I realize that I will probably offend generations of political anoraks with this bland assertion, but I’m going to make it anyway: “social” anything, whether it’s “social democracy” or “pure socialism” or “social something else” ultimately means that the costs for bad things get pushed onto society as a whole. Whatever the motivation for said “social” thinking may be, that is inevitably the outcome of socializing. I believe very much in outcomes, irrespective of the motivation.

Probably the greatest divergence between my own thoughts and those of statist people is that motivation is irrelevant, the outcome is what is important. I don’t care if greed is the driving force behind a better life for all, and I don’t believe that any stupid idea that leads to things getting worse for the people it’s supposed to help should be permitted, just because the motivation is noble. And don’t get me wrong, I don’t necessarily always attribute evil motives to the various disasters inflicted on us by a succession of increasingly socialist governments. I don’t believe for one minute that the faceless bureaucrats, EUreaucrats and quangocrats who seem to spend their days dreaming up ways to nanny, hector, bully and annoy us actually do so out of some perverse desire to inflict misery on us, I believe that most of the time, they genuinely believe that they are making these rules because they honestly believe that they will make life better for all of us.

The same thing with those calling for greater or better regulation of anything. They do not make these calls because they want to strangle business (unless they are the incumbent, of course!) — they make these calls because someone, somewhere has done something evil or malign or at least incredibly stupid, and the call goes out to protect the unwary and the innocent.

They do not necessarily understand how they regulation to protect us all from X ever happening again will not protect us from X happening again, because what actually does protect us is the fresh, recent, painful memory of how many people got stung by X. Ponzi schemes have been around for centuries, but Bernie Madoff got away with a Ponzi scheme in the hugely regulated financial sector, not because there is no regulation preventing Ponzi schemes (there is and it’s rigorously enforced) but because it’s been a while since the last big Ponzi scheme and nobody recognized it when it came round again.

Indeed, the strictness of the regulation around Ponzi schemes actually reassured punters, who assumed that the supremely compliant Madoff had to be doing good business, because he was in such a highly-regulated area. Think about it yourself: you never really dot every “i” and cross every “t” on every single contractual agreement you make, precisely because you “know” that everything is regulated and you are therefore protected.

And all this goes without even considering the horse-trading and lobbying around regulation in reality. Incumbent businesses love regulation, they adore it. This is why you often find that businesses will create societies and guilds and associations if there isn’t already some form of government regulation. By doing this, they try to enforce their business model on new entrants to a market and force them to do away with potential advantages that the incumbents don’t have. If the new player won’t sign up to “the rules” then the incumbents can immediately accuse them of having something to hide.

So, all the normal mechanisms of “social” engineering, however well-intentioned, will only ever occasionally and temporarily actually protect us in the manner in which they are intended to.

But the one thing which socializing does very well is to amortize the costs of “mistakes” or negative externalities or bad decisions across everybody in the society. Now, you may consider this to be a very good thing. But once again, the intention is good, while the outcome quite often is not.

Let us take for example, care of the disabled, something which surely no civilized person could object to. If you knew you that the child you (or your partner) was bearing could grow up profoundly disabled, requiring constant attention and considerable cost for home modifications, medical care, etc. Now, if you were in a society which did not socialize costs, that decision would be a completely different one. Unless you were incredibly wealthy, there would be no way you could afford that child, so you would probably opt for termination. In a “socialized” society, you make that decision on a completely different basis.

Leaving aside the debate about whether this is better for society as a whole or not, let’s just assume that the socialized society is a better one. I don’t necessarily believe that allowing one small group of people to enjoy the “benefit” of time with the disabled child is fair to the rest of society who have to pick up the tab, but let’s just assume that it is. The problem comes in the absolute limit of resources available to a society. People will always want more things than are available to them. Even a state as large and powerful as the USSR in its prime could not deliver all the needs of all its people all the time. Unlike in our society where most people have a decent (or better) life and a very few struggle, most Russians lived with just the basic necessities and very little luxury.

In our society, the hallowed NHS is the very acme of socialization of cost. Every taxpayer contributes to it and every subject of the Queen is entitled to use its services, whether they pay for it or not. But even though the NHS has the annual budget of a small country and employs millions of people, it cannot deliver the healthcare that everybody in the country needs. Thus, despite the prodigious amount of money that goes into the NHS every year, services are continually being cut, and there is always a disappointment for even genuinely ill people who have paid into the NHS all their lives who suddenly discover the truth, that some arbiter somewhere has decided that their particular problem, no matter how life-threatening, does not merit the NHS paying for the treatment desired or in some cases required. Hence the ever-popular “postcode lottery” headlines in the Daily Mail and the Daily Express.

This in turn leads to the NHS trying desperately to shift the burden of responsibility for these unpleasant choices elsewhere, like the growing indications that smokers or drinkers or the obese will not be entitled to care because of self-inflicted or avoidable conditions. This completely ignores the massive tax contributions made to the NHS by these same people. The NHS is happy to get the tax contributions while shirking paying back to people who pay this money in. This is a most egregious example of the difficulties facing socialized costs, along with not paying for state-of-the-art cancer care or “wonderdrugs” for people who desperately need them, despite their having funded the NHS all their lives.

These are particular examples, there are many more. The upshot of all this is that while socializing costs sounds like a wonderful idea and allows us to make “more civilized” decisions, the truth is that socializing costs does not take them away and at some point, some faceless arbiter is going to take difficult decisions that mean that for every happy family that has (for example) a well-cared for disabled child, there will be an unhappy family that has (for example) seen their beloved wife and mother eaten away by cancer because there simply wasn’t the money to buy her the new wonderdrug. If family A had decided not to have their disabled child, maybe family B would not have lost their mother.

Socializing costs does not take costs away. Eventually, difficult decisions have to be taken.

And broad-brush decisions taken by impartial, uninvolved people will naturally affect many more people than decisions taken by people who have to live with the consequences of their decisions.

Thaddeus J. Wilson

Jim
Lawrence July 18, 2011 at 12:21

What about Social Darwinism?

Thaddeus J.
Wilson July 18, 2011 at 12:49

There’s always ONE, isn’t there?!

Matt Wardman
July 17, 2011 at 12:28

Yes … but we are a society, and shared amenities/facilities/costs have
always been part of that.

I’m a low regulator, but not a no regulator, as regulation does work.

Let me put a hard case, Thaddeus.

Your child is run over by an uninsured driver and crippled, and redress
proves impossible – for the usual reasons.

Do you oppose the socialisation of the cost of care for the next 20-40
years, or do you have insurance in place?

Another one is the sewer adoption action I wrote about the other day; I can
quite believe that overall the costs will be reduced by making them shared
costs on water bills, if you consider adding up all the individual costs in
sorting out a problem each time it occurs.

I think I could make a similar argument for maintenance of big trees
devolving to local authorities; at present private citizens can be forced to
fund a public amenity.

The NHS is similar; by international comparisons it is cost-effective.

It’s an issue of degree of regulation/socialisation, not whether or not to
regulate/socialise.

Thaddeus J.
Wilson July 18, 2011 at 10:31

“Difficult cases always make for bad law” is a quote I heard many years
ago and I don’t remember who said it.

“Shit happens” is another quote I remember, but it’s something that
people refuse to accept is a part of life.

One hard case, like Soham, now means that TWENTY-FIVE PERCENT of the
British population are now subjected to expensive, invasive, repeated and
pointless CRB and eCRB checks which can possibly damage your career for
ever. I use this particular “hard case” purely to show how using a hard case
to drive any kind of societal change can be a terrible, costly, pointless
and disastrous thing.

Part of the problem with our society as it stands is that there is an
implicit assumption on people’s part that every other driver will have
insurance. Imagine if there was no requirement for people to have insurance:
do you not think that people would make sure that their own insurance
covered all eventualities? But because we are all “good people”, we assume
that everyone else will “do the decent thing.”

I would far rather make the fact that this particular kind of shit is
going to happen open, so that people would demand higher levels of
protection from their own insurer and remove the hidden cost of that
protection from the common purse.

Just imagine if insurance wasn’t legally required: every insurer who
wanted to remain competitive would have to offer truly comprehensive
insurance.

Now it’s true that the insurance would be more expensive, absolutely, but
the converse is that the NHS and/or society would not have to bear the cost
of the uninsured driver, who, should he be injured himself today, will
happily derive all the care he could possibly need from the very same people
who have done the decent thing by buying insurance.

Is it in any way fair for me today to have to pay towards the care of the
very same person who has caused my child (and me) so much pain and
distress?

SadButMadLad
July 18, 2011 at 11:29

Hard cases make bad law came to light in a comment made
by Judge Robert Rolf in the case of Winterbottom v Wright in 1842

Thaddeus J.
Wilson July 18, 2011 at 12:12

You may well be mad, but in the common vernacular, you are definitely
“sad”!

Malcolm
Saunders July 17, 2011 at 10:29

Very good article.

Apart from the complacency created by regulation, in which people fall for
a con because they are sure that the government wouldn’t let it happen,
over-regulation creates a formidable barrier to entry into markets. This in
turn damages competition and fosters the development of cartels. Consequently
prices are higher and when something goes wrong it affects all the players in
that distorted market.

The comments on socialised health care are particularly important. I
suspect that some readers are going to feel quite queasy about the thought
that in the absence of NHS provision there would be more terminations in cases
where it was known that the foetus had serious congenital problems. Well I
think that is bound to be true and far from being an uncaring approach it is
actually more compassionate and loving that what happens in a socialised
environment.

A potential parent who knows that the child they could give birth to would
have a very limited life and probably a great deal of suffering, also knows
that the task of caring for that child will probably be beyond the resources
of themselves and their families. The existence of socialised health care
allows them to set aside the care implications and they may continue with the
pregnancy for a variety of emotional, moral and religious reasons which rise
to a higher significance than they would have had if they had to evaluate all
of the factors involved.

The decision to terminate may be very difficult, but the consequences of a
seriously dependant child can damage relationships, impair the lives of
siblings, cause immense distress in living with the suffering of the child,
and ultimately result in institutional care which may be alienating and less
caring than you would wish it to be.

Consequences are more important than intentions and the distortion of
consequences resulting from socialising provision brings about a poorer
society in much more than a financial sense.

Real Life July 17, 2011 at 20:57

Excellent analysis, especially the second to last paragraph. Thank
you.

rogerh July 17, 2011 at 10:11

Good analysis – thanks.

So, suppose the NHS (and other societal insurances) did have limits, who
will be excluded? The porkers? The boozers? The halt? The lame? Your child, or
my child? Who decides what is in and what is out and can you trust them?
Professional whiners will make trouble – you might get voted out. So do a
fudge, push decisions downwards and muddle along – or change the
incentives.

Perhaps we could help by saying – hey, looks like you will have a disabled
baby. No problem, you can have that and we will pay – or we will give you a
termination and £10000 cash. Or, hey, looks like you have terminal cancer, we
will give you expensive treatment, no problem – or you can miss on the
expensive extra 12 months and we will give you £10000 cash.

I suspect a lot will take the cash. Why, because the economic bargain is
weighted towards an emotional wrench but a sensible decision. As things stand
there is no incentive to take that emotional wrench and most lack the courage
or wit to make it.

A bit distasteful but practical, but it gives the advantages of a free
service and the incentives (some) of a paid-for service.

Roue le Jour
July 17, 2011 at 02:00

One could argue that the actual purpose of regulation is not to protect the
public but to undermine its natural cynicism so that it will not apply it to
government.

Cascadian July 17, 2011 at 00:17

Well said Jim, though I don’t think the automatic avatar selector agrees it
has assigned you something close to a swastika.

Livewire July 17, 2011 at 08:05

Naughty bloghost, we never poke fun at the publicans… (WAAH
COMMENTERIST!)
Actually, in defence of Jim (cos he writes good
Libertarian stuff), the symbol predates the Austrian Corporal, I think it’s
Sanskrit (sp?).

gladiolys
July 17, 2011 at 08:41

It’s a Hindu representation of the sun (as in burning ball of gas
giving light and heat, not the newspaper). You can buy lovely glittery
ones from the Hindu temple in Neasden.

Dave H July 17, 2011 at 12:18

The quick way round that is to go to http://www.gravatar.com/ and choose your own to be
associated with the email address you use to leave comments. The downside is
that it lets them track where you go, but then I’m sure I’m pretty easy to
track through the blogosphere anyway given my attachment to my grumpy cat.
Many sites seem to interrogate the gravatar site for an icon, so it does
provide a consistent ID.

Jim July 16, 2011 at 23:05

I think the most corrosive thing about the socialisation of ‘bad things’ is
that it removes the responsibility for the individual to try and stop ‘bad
things’ happening to them. Instead of ordering their lives to avoid ‘bad
things’ (unwanted teen pregnancies, liver disease, drug abuse, lack of
educational attainment etc etc) people quickly come to realise (and demand)
that the State will provide them with the necessities of life, however badly
they behave.

In modern Britain it matters not how bad you are, the State will ALWAYS
clothe, feed and house you. You can be the foulest of murdering scum, and
society (ie the rest of us) will provide for you at zero cost to yourself,
often to a level that many people cannot attain from their own labours.

This is not right. We need to reintroduce a line, which if you go beyond,
we (society) will no longer support you. If it means you die starving in a
ditch, so be it. We have tested the non judgemental cradle to the grave
welfare state to destruction. We need a new system, that rewards good
behaviour and punishes the bad.

derfe July 16, 2011 at 22:34

ED P , Credit default swaps are like an inverse ponzi scheme , when
governments , or business do not default on debts and show themselves as ponzi
schemes , CDS are the default ponzi scheme.

when governments and businesses default and show themselves to be ponzi
schemes , CDS works ..

Ed P July 16, 2011 at 20:11

If things improve for everyone and there are no losers, surely that means
no change at all.
You say Ponzi schemes are banned – what about credit
default swaps?

wassname July 16, 2011 at 19:56

Socialism. The only one-word oxymoron.

Cascadian July 16, 2011 at 19:28

Thats a pretty good summarization of social schemes Thaddeus.

The NHS while not the most egregious example of waste is nevertheless a
pretty easy target because as you illustrate decisions can be life or death
and are easily exploitable.

The point most people miss about the NHS are its original intentions, it
was to be a scheme to treat patients so that they could avoid disastrous debts
for their treatment. It was set up by socialist politicians who believed that
people should use the system sparingly andsensibly. Weak politicians have
expanded that mandate to include just about any service to just about any
person who arrives at a hospital. It can be no surprise that the system cannot
budget for infinite demand and trivial desires.

Until sensible limits are imposed on the demand, yes that would be health
rationing, there is no hope that people who have been paying into the scheme
for a lifetime might receive first class care.

Andrew Duffin
July 16, 2011 at 18:59

A good way to think is to assume that anything prefixed by the word
“social” is actually the opposite of the noun that follows.

Hence – social wage: not a wage at all, but money handed over for nothing;
social cost – not a cost, but a nebulous figure invented to try to stop
someone doing something; social contract (for those who can remember) – not a
contract at all, a vague promise by the unions to be good, immediately
abandoned when it suited them; more examples will occur to you.

“Social services” and “social workers” are left as an exercise for the
reader.

Single Acts Of Tyranny July 17, 2011 at 10:04

Very good observation.

AndrewWS July 18, 2011 at 06:23

Precisely what I was going to say. Qv those who bang on about “social
justice”, which is quite simply unjust, in that the correlation between
action and reward/punishment is lost.

LJHills July 18, 2011 at 10:46

“social science” “social disease”

Saul July 16, 2011 at 17:00

The only “social” to worry about is Social Conditioning.

To isolate a quote from you above..”..they honestly believe that they will
make life better for all of us.”

Surely that is the point, to make it available for everyone, irregardless
of ability to pay. Perhaps a bit Utopian, but tell that to the relatives of a
sick person who are living on minimum wage.

Single Acts Of Tyranny July 17, 2011 at 10:03

Perhaps if the person wasn’t subject to any tax they maybe better able to
provide for themselves and also have a serious incentive to take care of
themselves ~ look at the hoons who fill casualty every Saturday night. They
impose a cost of thousands on everyone else, just because they stupidly
over-drink, take drugs, fight or fall down. If they had to pay at least some
of that cost, might they think twice about drinking 12 cans of special brew
and snorting a few lines before falling off a roof?

And can we get away from this idea that poor people were not treated
pre-1947, they absolutely were.

Saul July 18, 2011 at 17:03

Of course they were treated…very poorly.

ivan July 16, 2011 at 16:50

The law of unintended consequences always bites those that try to regulate
anything.

The NHS is the biggest Ponzi scheme going and will fail if only because all
statist schemes always run out of other peoples money eventually.

Maybe all the ‘social’ schemes should be funded only by those that propose
them and other peoples taxes. Then we would see those that are worth something
and those, the bulk of them, that are not. It would also reduce the tax burden
on everyone and might lead to a Negative Income Tax system to replace the
benefit system of today.

LJHills July 16, 2011 at 15:21

There are also the costs of lost iniative and inventiveness because of the
constraints of both regulation and the expectation of a standardised service,
particularly in health care and education: I have lived, worked and raised
children in third world countries where ingenuity and imagination fired by the
knowledge that no one would pick up the pieces delivered excellence on a
minuscule budget, not money and state intervention. The biggest crime of the
big state is that it infantilises adults by removing their responsibilities
and society’s expectation of individuals to deal with life, with the help of
friends and family.