Adam Smith wrote in The Wealth of Nations, published in 1776, "It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest." He also wrote: "Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only.
The discovery that self-interest and benevolence are not antithetical to each other is the source of modern economic progress, and fundamentally, of civilisation itself. A simple yet important proviso is that force and fraud must be excluded from human interactions, including interactions between government and the people. When a nation achieves such a desirable objective the rule of law prevails and the wealth of the nation is assured.
We all need food in order to survive yet this very essential commodity in our lives is produced, processed, packaged, transported, warehoused, distributed and sold by private individuals and enterprises. The process begins with farmers, who may or may not specialise. There are dairy farmers, cattle, and sheep farmers, wheat or maize farmers, citrus farmers, market gardeners whatever foodstuff there is a demand for, wherever the climate and soil are suitable, there are farmers growing it.
From the farmers, the food goes to abattoirs, canners, bottlers, cheese-makers, dairies, and so on, to be processed and/or packaged. Then it is distributed around the country by transport companies, or shipped to other countries by exporters, to a plethora of retail outlets.
We can do our grocery shopping at huge hypermarkets or at tiny neighbourhood spaza shops or convenience stores. We can purchase from specialty shops such as butcheries and greengrocers. If we are price-conscious, we can shop at discount wholesalers, or if we have a taste for more expensive imports we can buy from upmarket delicatessens. If a shop offers an attractive special, or consistently good value for money, we may travel halfway across town to take advantage of it.
Now imagine what it would be like if government decided that food was too important to be left in the hands of the market. Picture the following scenario: The government, concerned about those people, especially children, who are not getting enough to eat, and believing that everyone should be assured of adequate food, decides that all families will receive free taxpayer-provided groceries. It does not purchase the food from existing producers and suppliers it takes them over. The government turns the former hypermarkets, supermarkets and other food stores into government depots where people have to collect their rations on appointed days. Officials are not interested in differentiating on the basis of peoples individual tastes and needs, so everyone in a specific age group gets the same grocery pack containing food items that a committee of officials has decided are nutritious and adequate for a balanced diet.
As the consumers of the food have no say in what is produced or provided, they end up with a bland diet that appeals to very few. The people who work at the food depots are not beholden to the food dependents so they are inclined to treat them rather badly. Most people would agree that the result would be disastrous and rather unpleasant.
It is obvious to virtually everyone that the above scenario is not the optimum solution to the problem of some people not getting enough to eat. The simplest and most effective way to ensure that no one goes hungry is to leave the food market alone and to supplement the income of the indigent so that they can purchase adequate food supplies. And this is in fact what happens. Why, then, is health care treated so differently?
The Ministry of Health is correct in accentuating the importance of healthy food in maintaining a healthy body. What it needs to recognise, though, is the efficient food delivery process that occurs without the government getting involved in farming, market gardening or setting up outlets for the delivery of food products.
The notion that profit has no place in the production and delivery of essential life-saving goods and services is clearly faulty. The more vital the product or service, the more necessary it is to have fierce competition in its production and delivery, and profit is the only true motivator of such competition, which drives quality up and prices down. Prices for private hospital care have, in fact, been shown to be lower than the cost to government of providing similar services.
The Department of Health should consider adopting a positive paradigm, assuming that the nation is in transition from poor to wealthy that our people will soon make poverty history. Based on that paradigm it could adopt policies and structures that can easily adapt to that positive transition, firstly, by concentrating its own limited resources and the energies of its officials on providing quality health care to the poor. Secondly, by allowing the private health sector the freedom to grow and create the health care environment that can supply the services that will be needed by that increasingly affluent society.
In order to hasten the process of transformation, government could consider transferring ownership of state health care facilities to the people who work in them, and where appropriate to the surrounding communities, together with contracts for the delivery of services. This will improve accountability and service, given that renewal of contracts will be dependent on satisfactory delivery.
South Africans will then depend on a totally private, high quality, and fiercely competitive private sector for their health care, from which government will purchase quality care for the steadily declining numbers of poor patients.
Author: Eustace Davie is the director of the Health Policy Unit, which is a division of the Free Market Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author's and are not necessarily shared by the members of the Free Market Foundation.
FMF Feature Article / 12 June 2007
Publish date: 14 June 2007
The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.