--- Angelus Novus <fuerdenkommunismus at yahoo.com> wrote:
> Did you just not read the part where I said that if
> you are working, you pay for insurance? You may
> want
> to call that a "tax", but you might as well say that
> payment for anything is a "tax". If I order a
> cheeseburger at McDonalds, I am "taxed" for the
> service.
[WS:] This is not a right analogy. From an economic point of view, cheesubrger is not a public good http://en.wikipedia.org/wiki/Public_good, but insurance is. That is to say, excluding non-payers from benefitting from public goods would diminish or eliminate that good altogether, hence there is a need to compulsory payments for such goods (on the grounds of the free rider theory that a rational person would benefit from not paying for such goods but still being able to enjoy them.)
Now whether such payments for public goods are called "taxes" or "insurance premiums" is a matter of political semantics. Thefact of the matter is that political compulsion is necessary to insure that all beneficiaries pay and that individual opting out does not infrinhe on the quality of the good. A textbook example is fire protection - if it wre limited only to certain households, namely those that pay for the service, its effectiveness would be reduced to nil, so it has to be universal. But if it wre universally guaranteed but payments woul dbe voluntary, most "rational" individuals would not pay, since they would benefit from that protection anyway. hence compulsory payments are necessary.
It matters little if such payments are collected by the giovernment itself (and hence called taxes) or whether government delegated that authority to provate parties, like insurance companies, inwhich case they are called private insurance premiums. The bottom line is that you have to have that service and you have to pay for it. Whether you call that payment a tax or a private insurance premium does not really matter.
Is is a separate discussion whether delegating the authority for collecting payments and delivering such services to private parties is efficient or beneficial to society at large. Arguments have been raised for (1) single payer (government) but delegation of service provision to third parties (aka corporatism, which is the EU standard); (2) for delgation of both payments and service delivery to third parties (aka "market solution" favored by US conservatives; (3) collection of payments and direct service provision by governemtn (aka the Scandinavian and state socialist model.)
As I see, there are no public benefits of (2) - this essentially makes th emoney grubbers richer and everyone else left in the dust. I witnessed (3) in action - it has certain benefits 9such as universal access) but also serious flaws (mainly low quality of care and limited availability of some types of care.) Option (1) seems to be a reasomnable compromise between (2) and (3), but of course the devil is in details - some corporatist arrangements work better than other.
Yert another point is that payments are not just means of providing resources that cover the cost of service or good, but that they also "signals" providing information about the value of that service to both providers and buyers. A nominal fee requires making a choice on the part of the buyer without being prohibitive. That would encourage buyers to make judicious use of the resource and use only when needed instead of "hoarding" or wasting it (which happens if it is free.)
For example, providers sometimes institute nominal fees (that do not even cover any meaningful part of their cost) to avoid broken apointments, which makes the service less accessible to other who may actually need it. In such cases, imposing small fees improve public benefit - they do not prevent anyone from getting a service, but they simply prompt people to act more responsibly and do not waste that particular resource.
Likewise, such payments may "send signals" to providers what services are most needed, and how public values them. This is really standard econommic theory http://en.wikipedia.org/wiki/Price_signal so there is no need to explain it here.
What I stress here, however, is to separate those two functions of prices - the provision of resource to pay for the good or service and acting as a signal of the value and demand for that good or service. The fallacy of free market approach is that it confounds the two i.e. maintains that the signal needed for effective control must also deliver the full power needed to move the goods (which is absurd if applied to, say, electronics.) That means that one can provide goods or services that are publiclly funded in 99% and still use nominal fees for these services to act as signals of the value and demand for these services.
Wojtek
____________________________________________________________________________________ You rock. That's why Blockbuster's offering you one month of Blockbuster Total Access, No Cost. http://tc.deals.yahoo.com/tc/blockbuster/text5.com