What is rationing, and why is it wrong?

It has become popular in certain circles of late to allege, particularly in reference to health care, that “the free market rations too.” Well, that depends on your definition of “ration”. If by rationing you simply mean allocation of resources, then anything is rationing, and the word is robbed of its meaning. (ASIDE: Economists do sometimes use the word in such a general sense, but accompanied by an adjective as in: “non-price rationing scheme.”)

But the dictionary defines ration this way:

2a: to distribute as rations — often used with out. b: to distribute equitably.

Thus the word “ration” refers to a resource allocation scheme in which each person is assigned a share by some authority. This, of course, is absolutely not what the free market does. The free market is based on the idea that people own the fruits of their labor, and are entitled to make transactions or not as they choose.

With this in mind, Paul Hsieh makes an important point regarding the moral high ground in the freedom vs. rationing debate:

Too often, conservatives then concede this moral high ground to the liberals and defend the free market on purely economic grounds — e.g., a free market would lower costs for everyone. This is a serious mistake. Supporters of the free market should not allow opponents to characterize the marketplace as a form of rationing, let alone an unjust one. Instead, supporters should defend the free market as morally just because it respects individual rights. . .

Examples [of rationing] include sugar rationing during World War II and gasoline rationing during the 1973 oil crisis, when the government dictated the terms and conditions of sugar or gasoline sales.

But in a free society, the government should not be regulating such sales at all. Producers — not the government — created the sugar (or gasoline) in the first place. Hence, they have the moral right to sell it to willing consumers on any mutually acceptable terms. There is no “just” distribution of sugar or gasoline apart from the voluntary exchanges between producers and consumers in a free market.

The same principle applies to health care. Health care does not magically grow on trees. Instead, it is a service that must be created by hard work and rational thought. The producers thus have the moral right to sell it to willing consumers on any mutually acceptable terms. There is no “just” distribution of medical services apart from the voluntary exchanges between producers and consumers in a free market.

Hsieh makes a very good point that is too often missed. The free market is not just about better economic outcomes; it’s about freedom.

(Via Instapundit.)

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: