When Society Stops Rewarding Industry, We See Galtism

Following up on what motivates us to work and create, I want to point out a few cases of “Galtism” in current events.

(As background, John Galt is a character in Atlas Shrugged who leaves society when it stops rewarding his ingenuity and hard work.)

First, a letter from Jake DeSantis, an executive vice president at A.I.G. who resigned after the company reneged on its bonus contracts after it became politically unpopular:

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house. (Jake DeSantis, “Dear A.I.G., I Quit”, Ny Times, March 24, 2009.)

Second, some musings on “what happens when government regulation makes it more expensive to bill for medical services than providers receive”:

More and more of my fellow doctors are turning away Medicare patients because of the diminished reimbursements and the growing delay in payments. I’ve had several new Medicare patients come to my office in the last few months with multiple diseases and long lists of medications simply because their longtime provider — who they liked — abruptly stopped taking Medicare.

This scenario is not academic. The health systems in Canada and the UK have shortages of doctors, especially specialists…which is why it takes months to get testing and diagnosis even for serious illnesses.

Among P.J. O’Rourke’s well-known lines is “If you think health care is expensive now, wait until you see what it costs when it’s free.” The full speech is worth reading:

Freedom is not empowerment…. Anybody can grab a gun and be empowered. It’s not entitlement. An entitlement is what people on welfare get, and how free are they? It’s not an endlessly expanding list of rights — the “right” to education, the “right” to health care, the “right” to food and housing. That’s not freedom, that’s dependency. Those aren’t rights, those are the rations of slavery — hay and a barn for human cattle.

There is only one basic human right, the right to do as you…please. And with it comes the only basic human duty, the duty to take the consequences. (P.J. O’Rourke, “The Liberty Manifesto”, May 6, 1993.)

6 replies on “When Society Stops Rewarding Industry, We See Galtism”

  1. As far as “leaves society when it stops rewarding his ingenuity and hard work” here is what happened to me when I was a teenager in England. I got my first good paying job and was soon asked to work overtime. When I collected my pay I was taken aback by how much taxes were taken out of the overtime pay. The overtime had moved me into a higher tax bracket and I also had to pay the percentage take for National Health Insurance. Thereafter I seldom worked overtime. I withdrew my ingenuity (what little was needed) and hard work.

    Here in the United States when my wife started working outside the home, one year we had to may the Alternative Minimum Tax. The most ugly tax ever invented. So my wife switched to part-time work which then rid us of the AMT and also allowed deductions that had been disallowed before.

    At this point in the story I usually get a lot of flak from people along the lines that I am crazy to do such a thing just to avoid a “few” taxes. My response is that for us it is simply withdrawing a little from society, refusing to play the rotten game of taxing the productive to excess.

    When one taxes the productive there are consequences. It is the productive that have the most freedom to change their circumstances. They adapt faster than government can make laws. When I lived in England I often read in the news of the “brain drain” of doctors, nurses, engineers, etc. leaving for America where the taxation was less severe. One wonders how long it will be before America starts to see a brain drain of its own.

    In socialist England I was raised not to expect much material comfort. That will come in handy in the days ahead in America. People ask, “Don’t you miss England?” I say, “In four years of Obama, America will be just like England and I will be right at home.”

    All I have to do is wait.

  2. Also, most of the unfilled doctor’s positions in Australia are for jobs in small cities and towns. Doctors on some contracts currently get paid tens of thousands of dollars extra each year by the national government to work in such places. Yet contacts still go begging.

    It is all supply and demand.

  3. Regarding the supply of doctors, Australia imports huge numbers of them each year. This was the case with teachers in the 1960s and 70s. There are more doctors in the world, more can come to the country.

    Additionally, Australian students can choose to study medicine. Even if there are no publicly subsided places left, they can pay full fees and still study. The Australian government plans to soon heavily subsidise all it’s citizens without degrees to study at university, as long as they can keep up with their course.

  4. There is a UK/Canada style national health system in Australia too. It too could employ more doctors if more of them would accept the contracts waiting for them (ie there is a “doctor shortage”). Some people find it takes a long time to get many types of surgery done. If they have the money, they can buy private service and have it done much more readily.

    Such a national health system does not take any options away from the rich, while giving the poor a fairly good option that they wouldn’t have without it.

    The difference between the US poor have now and what they might have in the future is a) an expensive option or b) a cheap option (they may have to wait a while for in some cases) and an expensive option.

    The US pays much more per person for healthcare than countries with national systems. In many of those countries, proportionally, more people get more healthcare than in the US. Near monosophies can be a useful tool for citizens (just as near monopolies can be a useful tool for shareholders).

    A “doctor shortage” is much like any other sort of labour shortage. I could say that a city of a million people needs 100 full time harmonica players, but if the market can only support 5, how is there a shortage? If people are unwilling to pay (either directly or via their governments) what doctors want to be paid, then there is a stalemate.

    If there is a law in a jurisdiction stopping the employment of doctors on contracts different to those mandated by a certain body, then perhaps those contacts (or the law) needs changing. Perhaps the doctors, like other employees, need to change what they are willing to accept.

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