Gosplan Healthcare?

by Fritz Wagner

This week the machinery of the US Congress will grind furiously and may extrude a healthcare sausage that is nothing less than a Soviet style economic and social disaster. With the very best of intentions it cannot work because central planning cannot work. It runs contrary to the ineluctable tendencies of human nature. The impossiblility of successful centrally managed healthcare was brought home to me when considering Thomas Sowell's recent The Intellectuals and Society (See Book Reviews). At the same time, a not at all recent book, dating from the last years of the cold war, considers the then-Soviet design and construction of nuclear submarines ( (I am an inveterate reader of books naval and if you are old enough, you can remember it was a very scary time!).

When I read the following, I could not help but make the substitutions and insert hospitals, administrators, doctors, and patients:

For a student of Red Navy development, inter-service rivalry is an important cause of sharp and apparently unpredictable shifts in naval missions and in the naval building programme.

Opposing such shifts is the rigid Soviet planned economy, rigidly directed by Gosplan, the State Planning Committee. Economic planning is complex because individual industrial managers cannot themselves negotiate freely with their suppliers and with their customers; instead, everything must be decided centrally by Gosplan. Moreover, individual managers receive bonuses based on fulfilling their quota of the national Plan. They therefore have strong incentives  to avoid major production shifts from year to year, so that their own plants can operate on something approaching a steady level. Similarly, Gosplan itself is reluctant (indeed, virtually unable) to make major changes to its economic plan.

Both the managers and the Gosplan officials are political appointees, with ties higher up in the Soviet government, and therefore quite capable of exerting indirect pressure on the military to avoid unwanted changes (such as improvements) on its hardware. That is why the Soviets sometimes keep producing clearly obsolete systems, such as the MiG-25 high-altitude interceptor. The Soviets are well aware of this problem. Yuri Andropov announced plans to decentralise authority soon after he assumed power in 1982. The entrenched bureaucracy's strength shows in those plans' frustration; ultimately Andropov had to announce that, somehow, he was increasing local managers' authority and, at the same time, the power of Gosplan. (Norman Friedman. Submarine Design and Development. Annapolis: Naval Institute Press  1984, p 97.)

I haven't thought about "why communism failed" for many years. I fear some young people who have not lived through communism might also be historically illiterate and unable to imagine, much less evaluate, something beyond their own short personal experience, like the central administration of personal health needs in a society of some 300 million souls.

Will we be spared this comedy of horrors? Perhaps legislation will have to be subsequently introduced to conform human behavior (though not human nature) to the requirements of a new draconian health care Utopia. New crimes and stronger criminal penalties. Cash rewards for the reporting of "violators." Just like the old Soviet paradise.

But just perhaps there are still enough brave men of common sense remaining in Congress to stand fast.                      

March 10, 2010