Friday, October 30

Congress: "To allow the government to operate in competition with private enterprise was unthinkable as a long-range solution"

This recent talk of having a Government-run 'public-option' for health care to compete with private health insurance companies is not the first time that the US Government has come across the idea of running a business in direct competition against private businesses. The opinion at the time was that this was a very bad idea. Perhaps Congress should explain what has changed since then:
In the years from 1921 to 1923, the world was glutted by a surplus of Shipping; the vast fleet built to carry world trade during the war drove down shipping rates and an already cutthroat business became even more competitive. To shipowners, the social reforms and restrictions imposed by the Shipping Board became convenient explanations for a shrinking proportion of the world shipping revenue. It appeared that, ironically, the very laws intended to strengthen American shipping would weaken its competitive position and drive it from world trade. The classic conservative arguments against governmental regulation of business could be put to work; the 'do-gooder" meddling of reformers once again had been proven wrong.

The question of how to reconcile the apparently incompatible goals of the Progressive era-nationalism and social justice-had plagued the Progressive movement itself and helped lead to its demise. In the 1920'S, the conflict of these two ideological slants in maritime policy led to heated debates over several alternate solutions, of which the ship subsidy idea was one. If the government could subsidize shipping, American working conditions could be met, and ships might operate at rates competitive with foreign shipping. Several efforts to pass a comprehensive subsidy system failed since they appeared to be pure special-interest legislation. But in 1928, Congress enacted a mail subsidy plan that provided aid to regular cargo liners but not to tramp steamers, tankers, or so-called proprietary vessels owned by companies such as Standard Oil or United Fruit for the transport of their own products. Another partial remedy was the continued exclusion of alien flags from American coastal routes - the traditional enforcement of "cabotage" first established in the United States in 1789. Still another solution could be found in the retention of ships directly owned by the government through the Emergency Fleet Corporation established during the war and operated by the Shipping board. Such ships could operate at a loss, supported from general revenues, if necessary. This system, however, resembled state socialism, and Congress instructed the board to sell off those ships as soon as possible. To allow the government to operate in competition with private enterprise was unthinkable as a long-range solution. - Sovereignty for Sale (pages 4-5)
Of course this did not make sense for shipping then and it certainly makes no sense for health care today either. Especially if you consider that for the 'public option' to foster competition as the Democrats claim, then it has to offer lower rates than private industry. This it can do with no regard for the actual cost of covering people enrolled in their plans. That will result in the killing of private health insurance. And what kind of competition will that bring?


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