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“Profit” is a six-letter word, not four

August 11, 2009

Claire McCaskill (D-MO) hates the concept of profits. “Insurance companies make an excess of $12 billion in profits every year. That’s where the reform needs to happen,” she says.

Instead of criticizing the problem of access to insurance, or the limitations private insurance puts on healthcare access (which we are being told is the problem), McCaskill makes no attempt to conceal what the debate over healthcare is about. It’s a government takeover of a profitable industry in the interest of redistributing wealth and exterminating the private sector.

The failure of Left-wing economics is the tendency to disavow any role for profit in creating progress. All economic progress we have made in this country has been made because greedy capitalists sought profits. The light bulb, the automobile, the television…these were all invented by greedy, profit-seeking bastards. So were penicillin, the stethoscope, the smallpox vaccine, the heart monitor and other inventions that have made it exponentially easier to keep people alive and healthy than it was hundreds of years ago. And the sterilization tools, floor mops, latex gloves and millions of miles of rubber tubing that every hospital and doctor’s office uses are created by companies motivated not by some utopian altruism, but by an interest in making a product that people demand and selling it for profit.

Profit-seeking is a natural and inextinguishable human motive. If it were not natural, evolution would not have allowed living organisms to develop instincts of self-preservation. The beauty of a truly free market is that this natural and human instinct of profit-seeking can be harnessed to place limits on profit seekers themselves. Apple cannot charge $1 million for an iPod; it must make its iPods affordable enough that they can be purchased en masse by consumers who demand it because it has intrinsic value and it is in their self-interest to do so. The profit-seeking motive of the consumer, manifest in his interest in saving as much money as possible, limits the profit-seeking motive of the producer.

McCaskill and others are right to criticize insurance companies, but for the wrong reason. They are bad not because they seek profits, but because they create a broken market and a disconnect in the link between producer and consumer which places natural controls on what producers can charge for their goods and services. The problem with government intervention is that it does not repair the fractured market–it smashes it under an iron boot. This is why Medicare and Medicaid have made healthcare more expensive for everyone else–these programs have made it unprofitable for doctors to provide for their patients, thereby forcing them to limit their provision of healthcare and creating more scarcity in the market, not less. And by creating three parties in the healthcare market–those who produce it, those who consume it, and those who actually pay for it–insurance companies have created a broken market where doctors, pharmaceutical companies and hospitals have no incentive and no reason to keep their prices under control, and where there is no limit to the amount of demand since consumers do not pay directly for its costs.

Profit-seeking built America. It is the key to economic progress and prosperity. The Left wants to extinguish it. We cannot let that happen.

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