Whoever coined the phrase, “time is money” was on to something. Our time has value. That value varies based on perceived scarcity. Have you ever paid more for something that is convenient rather than waiting to get it where you know it will cost less?
I used to work for a company that operated a chain of convenience stores, where almost every item sold was priced ridiculously higher than it would be at your average grocery store. Yet there was plenty of product turnover in our stores. Were the customers stupid, or were they making a decision to spend more based on the scarcity of their personal monetary and time resources?
The beauty of a system like this is that each consumer is free to choose how much time and money to spend on a purchase. There are a variety of choices available. If you can wait a few days, you might be able to find the desired product cheaper online. If you absolutely must have it at this very moment, you will likely pay more than you would otherwise.
I personally have never understood the people that spend hours waiting in the cold for the stores to open on the day after Thanksgiving. They apparently believe that their availability of time at the moment amply exceeds their cash supply, or that bragging rights on getting the best deal are worth the investment. Some are apparently willing to kill other people over such matters.
What happens when you don’t have a choice in the matter of whether to spend time or money on a product or service? When I was young, no one had the option of transacting banking business between 5:00 PM on Friday and 9:00 AM on Monday. Thankfully, that model eventually gave way to anytime banking online and at ATMs, and live banking on Saturdays. Thanks to competition, today you have plenty of banking choices.
A few years back, a local supermarket chain advertised that they would work to never have more than three customers in a checkout line. I’m not sure what happened to that philosophy. Checkout is usually pretty quick at the local outlet of that chain. But if I choose to go to the store at the busiest time of day (or of the week), I can expect to wait a bit at checkout. It may seem like I don’t have a lot of choice in the matter, but I do. I could choose to go at a less busy time or I could choose to pay more at a different retailer. And, in reality, the store is pretty good about adding checkers at busy moments.
Economist Don Boudreaux writes in this 2007 article about returning from overseas at the busiest travel time of the year only to be faced by an interminably long wait to have his passport checked at JFK Airport. At peak season, the government supplied only three passport checkers at JFK.
Boudreaux explains that “commercial airports are neither built nor operated in full accord with the profit motive. Political and bureaucratic incentives are the dominant forces in play to guide the construction and operation of these airports.”
The “profit motive” is often badmouthed and sidelined in the name of fairness. After all, is it fair for someone to make money off of your plight? What would happen if the government contracted other services to safely validate passports for a fee? Would the lines have been shortened if some had chosen to pay an extra $10 or $20 for rapid passport verification?
Fairness and Medicine
While each of us is in favor of fairness, we would be wise to consider whether the resulting rationing of products and services by time is a preferable alternative to rationing by cost? Take, for example, health care. Mandated health care price limits necessarily mean rationing by time. When no one is free to pay more for a scarce commodity or service, everyone must unavoidably wait for it.
In our current public-private socialized health care system, rationing is both by cost and time. The waiting is usually limited to dallying in the doctor’s waiting room. But if you need a medical procedure, you can usually get it fairly expeditiously.
This is not the case with many procedures in countries with government run health care systems. In Canada the waiting list for major joint replacement exceeds three years. Even then, government bureaucrats have told people as young as 57 that they’re too old to benefit from the procedure.
Our quirky system still rations partially by price. Those that can least afford medical procedures can go without (although this is not always the case). Proponents of government run health care argue that our current system is immoral. But assuaging these people’s consciences means that everyone will necessarily have their medical care rationed much more significantly by time than it is today.
Even then, the costs tied to medical care will not go away. They will simply be coercively socialized so that those that have more monetary resources will be forced to pay even more to cover care for those that have less. We will all pay, but it will be far less directly tied to a medical good or service than it is today.
While such a system may be considered fairer on the surface, it will create perverse incentives for people to obtain services that are ineffective and/or unnecessary, regardless of what the bureaucrats do that run the system.
I reported last November that Medicare spends most of its money on cases we don’t know how to treat. The same study revealed that about 75% of all Medicare expenditures are for treatments that are completely ineffective. But we now have an entire industry that is reliant on that revenue stream, so the government bean counters are powerless to cut it off.
Massachusetts’ Romneycare system has proven to increase both monetary and time costs for most of the state’s citizens. Yet it is touted as a ‘free-market’ success, upon which a national medical care system should be modeled.
Before we rush headlong into the equality of a government run health care system, we should carefully consider whether we really want more rationing by time than we have today. They had equality like that throughout the economy in the old USSR.
With government run medicine, people will still suffer and people will still die due to inadequate health care. But the demographics will be somewhat different. Some that could afford to get a treatment today will be forced to wait so long that the treatment will do them no good. Our current system is a mess. But is a system like this better?
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