We hear regularly about the "cycle of violence" in the middle east and what a danger it is to the world. Now, I disagree with both the description and the belief that most of our foreign problems come from this one issue¹, but ignoring that for the moment, I would still contend there is a much more dangerous cycle right here at home, far more threatening to the welfare of Americans, and that is the cycle of compassion.

This topic is nothing new, as I described it explicitly in "The Endless Cycle of Intervention" and "Exit Strategy", not to mention my comments in "How To Blame the Free Market". But, for the benefit of those who do not follow links (seemingly every one of my readers), allow me to summarize very quickly. What I am describing as the "cycle of compassion" is a series of events every bit as deadly as the supposed "cycle of violence", as far more certain to follow one another. The pattern is seen every day in American politics. A politician, looking for an issue on which to hang his hat, finds an area of life which falls short of perfection ("Utopianism and Disaster", "Principles Versus Outcomes", "Life Is Not Fair - And Trying To Make It So Makes Things Worse"), manages to stir up public indignation over that imperfection, maybe creates a few convenient villains to blame for the lack of perfection ("Life Without Villains", "Enemies Into Villains", "Rethinking My Earlier Position") and finally pushes through some ill-considered laws intended to enforce perfection.

What makes this so deadly is a combination of three factors, though only one really needs to exist, and as I will show, by definition it must. The two non-essential factors, which nevertheless almost always coexist are poor planning and excessive promises. The third, and essential factor, is the impossibility of delivering via government intervention, even were the promises kept sensible and the plan well thought out.

Let us look at the two less significant factors first. Basically, because the politicians who indulge in such schemes are looking to make a name, and enacting their law depends on acting when the public indignation they generate is at its highest, they will almost always need to act swiftly, to get the law through while people are fired up, and to get their name attached before a rival cashes in one public outrage. As a result, the laws enacted are almost always poorly thought out, filled with unanticipated consequences, and sometimes even failing to properly address the issue itself. As a result, it is a rare measure which is not met with immediate disappointment.

For similar reasons, the laws enacted also usually promise far too much, much more than they could ever hope to deliver. And the reason is just as obvious.When a politicians is trying to fire up the crowd, to cash in on their outrage, it does not work to make sensible, well reasoned, carefully qualified promises. He must promise the moon to keep the crowd excited. Nor does it help that most such laws are premised upon the failure of life to deliver perfection. With that underlying logic, the law itself can hardly promise anything short of perfection, which, as anyone who has worked in the real world knows, is a very hard promise to fulfill. And so, it is almost inevitable that even when the laws are not badly drafted (which is rare), they will still disappoint due to excessive promises.

Which brings us to the big reason for failure, the single reason which is unavoidable, and not based upon the mistakes of the law makers. Even if they thought through every word they wrote, and even if they kept their promises modest, there would still be a single, unavoidable stumbling block, and that is the fact that the government simply cannot deliver better than the free market in any for-profit venture. ("The Inevitability of Bureaucratic Management in Government Enterprises", "Planning For Imperfection", "The Limits of "Scientific" Management", "Greed Versus Evil") Even if you disagree with that basic premise, there is one premise which is hard to avoid. Everyone who wants the government to "do something" that will "make sense", has their own definition of what "makes sense", and, as a result, very few will ever imagine the specific form the government program will eventually take². As a result, almost any proposal will rarely match the program voters imagined in advance. And so it will inevitably disappoint.

And that is what initiates the cycle of compassion. As I described in "Recipe For Disaster" and "Damn the Torpedoes!", no government program ever goes away. Once there is a program, it is simply assumed that it is the job of government to fix that problem ("Doing Something", ""Doing Something" Revisited")³. More important, once a program is put in place, there are instantly dozens of excuses. Failures are not the result of government meddling where it shouldn't. It is because the program was given too little funding, or too little authority, or, in the last resort, because the law was written badly. Inevitably, the case is made that one more fix and everything will be fine. ("Examples From Another Field")

And so, starting from one bad law, we get another, and, when that fails to live up to the hype, yet another. And all along, each failure is treated as a "crisis", leading to hastily enacted, over-reaching laws which are sold through hyperbolic promises. Which means, as things progress, the situation becomes ever worse, with bad law piling on top of bad law, each carrying massive, unanticipated consequences, with the consequences requiring still more bad laws, themselves burdened with consequences. And so, before too long, what started as a situation simply less than perfect has degenerated into an actual crisis, all from efforts to "fix" a lack of perfection.

In short, the government has taken normal circumstances of the real world and managed to create a crisis by trying to aim for perfection.

Perhaps the best example is to be found in medicine. Prior to the 1960's there was little enough regulation. (Excepting for employee health insurance -- see below.) Individual states regulated medical licensing⁴, and there were some state controls over hospitals and such, as well as the usual controls over insurance, but by and large medicine was a private industry and run as such. And, as any business, it tended to provide services pretty well, at a reasonable price, providing services to most, but not all, individuals. In fact, most hospitals and others even offered free services, even in states where it was not mandated, as attested by testimony offered in hearing on Medicare and Medicaid held in the 1960's. So there was no lack of service, not lack of "access". As was made clear at the time, the reason for medicare and medicaid was not a lack of service, but an effort to spare the poor and elderly the "embarrassment" of relying on charity.

Keep that in mind. All of this started to spare the poor and old having to ask hospitals for charity. Not to make sure they got care, but to spare their feelings.

But, as soon as they enacted this plan, the inevitable happened. When a good becomes free, people use too much, and providers both overcharge and begin to offer services they otherwise would not, due to price restrictions. So, costs rose massively. And thus, we had more regulation, this time restricting access, limiting hospital purchases of technology, and a host of other efforts to jeep down costs.

Let us not forget that, in parallel to this, we had another bad idea. Due to wartime restrictions on wages, we had started using health insurance as a form of salary during World War II. Due to laws enacted afterward, this practice continued, and so a number of Americans were now paying for care using insurance. And so, employees, and that groups was growing with every year of economic growth, were buying care with other people's money. Once again, destroying any impetus to reduce costs.

Finally, starting in the 1950's (in a handful of areas of the law even as early as the 1930's), but coming into its own in the 1960's and 1970's, the tort law revolution was driving costs and creating the new phenomenon of "defensive medicine". It was not a huge driving force, but it definitely fed into the spiral of escalating prices, as well causing doctors to ask for more and more procedures for each patient, causing the "standard of care" to include a large number of procedures designed not for any legitimate health care reason, but to avoid lawsuits.

And so, having passed medicare and medicaid, and then passed "cost cutting" measures on top of them ( "Government Efficiency", "Medical Reform, An Overview"), as well as creating the bizarre tort law environment ( "The Problem With Tort Reform", "Red Herring") , and the circumstances where we routinely use health insurance to pay for everything ("The Insurance Sham","Redefining Insurance... To Actually BE Insurance"), congress had created a circumstance wherre prices were destined to rise high ("High Cost of Medical Care", "My Health Care Plan"), and one in which they could not propose the obvious solution of rolling back all their own previous bad ideas("A Different Look at "Health Care Reform"").

Instead, we get a pair of bad ideas, both of which will lead to new bad circumstances and farther intervention. First, forcing insurers to cover pre-existing conditions ("Preexisting Conditions"). Second, requiring individuals to buy insurance.

Of course the requirement to cover pre-existing conditions makes mandatory insurance almost inevitable. After all, if one were to require insurers to cover pre-existing conditions and not require every individual to carry insurance, then they would go without until they fell ill, then buy coverage and expect pre-existing disease coverage to take care of them. In other words, insurers would make no money, as every person who bough insurance would represent a loss.

In fact, the pre-existing condition requirement also means insurance will all be "bargain basement" insurance as well. The reason is obvious. If you are required to buy insurance, and insurers are required to cover pre-existing conditions, then the best plan is to buy the cheapest insurance possible to meet the mandatory insurance coverage, but when you get a real problem, upgrade to "Cadillac" insurance to make sure you get the best service. But insurers will know that, so no one will offer top of the line insurance, as it would be begging to be bankrupted by company jumpers. So, with mandatory coverage and coverage for pre-existing conditions, we will have only bargain basement insurance.

Which will likely be deemed a "crisis" and lead to two possible responses, both part of the logical "cycle of compassion". First, the government could step in and mandate that any pre-existing condition must be covered under the old insurer for X months after changing policies. That sounds sensible and would discourage jumping firms when you fall ill, but for long-term illness it still is not a deterrent. Also it favors the insurers (a small number of votes) over the insured (a lot of votes), so it is unlikely to be chosen.

More likely, politicians will decry the "greed" of insurers, that is their efforts to avoid bankruptcy, and so will pass laws mandating that insurers must provide what amounts to "Cadillac" insurance. Of course all insurers will still provide the minimum required by law, but they will be forced to provide a lot more than they might want.

And the result of that will likely be higher insurance premiums, which will again, bring about two government responses. Either they will end up paying larger subsidies for ever higher income ranges, or they will mandate lower premiums, both of which have clear detrimental effects, I will describe below, as they are shared by the logical outcomes of mandatory insurance.

Which brings me to the results of mandatory insurance.

One result of mandatory insurance is similar to that of forcing coverage for pre-existing conditions. The government gains an ability to define what is and is not "insurance", and as a result, they can effectively mandate coverage for specific conditions. As I mentioned before, this will force insurers to cover those conditions, which will lead to increased premiums, and, as a result, either higher subsidies, or mandated premiums.

And what are the results of either? Both effectively put insurance under government control. If the government pays subsidies for more and more people, then more and more of the income of insurers depends on government payments, making the government effectively the only customer of the insurers. Likewise, if the government reduces premiums, bankrupting insurers, the only options are to pay direct subsidies to insurers, which would give them direct control, or create government funded insurance.

In all cases, the outcome if effectively a single-payer system, whether it is obviously one, or is disguised as a system of subsidies and mandates.

Which brings me back to my original point. All of this started to avoid the "embarrassment" of having to ask for charity. That was the "problem" we fixed by creating the many, many problems we face today. In other words, a minor flaw, a slightly less than perfect system resulted in the government creating an ever worse system, breaking it more with each "fix".

Not that this is unique to health care.

Look at the railroads. The government granted them subsidies and land grants to "encourage" rail connections for "national prestige", and were surprised when those railroad began to falter when they no longer received subsidies. The fail railroads shut down routes and raised rates, and the government then responded by capping rates and mandating routes. And when that had the predictable negative outcome, not only did the government disastrously nationalize much of the failing rail structure, but even more foolishly split apart passenger and freight, resulting in the mess we have today. ("Killing the Railroads")

Or look at those cities which hoped to make police more "involved" by requiring them to live in the city. As most cities passing such laws were unappealing, the cities suddenly found they could not find enough police. And so, they then had to pass laws mandating tax breaks and mortgage assistance for police officers, just so they could find enough. And so, to make sure police were more "responsive to local concerns" they instead created a powerful block which can demand a number of concessions just to ensure there is adequate police coverage. In other words, they took an imagined worry, that out of town cops aren't involved enough, and tried to fix it by creating a powerful political pressure group which is even less "responsive"⁵.

Each of these shows an interesting trend. Though not one of the problems mentioned had yet reached the logical end point, each shows some signs of where that point is. In each case, as the government intervened to fix a previous problem, the solution was always more government control and more power. In short, the end point of this path, this "cycle of compassion" is inevitably an all-powerful state with total control.

And that is why the cycle of compassion is so dangerous. It can start anywhere, any time circumstances fall short of perfection and a clever politician can work up the public about it, and form there, it is just a matter of time before we achieve total government control.

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1. I criticize the entire notion of a cycle of violence in "Moral Equivalent", "Just Angry", "A Hypothetical Situation", "Moral Equivalence ", "A Pet Peeve" and "Another Pet Peeve", and dispute claims that this one issue drives the entire politics of the middle east (at least as anything more than a convenient excuse) in "Correlation vs. Causation" and "The Failure of Negotiation". But as that is not my topic here, I would appreciate few comments on that topic. Don't worry, I will write on it again soon, so anyone who disagrees with have plenty of chances to disagree.

2. Just look at medical reform. No one could have imagined the house or senate bills, much less consider them ideal. In fact, most who pushed ardently for reform had very different ideas in mind. As I argued in "The Inherent Disappointment of Authoritarianism", everyone imagines the regulators will share all their prejudices and see that their own plan is the "only one" that "makes sense" ("The Right Way"), but in reality there are countless opinions on how things should run, and so it is unlikely any regulatory scheme will match even a significant minority of voters' opinions on how it should work. At best, regulation will be grudgingly accepted by the majority as a necessary program which runs in a hopelessly flawed way. There is simply no way to enact a program that will please the majority.

3. I have discussed several times our absurd behavior in this regard, our insistence that we want small government, while at the same time we pillory anyone who refuses to propose a government solution for anything and everything that even slightly inconveniences us. Rather than go over that again, see "The Difficulty of Principle", "Don't Blame the Politicians", "What We Deserve" and "The Presumption of Dishonesty".

4. My thoughts on the topic of licensing can be found in "Medical Regulations", "Medical Regulation II", "Professional Education", "Business Licensing and Regulation", "Another Thought on Regulation", "Insider Trading", "Gun Control, The FDA and Regulating the Law Abiding", "The Right Way", "Bad Economics Part 5",  "Bad Economics Part 2" and "Bad Economics Part 3". It is a bit outside of my scope here, so I will leave it at that.

5. Police are not alone, similar laws were passed with regard to teachers in some cities, but police seem to be subject to more bad laws than most civil servants. Mainly this is due to the tendency of populist politicians to want to create "accountability" among police, by putting them under review by panels of citizens and other measures. The residency requirement is just a part of such schemes, which rarely seem to have any real benefits. ("Deadly Cynicism")

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POSTSCRIPT

My thoughts on health care reform can be found in the posts "Medical Reform, An Overview", "Who Will Decide",  "My Health Care Plan", "Envy And Analogy", "Reviving Nonsense in the White House",  "A Simple Question", "An Interesting Conversation", "The Problem With mandatory Insurance", "Envy Kills", "The Devil is in the Definitions (And Assumptions)", "Cutting "Costs"", "Misunderstanding Profits", "Again?", "Government Efficiency", "Two Examples of "Inefficiency" in Capitalism", "Bad Economics Part 10", "Semantic Games", "A Food Security Plan", "The GOP Health Care Plan" and "Don't Buy Into The Wrong Argument".