This is part 7 of a series; part 6 is here.
In the last part of this series I proposed that a government should only raise money by renting land and charging fees for environmental damage. I also said that the only responsibility of a government should be to provide external and internal defence.
This begs the obvious question; how are things like education and healthcare funded? Before I delve into this question, let's examine the ways things are today:
- It's worth observing that most goods and services are simply paid for by the people who consume them, and the free market system allows anyone to compete for business based on quality and/or price. So why do we treat education and healthcare differently? Presumably it's because we think that everyone should have a right to these things regardless of whether they can afford them, and that government is the only way to achieve this.
- When the government gets involved with an industry sector, it effectively gains a monopoly. This in turn makes it very hard for the free market to provide better alternatives and reduces the incentive for the government to improve its own efficiency or methods. For example, it's really hard for a private school to compete against a public school because parents who want to send their kids to the private school have to pay out of their own pocket.
- Many people in the US are frustrated with the quality and efficiency of education and healthcare. Numerous studies indicate that we get poor value for money compared with many other developed nations, so whatever approach we're taking right now doesn't work very well.
Most countries tackle these issues by allowing the government to try different variations, such as raising tax to provide higher quality, transfering money between competing programs to get a better blend of spending, introducing complex subsidies, and so on.
I favor a different approach, which is to place the responsibility for education and healthcare back into the hands of the people. I think they should be treated like any other good or service, be provided by a free market system, and funded directly by consumers with no government intervention.
One result of providing education and healthcare via a free market system would be greater choice and lower prices; most families would immediately benefit. The only apparent losers are low-income families who would no longer be subsidised by taxes levied on higher-income families. However, I think there's an answer to this apparent issue that ends up being a win-win for everyone involved.
Stay tuned for the next installment!
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