A few years ago, a friend of mine was mortally ill with little prospect of treatment for his condition. He learned that there was a newly developed experimental surgery that might be of help, but there were only a few doctors anywhere in the world performing it. But he was a man of considerable financial resources, so he tracked down the physician who had invented the procedure, negotiated terms, and flew him several thousand miles for the treatment. How much expense this entailed I do not know, but I assume it was somewhere between sobering and staggering.
Very wealthy people can do things like that — that is the definition of being very wealthy. The economist Tyler Cowen was denounced for his “sociopathic callousness” for arguing that realistic health-care reform means accepting the fact that “sometimes poor people will die just because they are poor.” Laura Clawson, who hails from the shallow end of the dime-deep intellectual pool at Daily Kos, spoke for the conventional liberal worldview in maintaining that this line of thinking is “monstrous. In the direct sense that you have to be a monster to think it, never mind publicly advocating it as policy. His equation of health care with ‘all sorts of other goods’ that the wealthy have and the poor don’t is a moral and ethical failing, not a logical one — he’s simply suggesting that the right to have treatment for asthma or diabetes is a moral equivalent with the right to have a gold-plated Rolls-Royce.”
But as in the example of my friend, sometimes health care is the equivalent of a gold-plated Rolls-Royce. The most generous national health-care program we can imagine is not going to have the resources to provide each and every one of the 314 million citizens of these United States with the same kind of health care that Bill Gates can access. There are financial limits, and there are physical limits as well: only so many doctors, so many hospital beds, so many doses, so many transplantable organs. Which is to say, sometimes poor people will die just because they are poor, and sometimes middle-class people will die because they are not millionaires, and sometimes millionaires will die because they are not billionaires. And if we can set aside the gold plating, the Rolls-Royce analogy turns out to be more apt than Ms. Clawson might imagine: The cost of a kidney transplant is about the same as that of the least expensive Rolls-Royce, starting at a bit over $250,000. An interesting aspect of our health-care economy is that kidney transplants are available to many people who are not in the market for a bespoke luxury sedan.
But we owe a little something to the Rolls-Royce crowd.
While the Left rages about economic inequality, a phrase with a very elastic meaning, few people understand what I like to call the Social Value of Gazillionaires (SVG). And it is easy to be so blinded by resentment and envy — to say nothing of good taste in the matter of a Donald Trump or a Paris Hilton — that one completely misses SVG. Seeing for sale a $130 million condominium in Manhattan, a $4 million sports car, or a $2.5 million wristwatch, and reflecting that there are very poor and miserable people in this world, it is very easy to make the intellectual error of believing that the latter is a consequence of the former. It is not. In fact, something very close to the opposite is the case.
For example, there is a well-established pattern in automobile innovation in which safety and performance features are developed for high-end cars and then work their way down through the lines until they become standard equipment on ordinary vehicles. (Sometimes these are developed for non-production vehicles, especially racing cars.) The technology that coordinates seatbelt pre-tensioning with airbag deployment was first developed for the seriously expensive Mercedes S-Class sedan in the early 1980s, and within a few years Porsche was offering a similar system as standard equipment. Chrysler joined in a year later, and today very modestly priced cars, such as the Ford Fiesta, are available with side airbags and related safety features that were not available at any price in the 1980s. That’s SVG in action. Things like antilock brakes and modern throttle systems have followed similar patterns of development. In the 1990s, a single high-end sports car, the Acura NSX, was responsible for introducing a half a dozen important technical innovations into the marketplace. How many non-rich people are alive today because rich people wanted a higher level of safety in 1981 — and were willing to pay for it — is anybody’s guess, but the number is surely large. There was no philanthropic motive there, to be sure, but the best social innovations do not rely on philanthropic motives, which are notoriously unreliable.
The unstated corollary here is: Sometimes, poor people will die in automobile accidents because they are poor. Some people cannot afford Volvos. But the cars they can afford are better, more reliable, and safer because of innovations born of the development of the cars they cannot afford.
Scarcity is real, and it cannot be negotiated away. The only real cure for it is prosperity. “Prosperity” is one of those words that politicians like to use in a vague way, but we can be more specific. One indicator of meaningful prosperity is the relatively rapid passing of goods and services originally developed for the highest end of the market into general consumption as former luxury goods become commonplace. That is a process that really only happens under free enterprise — and, particularly, where conditions are favorable to heavy investment in productive resources. In the case of health care, it is important to keep in mind that innovations that are not strictly medical have produced enormous health-care benefits. Everything from refrigeration to the development of synthetic polymers (two fields that turn out to be related) has unforeseen and unforeseeable medical applications. What that means is that health care does not depend upon a friendly investment environment for medical innovations, but a healthy investment environment overall.