Decentralization and Deregulation

In the post on the Redistribution of Wealth I brought up the interplay between regulation and market centralization.

Regulation has the effect of centralizing markets. The centralization of markets has the effect of concentrating wealth and disenfranchising the people at large.

With this model one can easily see how progressives undermine their good intentions. Progressives imagine that some great good would come to the masses with just a little more regulation and order. Progressives then create centralized markets and massive government regulators to impose order. The end result of the effort is a few extremely powerful insiders and impoverished masses.

The model also exposes the weakness of the Conservative position. Conservatives rebel against the government regulations, but try to preserve the centralized market.

Deregulating a highly centralized market does not achieve the widespread benefits one would hope to achieve with market reform. When one simply stops enforcing the regulations of the centralized market, the insiders will try to use their market clout to impose order. The effort is likely to result in chaos.

Restoring a free market actually requires a strategy. One strategy would be to create a regulatory regime that decentralized the market. Decentralized markets do not take kindly to central regulation. So, if a decentralization effort was effective, it would be followed by a movement to either end the regulations or to preserve only those regulations that maintains the decentralization.

How to put this different. Marx instructed his followers to use the tools of the capitalist to bring down the capitalist system. I suggest that freedom lovers use the tools of the progressives (regulations) to unravel the centralized markets created by the progressives.

This methodology is best seen in the Medical Savings and Loan.

Employer based insurance was the creation of progressives. This system created a paradigm where every medical transaction was a lawsuit against risk pools. Insurance necessitated the creation of insurance regulations and effectively consolidated in the health care market into a centralized market.

The Medical Savings and Loan would break apart the risk pools into a collection of savings accounts, loans and grants with the savings accounts under direct control of the policy holders, the loan reserves under the control of the Medical Savings and Loan and the grants under the control of charitable organizations.

This new set of regulations would create a decentralized market. With each person directly controlling his medical resources, the people would seek to preserve only those regulations that protect their health care resources.

Dare I mention, if people retained control over their health care resources there would be a massive redistribution of wealth from the ruling elite to the people. The medical savings and loan would take all of the wealth locked into insurance companies and put it back in the people's hands.

Oddly, one of the biggest blocks to the Medical Savings and Loan is the words we use in political discourse. The process of liberating people's health care resources from control of insurance companies is called "liberalization."

Conservatives and Progressives are engaged in a death struggle over who should control the health care system: Conservatives want big private insurance. Progressives want big government.

The health care reform that does best by the people liberates resources from the elite and places them back in the hands of the people. This type of system used to be called "liberal."