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Originally published August 21, 2009 at 3:58 PM | Page modified August 22, 2009 at 11:40 PM

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Get real: Health-care reform based on collectivism will fail

The government-dominated approaches to health-care reform are bound to fail, write guest columnists Robert J. Herbold and Scott S. Powell. Collectivist reforms cannot work because they preclude personal responsibility in decision-making.

Special to The Times

THE visceral reaction that members of Congress encounter in their home districts during the summer recess reveals a widening gap between Washington elites and voters whose instincts tell them to distrust a government whose actions would broach an unacceptable and irretrievable loss of freedom.

It is not just that the current approach to health-care reform is deeply flawed, it is that the whole legislative process has become corrupted in ways that are impenetrable, hasty and irresponsible — oblivious to past mistakes and divorced from common sense and any sense of fiscal responsibility.

It is understandable that the framework for the Obama administration's reform is collectivism. Collectivist programs are well-suited for expanding political power because they carve out interest groups and classes that can be mobilized for causes and votes. In this regard, the Democratic Party has a huge advantage over Republicans, who are traditionally more concerned with individual, family and business issues, and who are less inclined to look for government solutions. The problem is that collectivism that works so well in political organizing fails dismally in economics.

Collectivism forces people to conform to groups and forgo independent initiative even though it is individuals who respond to incentives and make economic decisions. Collectivist reforms cannot work because they preclude personal responsibility in decision-making, which is the key driver for markets to contain costs and allocate resources efficiently.

In fact, collectivist government intervention can be catastrophic when imposed on a national level. A major contributing factor for the failure of Fannie Mae and Freddie Mac and the financial turmoil that led us to the brink was because of politicization and socialization of mortgage underwriting, which created a false sense of security, abrogated market signals, prevented the rational calculation and pricing of risk and contributed to blurring the lines of right and wrong. We cannot afford another such experiment with the health-care sector, which is 17 percent of the U.S. gross domestic product. The division in our country wasn't always this way. When John F. Kennedy gave his inaugural address in 1961 invoking people to "ask not what your country can do for you; but rather ask what you can do for your country," he was suggesting that Americans think and act by taking personal responsibility and not depend on government. That attitude of relying on personal responsibility has been a core value in our country from its very beginning. But over the past 45 years, personal responsibility has been increasingly marginalized by more collectivist government policies. And this has been happening within the U.S. in the face of collectivism failing in every society across all cultures where it has been adopted.

In its extreme form, collectivism failed in China as it did in the Soviet Union with devastating consequences and loss of human life — an estimated 40 million Chinese and an equal or greater number in the USSR.

Its lesser forms also have had serious consequences. A chief factor in the downfall of many U.S. companies and industries has been the collective actions of unions. In Europe, collectivist policies have so weakened the moral fabric of once-proud peoples that they are now more concerned about their narcissistic social benefits than they are willing to make sacrifices necessary to defend themselves against threats to their very existence such as terrorism.

Today, nearly 50 years after JFK's address and 30 years since abandoning collectivism, China has lower income-tax rates, a huge trade surplus and a significantly higher economic growth rate than the United States. While the Chinese have come to understand the symbiotic relationship between individual initiative, personal responsibility and prosperity, few U.S. politicians of either party speak in these straightforward terms anymore. It is not just that our government is now bailing out failure at an unprecedented rate; it is that on almost every major front of reform, individual responsibility and the attendant moral underpinnings of free choice are being subordinated to an increased role of the state, which fosters a collectivist-entitlement mentality.

Reforms based on collectivism will fail because such approaches undermine personal responsibility and free-market mechanisms that provide the adaptability, innovation, excellence, pricing and cost containment that are absolutely essential. It is ludicrous to spend additional hundreds of billions for supposed health-care reform that will limit options, weaken competition and create the largest U.S. government bureaucracy ever while ignoring the reasons behind the insolvency of Medicare and Medicaid.

The fact that a chief driver of skyrocketing costs — abusive medical malpractice lawsuits — are off-limits in the current reform bill proposals reveals the flawed and disingenuous nature of this exercise. With bills now so laden with earmarks that they regularly exceed 1,000 pages in length that few congressmen read, the legislative process is fundamentally corrupt, just as our federal bureaucracies are out of control.

More bureaucracy, greater dependency, higher taxes, more debt, fewer choices, lower quality. Get real. Fool us once with the stimulus plan, shame on us. Fool us twice, shame on our political leaders. This is less about reform and more about collectivist political power to redistribute wealth, expand federal government control, weaken individual and states' rights, and create a permanent power base through entitlements and dependency.

It is time to take the first step in restoring the primacy of personal choice and responsibility. It is time to say "no" to Washington elites and "yes" to the people who deserve real reform based on a competitive system with incentives to contain costs while assuring choice, quality and flexibility.

Robert J Herbold, left, is the retired COO of Microsoft and managing director of the Herbold Group. Scott S. Powell is the founder of AlphaQuest and director of capital markets for Clarus Capital. Both are affiliated with the Hoover Institution, the former on the Board of Overseers and the latter as a Visiting Fellow.

Copyright © The Seattle Times Company

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