Folk economics: how much is it worth?

A Mennonite family we know had to take one of their children to the hospital recently. He had stepped on a wire (barefoot, I assume, since that is how Mennonites spend the warm months), and his foot had become badly infected. A week later I asked how he was doing, and was told that the doctors still hadn’t figured out what was causing the infection. My heart sank at that; last year we spent three days at the hospital with newborn Peter and incurred $13,000 in costs, only to hear that they were unable to figure out what was wrong with him but that whatever it was he seemed to be over it. The Mennonite boy is home now, after twelve days in the hospital; they never figured out what was wrong, but he is doing better now. I have no idea what that episode will cost the family, which on principle does not carry insurance.

If anyone ever develops an agrarian economics, it will be either Wendell Berry or someone who builds on the important foundational work he continues to do. His latest essay on Faustian economics is now available to read at the Harper’s website, and I recommend it highly. One thing he mentions is how in today’s predatory economy the so-called free market is only free for some:

Some of us would-be humans have thought too that we should not be free at anybody else’s expense. And yet in the phrase “free market,” the word “free” has come to mean unlimited economic power for some, with the necessary consequence of economic powerlessness for others.

Several years ago, after I had spoken at a meeting, two earnest and obviously troubled young veterinarians approached me with a question: How could they practice veterinary medicine without serious economic damage to the farmers who were their clients? Underlying their question was the fact that for a long time veterinary help for a sheep or a pig has been likely to cost more than the animal is worth.

And even if the cost is less, it may be a matter of throwing good money after bad, preserving an animal which will never thrive. In his writings on raising meat animals, Gene Logsdon suggests the most prudent course is usually not to intervene at all. He mentions a rancher who simply put his animals out to pasture in the spring and rounded them up in the fall, figuring that any that were lost over the summer were being culled by nature.

I had to answer that, in my opinion, so long as their practice relied heavily on selling patented drugs, they had no choice, since the market for medicinal drugs was entirely controlled by the drug companies, whereas most farmers had no control at all over the market for agricultural products.

My questioners were asking in effect if a predatory economy can have a beneficent result. The answer too often is No. And that is because there is an absolute discontinuity between the economy of the seller of medicines and the economy of the buyer, as there is in the health industry as a whole. The drug industry is interested in the survival of patients, we have to suppose, because surviving patients will continue to consume drugs.

I would only disagree with the final sentence. I do not think that the drug industry is interested at all in the survival of its patients; if it could find a way to make good money from drugs that killed people or animals, it would do that as well. What the medical industry is interested in is convincing potential customers that the work done by its products and procedures is vital, whatever that happens to be. During our three days in the hospital with Peter there was never a single question raised, by us or the practitioners, about whether a particular procedure was needed. In fact, one particular procedure was clearly not needed, as a nurse happened to say when the doctor who ordered it was out of the room; but it was performed anyway, and charged for afterwards.

Berry contrasts this with an example of what he calls community economics:

Now let us consider a contrary example. Recently, at another meeting, I talked for some time with an elderly, and some would say an old-fashioned, farmer from Nebraska. Unable to farm any longer himself, he had rented his land to a younger farmer on the basis of what he called “crop share” instead of a price paid or owed in advance. Thus, as the old farmer said of his renter, “If he has a good year, I have a good year. If he has a bad year, I have a bad one.”

This is what I would call community economics. It is a sharing of fate. It assures an economic continuity and a common interest between the two partners to the trade. This is as far as possible from the economy in which the young veterinarians were caught, in which the powerful are limitlessly “free” to trade, to the disadvantage, and ultimately the ruin, of the powerless.

In our own situation, the members of the medical establishment were the powerful and we were the powerless. Can we imagine an alternative scenario where both of us shared a common interest and a common fate? Say, paying for treatments of conditions identified (if the patient elects to take them), but not for the identification process itself?

7 thoughts on “Folk economics: how much is it worth?

  1. –how does the ins. industry factor into this? Seems to me that every time something becomes insurable, it becomes unaffordable for everyone without insurance

    –how do you factor in the training of the doctor, which is lengthy and expensive? Seems to me you are suggesting that a doctor shouldn’t charge (for example) if he determines that you are terminally ill.

  2. This is something I have thought about a lot recently too. I think it relates to every organization, etc, in this society, treating human beings as abstractions. Recently, we found out that our insurance company was raising our rates, $15 more a month. No, accidents, or tickets, they just decided to use credit ratings as their criteria. Our credit isn’t brilliant, but it isn’t horrible either. Our agent was really upset with this, because it was affecting a lot of his clients. He, along with the rest of us, did not think it fair. We were no longer individuals. Just a credit score. You’d think they were loaning US money, instead of the other way around. Also, the fact the everything is oriented around money, means that other arrangements can’t be arrived at. So the vets have to be paid, so they can pay off thier huge vet school debt, instead of the farmer offering say a freezer of beef, for a year in exchange for some vet work. The medical industry is among the worst, because when you need their services, you are not really in a good bargaining position. So they charge, and YOU ask questions afterward.
    A lot of little things the goverment does, like making you get your car inspected, before you get it tagged, discrimminates against the poor, and low income working class. How does a single mother, working at Walmart, get an old catalytic converter replaced, to pass emissions inspections. They run $$$$. Yet, she has to, or they won’t pass her car.
    Somebody did a study, and found out, that the poorer you are, the more things cost. Sorry this is so long, but I started noticing years ago, that things were not often fair when you had no money. But with money, you can get anything arranged to your satisfaction.

  3. Servetus,

    –how does the ins. industry factor into this? Seems to me that every time something becomes insurable, it becomes unaffordable for everyone without insurance

    It’s probably an iron law of the universe that services will always expand to absorb the funds available to pay for them. An optical shop had a sign up last December loudly announcing “Only XX more days to use your vision benefits—stop in now!”

    –how do you factor in the training of the doctor, which is lengthy and expensive? Seems to me you are suggesting that a doctor shouldn’t charge (for example) if he determines that you are terminally ill.

    I’m not suggesting any changes to the existing system, just looking to understand where it is fundamentally flawed.

    But doctors are unusal in charging for diagnosis. Right now our small P.A. system is in the shop because it begins to squeal once it heats up; I expect the tech to call me, tell me how much it will cost to fix it—and return it to me for no charge if I decide not to have it fixed. It works the same way when I take my car in to be repaired; they tell me what is wrong, I decide whether or not it is worth fixing, and they only charge me for the repair itself. If I decide that the car is terminally ill, then I get it back for no charge.

    And as far as factoring in the cost of training doctors, this may be another example of the aforementioned iron law in action, i.e. a doctor’s training is lengthy and expensive exactly because he can (eventually) pass on the costs to his patients. Not too long ago medical training was brief and not all that expensive.

  4. Mark,

    I think it relates to every organization, etc, in this society, treating human beings as abstractions.

    Sad to say, this is exactly the technique that makes modern society possible, the substitution of abstract business relationships for neighborly relations. Rather than depend on our neighbors in time of trouble, we hand money to someone we will never know in exchange for a promise of money in return when certain specifiable conditions arise.

    The Amish and Mennonites, on the other hand, depend solely on people they know personally to help them when they need help (which, among other things, requires them to maintain good relations with their neighbors so that the help will come when needed). There is no way to do this among a group of people larger than, say, the average medieval village.

  5. I’ll try to limit this :*). I have enjoyed your blog on and off for a long time and have mostly lurked, when I have visited. I recently found Google Reader and have subscribed to your blog as we are at an earlier point in a similar journey to you and what you share has given my husband and me much food for thought.

    This post really struck a cord for me for a number of reasons.

    1. We have a treasure of a son (our sixth) who has Down syndrome and is currently being treated for leukemia. We have been in the throes of the medical establishment for his entire little three and a half years. We have often asked the questions “Is it necessary?”, “What if we don’t?” and “Is there a less invasive way?” Of course the cost was never discussed in advance. I never thought to compare the diagnosis scene to any other kind of repair work. I have also wondered (as we encounter LOTS of residents, med school students, etc during our hospital stays) if the duration of their training isn’t to indoctrinate them into the pharmaceutical way of life! (I’ve wondered similarly about vet school)

    2. Within the past year, we have had dealings with two ‘local’ veterinarians. We have a dog who had a tumor on her eye. It had self-lanced and we really wanted to get it removed (as long as it wouldn’t cost an arm and a leg). The first vet’s office would not give me ANY idea what this would cost… with THREE phone calls. Neighbors told us of another vet whose office was glad to quote us a price ($45-55 depending) and explain how the office works (1st come; 1st served). Dr. Dennard charges $35-$55 per animal for spaying and neutering (depending on gender and condition); others charge $85. People come from a long way to have him care for their animals. He paid for a fellow to vet school who was to come back and help him and evetually take over his practice. Once graduating from vet school and returning, this fellow decided he didn’t like the way Dr. Dennard operated. So he left and set up his own practice.

    3. Finally, we have been raising pastured poultry since 2003. When we lived in MN, we sold eggs, chicken and turkey. We have returned to GA and have over the last year, made strides toward relearning pastured poultry for the south! We are still learning, but are getting ready to offer to raise chickens and turkeys for folks on pasture. We are amazed at how much costs have increased and we are trying to find a balance between making a return on our effort and not taking advantage of folks looking for good food. It does seem that this is one place where a farmer can dictate the cost of his product, but of course, folks don’t have to buy!

    Our bivocational-contractor-pastor has looked at some of our numbers and reommended we charge $3.50/pound for our pastured chickens on farm, $3.75/pound for delivery (to a drop point).

    So, all that to ask what do you do with regards to pricing your farmstead produce? What are your ‘guiding principles’? How do you avoid this ‘predatory’ economy mindset?

  6. Right on….your post on cost of medical and vet. treatment, and the real cost incurred by most of us really hits the mark. We have insurance, not great insurance, but insurance..and we are just now needing medical treatment for my husband. Boy, we can’t afford it even with insurance. How can anyone who is not rich ?

    I also see you quote Wendall Berry, I wish more people read him.
    I hope you don’t mind but I will be referring to this blog posting sometime soon in my blog. I am personally fed up with the politically correct way of treating animals. I love animals, but they are NOT people. Give me practical treatment, I will pay a fair price. But gosh darn it, I cannot and will not pay more than an animal is worth for medical treatment in livestock. Also, I will NOT pay to keep my beloved dog or cat going when I cannot afford the cost of even the most basic medical tests after insurance covers their part. And, I am tired of vets giving you the judging look and response when you decide to have an animal put to sleep rather than spend thousands of dollars to keep the animal alive for a year or two more.

    Oh my, I sure did get excited and I think you hit a nerve ! Thanks…KathyB.

  7. So, all that to ask what do you do with regards to pricing your farmstead produce? What are your ‘guiding principles’? How do you avoid this ‘predatory’ economy mindset?


    Not that we’ve come close to solving any of these puzzles, but we have thought about them a lot, and often in the context of selling what our farm produces. In the upcoming days I’ll be writing a series of posts on how we think through such matters at this point.

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