could then access the account to collect premiums as well as contribute immediate financial coverage for various treatments and procedures. The accounts should be secured and regulated in order that the transactions between patient and doctor, insurer and insured, and employee and employer are as efficient, open, and as free as possible.
Second, private retirement accounts should be implemented for pension funds, along the same principles. Social Security (FICA) taxes should be paid directly into the account, as well as any other retirement contributions requested by an employee. The funds in the account should be able to be invested in any stock, bond, or other investment fund, as determined by the employee. Retirement funding is an employee's choice, and any investment in that process is simply a market exchange between the employee and his fund manager and/or investment advisor. The choice should be open and unfettered. In other words, your boss should have nothing to do with it.
Now, imagine if such an intelligent market-based policy were implemented. Employees would be free to shop around to find the best health insurance, doctors, retirement funds, and more. Most importantly, they wouldn't even have to leave their jobs to do so. Or, even if they chose to change jobs, they could take their benefits with them.
Let's examine some case studies to observe how such a brilliant policy could solve so many of the "crises" that are "created" by corporations.
Case Study 1: Wal-Mart (The non-existent benefit)
Among being pilloried for saving poor people money on basic goods, Wal-Mart is also subject to heaping progressive ridicule for not "providing" health insurance to many of its employees. How dare you, Sam!
Of course, our friendly proposal would solve this little difficulty. Under it, Wal-Mart employees could purchase health insurance as they please, without the permission or sanction of Wal-Mart. This makes so much sense it's difficult to take the progressive line seriously. Why should an employee have to work for benevolent employer - or lobby for some proposed legislation forcing benevolence - before he can get decent health insurance? If a Wal-Mart employee wants to spend a third of his lilliputian paycheck on comprehensive health insurance, shouldn't he be allowed to?
Everyone nods. But what about those who can't afford health insurance, you ask? To this, there are two solutions. The first is the natural lowering of health insurance costs that will result from market demand and consumer choice both increasing. Competition is the best-known and time-proven method of lowering prices for consumers, and it can do so in health care as well. Such competition is hardly achieved now - by forcing an employee to quit his job before he can easily find new insurance.
The second solution is through the negative income tax. States should be able to provide supplemental income to their low-income citizens in order to help with health insurance costs. Such subsidies could be paid right into the health savings accounts, allowing low-income individuals the same opportunity to participate in the health insurance market. The unfortunate truth is that the labor market is not the place to expect welfare - if you want the labor market to be efficient. The dirty truth of economics is that markets work efficiently when they pay their employees what they should be worth on the market. The safety net beyond an employee's fair market value is important - and it should provided by the government, not forced through employment.
Google employees, for example, get wonderful benefits, simply because they also make obscene amounts of money. Wal-Mart employees, by contrast, get minimum wage because Wal-Mart's competitive advantage is cost-cutting. That's life, and that's why there's no Olympic-size employee swimming pool at your local Wal-Mart. But the policy effort shouldn't be to force Wal-Mart to act like Google; the two companies have opposite purposes and strategies. Instead, the effort should be to let the Google and Wal-Mart employees use their compensation in the same way - for the purpose of securing health and retirement benefits on the open market - and thus drink from the same fountain.
Case Study 2: Enron (The disappearing pension)
Enron is perhaps the favorite progressive case study. Howard Dean, for one, once famously objected to Social Security private accounts by saying it was "run by the same people who gave us Enron." Apart from such a blubbering logical fallacy (is the Congress run by the same people who gave us Manzanar? The Fugitive Slave Act?), Mr. Dean clearly missed the point in another way. The market could have mitigated the Enron disaster.
Think about it. Businesses come and go; markets change and companies become bankrupt. Even without wanton accounting malfeasance, any company can go bust at any time. Why then, would you want to rely on one company for your retirement? (Insert sound of crickets.)
The secure appeal of Social Security private accounts is that the money can be invested anywhere in the market, separately from the company, controlled by a separate investment firm, overseen directly by the employee, diversified into several different markets, and also backed by the Social Security Administration. In other words, with Social Security private accounts, Enron wouldn't have been nearly the disaster it was. Its employees may have lost their jobs, but they never would have lost their retirement pensions.
It's certainly better than the current system, controlled by the same people that gave us Howard Dean. Seriously.
Case Study 3: GM (The inefficient benefit)
If anyone needed more confirmation of my earlier point that businesses are horrendously inefficient at providing health benefits, one only needs to look to GM. Aside from the decades-long insistence of quantity over quality, another competitive disadvantage of theirs is working (surprise) to sink the American carmaker - with excessive health benefits. These benefits were procured at the behest of the United Auto Workers, an extortionate labor union, and they did much to prove the fact that businesses shouldn't be in the business of choosing health benefits for all of their employees at once. When they do, the company goes down in flames.
By contrast, our health savings accounts are immune to the collectivist wrangling of labor unions, and they also aren't guaranteed in perpetuity. As your health contributions are always merely a function of your paycheck (and the percentage you choose to contribute), health insurance costs can never sink a company. When labor costs are too much, wages can be reduced.
Moreover, private accounts help to level the playing field. Rather than relying on GM to provide medicine and doctor visits, GM's employees could find such benefits on the open market, even through a competing company. Now, as we've noted, GM has enough problems building quality cars - it's unlikely that their health insurance crisis is the sole cause of their disaster. But it's undeniable that a private accounts system, with employees allocating their individual compensation to health and retirement benefits as they see fit, is superior to the current Marxist nightmare of hundreds of thousands of unionized employees all demanding a fat piece of a non-existent future pie.
Case Study 4: Dunder-Mifflin/Initech (The death of the American dream)
Our final case study is probably the most common. It's not corporate exploitation - it's corporate tedium. Either an employee wants to leave a boring, unsatisfying job but is afraid to lose his valuable benefits, or an employee likes the job okay but wishes he could get some better benefits to make his current misery a better long-term welfare investment. Or maybe he hates both.
Many employees feel "stuck" in their jobs, as red tape abounds to limit mobility, and entry costs into new industries or new jobs are too high. The corporate bureaucracy, from the perspective of the employee, can often be at Soviet levels.
The solution to this menial Corporate Drone existence is thankfully provided by our friendly market-based proposal. Personal accounts allow employees to "shop around," in effect, both for jobs and for benefits. Since the two are disconnected, the market can be truly effective. Jobs are chosen because the person likes the job, and the benefits are chosen because the person likes the benefits.
It's so simple, even a progressive could support it.
More on the market | If you like this work, you might also like: The Unwelcome Conversation PI destroys the socialist fallacies of Berkeley professor George Lakoff
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