Nobel Laureate and father of free market thinking, Milton Friedman, sadly passed away November 16, 2006 at the age of 94. He will be missed.

Via Andy Kessler
http://www.andykessler.com/andy_kessler/2006/11/email_exchange_.html

a piece by Milton Friedman titled “How to cure health care”. It is a terrific piece, found here and some of it discusses Gammon’s Law, best summarized by this:

He observed that in “a bureaucratic system . . . increase in expenditure will be matched by fall in production. . . . Such systems will act rather like ‘black holes,’ in the economic universe, simultaneously sucking in resources, and shrinking in terms of ‘emitted production.’”
http://www.hooverdigest.org/013/friedman.html

Kessler includes emails from Milton Friedman

The market for automobiles, for TVs and so on is a market in which the producers deal directly with the consumers or, if indirectly, very closely, and in which the producers are incentivized to try to improve the quality and lower the cost of the goods that they are providing. They try to produce items that the consumer wants enough to pay what it costs to produce them.

In medicine today that is not the case. Almost no consumer of medical services pays for his own cost. Almost invariably, a third party pays. The incentives that operate in such a market are very different than the incentives that operate in the consumer market.

… If we could get the market straight so that customers were paying for it, I believe you could achieve at least as great improvements in health at a much lower cost and spread over a wider fraction of the population, but it is not easy to go from one market to the other. The market as it has now developed has very strong special fixed interests who will not give up their special position at all easily. The only real movement in the right direction has been the introduction of health savings accounts and their gradual spread. That may start a slow and steady movement in the right direction but I am not overly optimistic.

http://www.andykessler.com/andy_kessler/2006/11/email_exchange_.html

Thank you Mr. Friedman. As you righty observe, this will not happen in your lifetime.