One thing that all Libertarians have in common is a disgust for systems which socialize risk and privatize gain. Most Libertarians take the bailout of the financial system to be the paradigm example. This blog examines a more subtle and destructive instance.

Left vs. Right Libertarianism in Theory

Right-Libertarians, nearly always from the Austrian School of Economics, come in two flavors.  The first and more well-known flavor believes in the Constitution.  They believe that the United States government is a legitimate institution.  But, they believe that the only proper function of that institution is to defend rights.  Therefore, the first kind of Right-Libertarian believes in monopoly of force -- the government's responsibility to own the threat of violence and imprisonment.  That power, according to the first kind of Right-Libertarian, ought to be used only to protect life, liberty, and the pursuit of happiness. 

The second kind of Right-Libertarian is the Anarcho-capitalist.  This flavor of Right-Libertarianism believes in the invisible hand of the free-market system so strongly that, by its lights, the government serves no purpose whatsoever.  Damn the Constitution.  Damn the founding fathers.  Damn it all.   (Ironically, the tea-baggers switch between the anarcho-capitalist belief system and the monopoly of force belief system -- without any awareness that this minute-to-minute flip-flop is incoherent at best, clinically insane at worst.)

Left-Libertarians are much more unified -- in theory and in action.  Left-Libertarians are less concerned with the role of government and more concerned with the protection of natural rights -- whether they be endangered by rogue nations or corporate practices.  The government, as seen by the Left-Libertarian (most notably Chomsky), is a neutral institution which can be utilized to protect the people from the abuse of power.

Health Care

The debate over health care elicits a Left-Libertarian argument for the public-option. This argument can be justified by the free-market principles of the Austrian School -- the Right-Libertarian mind-set. 

Right-Libertarians argue that there is no such thing as a free lunch.  Opportunity costs always exist.  Therefore, the public-option will do nothing but rearrange costs from the people in the form of premiums to the people in the form of taxes.  Nothing good can come of it.

What the Right-Libertarians miss is that insurance companies are already rearranging costs.  Over $100 billion per year in emergency care doesn't just disappear.  As uncompensated care rises, insurance companies raise premiums.  In 2008, uncompensated care upped the average American family's premium $1,017 over the year.  And yet, the Right would have you be terrified of taxes.

Cost-shifting in the private sector is much more dangerous than taxation because the corporation supposedly calculates the price of their service based on demand and supply.  Yet emergency care is not demand for insurance coverage -- though the price system acts as if it were.  So insurance companies charge a rate which has little to do with the demand for their service. 

The problem goes deeper.  Insurance company A contractually agrees with customer B that A will cover B so long as B pays monthly premiums.  But as soon as B gets sick, A researches B's record to find contract-nullifying-causes.  When A finds a history of domestic abuse, acne, typos on a form, momentary lapses in coverage, etc., then A breaks the contract with B. 

This practice is socialized risk/privatized gain.  The very same concept which underlies the government bailout of the financial sector is present in the health care system.  Only socialized risk/privatized gain was enacted through a bill for the financial system.  In the health care system, socialized risk/privatized gain is the norm. 

Right-Libertarians have difficulty with this application of the concept.  For them, socialized risk/privatized gain is a concept which only applies to the relationship between government and the corporation.  In reality, socialized risk/privatized gain is a concept which applies to the relationship between the corporation and the customer as well.  I suggest that the latter -- because it's more difficult to detect -- poses a much more serious threat.