This week in Venezuela, the government is threatening to seize the nation’s bakeries because of an acute bread shortage. Three years into catastrophic scarcity throughout the economy, the deadly legacy of the late Hugo Chavez’s left-wing economic policies, the government is still offering the disease as a cure.
Somehow, despite an abundance of evidence like the situation in Venezuela, some of the politicians in our own country continue to propose price controls here to address whatever thing about the world they would like to change. If there were a Hugo Chavez Price Control Award, it would certainly go to Rep. Peter Welch (D-VT).
Like the socialist Sen. Bernie Sanders (I-VT) whose presidential candidacy he supported and shares a home state with, Welch sees government as his hammer and every problem as a nail.
Perhaps no other lawmaker is as relentless as Welch on proposing price controls.
Not content to be a price control champion on one issue, Welch has actually led a variety of efforts to issue price controls on prescription drugs under flimsy disguises.
The U.S. is one of the few countries with a free drug market, while also dominating the production of new drugs. Essentially, we shoulder the invention of new medicines for the entire world, and then left-wing governments in other places set below-market prices to use the drugs we invented.
Welch and other liberals respond not by trying to protect U.S. companies (and the high-paying jobs they create) from this treachery, but by instead suggesting we imitate those left-wing governments here.
In the process, we would essentially destroy the research and design pipeline for new medicines in what is literally a real-life rendition of Aesop’s “The Goose that Laid the Golden Eggs.”
Welch is also point man on Medicare drug “negotiation.” This approach is fiendishly clever in that it sounds like a reasonable, market-based idea, since negotiation is one of the core processes in a market economy that drives down prices.
Unfortunately, in this case the proposed negotiator is the federal government, or, more precisely, an unelected bureaucrat deciding for every Medicare enrollee which medicines are “too expensive.”
The problem is, unlike a private company, the government has none of the incentives that make the process work in the first place. People who get their health care from Medicare can’t go to an alternative provider. They do get to vote every two years, but the distance between election day and the government employee rationing their drugs is vast. Further, no one in the government materially benefits if they succeed at deciding which drugs to provide. There is no profit margin. No one has the potential to become wealthy.
Meanwhile, this proposal has been estimated to save approximately zero dollars by the Congressional Budget Office, in part because the government, while a significant player in the drug market, is actually far from the biggest player. The government buys at market prices which are set by an actual, functioning market.
So why do Welch, Sanders and co. love this idea so much? Perhaps because their vision of the health care system is more like how Venezuela works than the USA.
Lest you think that Welch’s left-wing thinking is limited to just drugs, it should be noted that when diary farmers in Vermont were having a tough time from ups and downs in the market, otherwise known as how people know which goods to produce, he proposed price controls – and subsidies, too.
So, Congressman Welch, like you, the late Chavez was a devoted socialist. He once mused that perhaps life had once existed on Mars, but had ceased because “capitalism arrived there” and “finished off the planet.” His country is in utter shambles from implementing the vision you two share. Perhaps you could leave Congress and retire in Venezuela, where you can enjoy all the fruits of the price controls you hold dear.