In news that made hardly a splash at this end of the pond, Britain’s Royal Navy has offered to scrap half the fleet in order to spare its two aircraft carriers from the budget bludgeon. With a force reduced to only 25 vessels, the senior service of Great Britain, which was for perhaps 200 years the most powerful navy in the world, will shrink to its smallest size since the reign of Henry VIII. It will be about the size of the Italian navy, and half that of the French. According to the Telegraph, even if the carriers are preserved, the Ministry of Defence (MOD) may not be able to afford aircraft for them, leaving MOD to borrow aircraft from allies. At the same time, the budget for Britain’s National Health Service (NHS) has risen to over £100 billion, more than double the amount for MOD. There could hardly be a clearer illustration of the old economics problem of guns versus butter. That the British, like the rest of Europe, are able to choose butter over guns is due to one major enabler: the United States of America.
American military power has guaranteed the peace and security of Western Europe since the end of World War II. Increasingly since the fall of the Soviet Union, our European allies have been able to rely on the Pax Americana. With American security guarantees, Europe has been free to pursue socialist ideals like universal health care. But even without a heavy defense funding burden, Europe is beginning to experience the fundamental problem inherent in treating a market commodity like health care as if it were a citizen right. That problem, of course, is cost.
Governments guarantee their citizens various individual rights. In the U.K., these rights interestingly do not include U.S.-style freedom of speech. But among the guarantees the government has made to the subjects of Her Majesty is health care. Every Briton has the right to walk into an NHS surgery (doctor’s office, for us Yanks) and see a physician. Some patients pay a small contribution to the costs of prescription drugs, for instance, but otherwise the visit is essentially free—if you ignore the patient’s tax burden, that is. The demand from the consumer for anything that is (or is perceived to be) free will never be constrained by price. As long as the costs are hidden, people will continue to use a “free” resource beyond the limit of real need. Health care is already high on the list of precious resources. In an environment where patients pay for their own care, demand is already nearly inelastic. When you add a pricing scheme that conceals the real costs to each patient, it should be no surprise that you find demand rising without limit. The British are not peculiar in this matter; people anywhere could be expected to behave the same with similar incentives.
When price does not constrain demand for a resource, what can? Essentially, rationing by delay. As noted above, Britons have the right to walk into a surgery and see a doctor. Of course, what actually happens in doctors’ surgeries is that the patient has the right to join the queue of people waiting to see an NHS doctor. How long are these waits? In a nod to reality, Britain’s coalition government has abandoned the goals of the previous leadership. Under the recently ousted Labour government, the goal for getting in to see a general practitioner (GP) was 48 hours, while the goal for seeing a specialist after referral from the GP was 18 weeks. Some have reported that the actual waiting time for follow-on care was 26 weeks, which no doubt played in the new government’s decision to abandon the 18-week goal.
The solution is painful but obvious: Stop pretending health care is a right. Over the long term, no government can guarantee an unconstrained market commodity to its citizens as if it were a political right. Speech and religion are cheap. Even the right to counsel is constrained by a limited demand pool (indigent criminals). But health care is very important to every one alive, or will be at some point, making the demand pool approximately equal to a nation’s population. Since not all of a country’s population pays taxes, the demand pool for health care is larger than the tax base that could support it.
For better or for worse, the sun has long ago set on the British Empire. It may be just as well that the once unchallenged monarch of the seas now will diminish even further in might. After all, might does not make right. On the other hand, power vacuums on the high seas invite piracy and give unscrupulous regimes the idea that they could step in where the more benevolent hegemon has stepped out. Overwhelming military strength is the only guarantee of peace and stability. Fortunately for Mother Britannia, her American child has been willing to step up as bobby for the world. The question for Americans now, though, should be all the clearer given the Royal Navy’s order to scuttle the ships: If the U.S. chooses butter over guns, who will take our place?