Government Spending Makes the Pie Smaller

I have made clear in prior posts that a voluntary transaction in a free market makes both parties to the transaction better off, and therefore makes "the pie"--the total wealth of the economy--bigger.  I have also made clear that the opposite is true: that involuntary transactions, such as taxes and stealing, destroy wealth and therefore make the pie smaller.

A recent op-ed in The Wall Street Journal helps makes the latter point.  John Cochrane, a professor of finance at the University of Chicago Booth School of Business and adjunct scholar at the Cato Institute, writes that the real problem with the Obama administration's recent decision to compel church-affiliated organizations to provide coverage for medical services they believe are morally repugnant (abortifacient drugs, sterilization and contraceptives) isn't merely that religious liberty is grossly violated, it is also that anyone has to pay for anything for someone else.  ObamaCare is not about insurance, but is about making some people pay for what others want or need.  It therefore not only deprives many of religious liberty, it deprives everyone of something almost as important: economic liberty.
As Cochrane points out:

It's not about "access" and it's not about "insurance." It's because Americans, when paying even modest co-payments, choose to spend their money on other things. They prefer a new iPod to a "wellness visit" to the doctor. As the HHS unwittingly admits: "Often because of cost, Americans used preventive services at about half the recommended rate."

Remember, we're supposed to be worrying about skyrocketing health-care expenses. Doubling the number of wellness visits and free pills sounds great, but who's going to pay for it? There is a liberal dream that by mandating coverage the government can make something free.

Sorry. Every increase in coverage means an increase in premiums. If your employer is paying for your health insurance, he could be paying you more in salary instead. Or, he could be lowering prices and selling his product to you and all consumers more cheaply. Someone is paying. Not even HHS tries to claim that these "recommended preventive services" will lower overall costs.

Here's a good mandate: Let's mandate that every time a government official says that the government is going to "help" some category of voter, he or she has to say who they are going to hurt in the same sentence. Because it has to be someone. 

(Emphasis added).
Statists deny the basic truth that when they proclaim that someone can get something for free, someone else has to be hurt to pay for it. Unlike voluntary transactions, compelled transactions always make somone worse off.  They have to, or else they wouldn't have to be compelled.  And by hurting someone, compelled transactions make all of us worse off, by making the pie smaller.

Some are only now seeing the gross violation of liberty that ObamaCare inflicts. We all will see the gross violation of prosperity it will inflict soon enough.