Recently, someone asked me what the North was fighting for in the Civil War, and it got me to thinking.

There is always an economic reason behind war. It is pretty obvious what the South was fighting for: to keep their slave "property" and the general economics of the plantation. The customs duty issue was less important for the South by 1860, having achieved a level of compromise after the Nullification Crisis of 1832-1833 nearly started a Civil War then (with ground zero being South Carolina - an eerie preview of what was to happen at Fort Sumter). On top of the slave system economic issue were the usual bunch of racial & national identity issues along with "honor", but slavery was the real reason the South fought.

The Northern drive to war is a bit more obscure. Abolition was still viewed with some concern in the North. The New York Times of January 29, 1861, reported a "Union meeting at Cooper Institute last evening, convened one of the largest meetings ever assembled in that oft-crowded edifice." One of the resolutions of this meeting was:

"On the broad questions of justice, and of reciprocal benefits and obligations, we are willing to concede to the people of the South, perfect and entire equality in this Union, even to the extent of protecting slaves in all the Territories, as property, without representation; as also the inviolability of the institution of Slavery in the States where it exists, or in places under the immediate jurisdiction of the United States, within the boundaries of such States"

And in case there were any questions:

"Resolved, That we consider the question of Slavery as one depending entirely upon the great Laws of Nature, and that it is vain for men to legislate upon it, or seek to confine it within arbitrary limits; it has existed, and will always exist, in some form or other, obedient to the universal principle of earth's economy, until organic forces shall have been brought into action to take the place of human labor, for the peculiar purposes to which slave labor is now devoted."

And the assembly wanted the Abolitionists to concentrate working on the robots:

"Resolved, That, while we are determined to check the movements of the so-called Abolitionists of the North, as detrimental to the views and interests of a still larger majority of our fellow-citizens of the South, we earnestly call upon such Abolitionists, and those agreeing with them in sentiment, and actuated by what they regard as a high principle, to exercise their influence, power and means solely in the development of such mechanical agents as may in the course of time be fitted to perform the functions now exacted from slave labor alone."

Other resolutions discuss the need for rule of law and obedience to democracy. No doubt also many Northerners felt that Southern disunionists were traitors, and insulting the honor of the United States. But where is the economic argument for war?

A New York Times editorial of November 9, 1860 spells it out. What is the North not fighting for?

"South Carolina may undoubtedly withdraw her Senators and Representatives from Congress if she chooses: she cannot be "coerced" into sending them to Washington. If she decides to stop the mails, and forbid the establishment of Federal Post-offices within her limits, there is no reason why the Federal Government should force them upon her. If her juries acquit men charged with offences against the Federal laws, -- if her citizens refuse to serve as Federal Marshals, or Judges, -- the Government need not specially interfere, for it has no direct interest at stake."

So what is the North fighting for?

"But if a vessel entering Charleston refuses to pay the Federal duties, the Government has no choice but to compel payment. If a vessel proposes to leave Charleston without a proper clearance under Federal authority, the Government vessels will compel her return or seize and confiscate her as a lawful prize. And if South Carolina troops take possession of Fort Moultrie, the Federal Government has no choice but to send a man-of-war thither and drive them out. These are acts of positive aggression -- acts of war, and must be met as such."

In other words, collection of Southern custom duties is at least one economic basis of the fight for the North.

It bears remembering that in 1860, most of the Federal income is coming from customs duty. Only during the Civil War did the US seek additional revenue sources to deal with the double whammy of loss of Southern duties and the need to finance the war. A great New York Times editorial of December 26, 1861, discussing the options and issues involved in income taxes, corporate taxes, and liquor excise taxes mentions: "Our revenues from imports are fast failing us while our expenditures are enormously increased. There is no hope that for years to come the former can be at all adequate to the wants of the Government."

Here is the truth about health care.

Comparisons between the US and other developed countries show that Americans don't actually utilize "more medical care" or have more doctors per capita than other developed countries. And although there are certain conditions that we excel in healing (such as specific cancers), our overall health remains pretty bad, we die a bit early, but it is unclear how much of this is us just eating too much and not exercising enough.

We do tend to have easier access to medical imaging devices and we use far more on-patent drugs than other countries, but those are not the major items in the cost differential between the US and other countries. The very small profits of health insurers are not the reason either. Nor is the malpractice issue. Nor is the fact that our hospitals have many more people working in them besides the doctors and nurses than other countries (janitors? security?) These are all pie slices, but small ones.

The main reason US health care is so expensive is that we pay our doctors and nurses more than other countries.

Every country with socialized medicine "sticks it to the doctors". Medicaid does this already in the US. A doctor told me once that a Medicaid patient is "like working for free". Medicare pays better, but still is pretty cheap. Private patients, even when covered by insurance, is much more expensive. Except when you are in an HMO, like Kaiser Permanente, where doctors are salaried.

In Europe and Japan, the concept is called "negotiation" where a physician union "negotiates" with the government. Of course when you negotiate with the legitimate wielder of force, you generally lose. Sometimes they win a bit, like the French physicians who went on strike in 2002. Or the physicians in Luxembourg who just went on strike. The Lux dox union suggested perhaps instead of cutting their pay they could send home "non-critical surgery patients home to recover and using hospital beds for patients who need them most."

In a free market, supply and demand determine price. There is a lot of money flowing from governments into health care in the US, ironically much of it for seniors who may not be poor at all through Medicare. This drives up demand.

The tax distortion of exempting employer-paid health insurance from taxation drives people to cover more of their medicine with insurance, insulating them from the prices of the free market, again driving up demand.

Some argue that our doctor supply is artificially limited. The fact that we make immigrating doctors redo their residency even if they are of world-renowned quality is pathetic. We may also over-train our doctors, perhaps we train them more than either they need to be trained or more than they can actually remember. Sometimes you need a housepainter and some times you need Rembrandt. We may have too many Rembrandts, but our state licensing and certification boards set the bar, not patients.

I think we need some level of government-funded health care for the poor. In a perfect world, it would look like an HMO like Kaiser to keep costs low. It won't do anything for anybody. Whether it should be run by the government, or merely paid for by the government, is a larger question.

For the non-poor, we should consider removing the crazy things like the health insurance tax distortion. Medicare should go away, you are either poor or you are not, regardless of age. And there are a lot of state mandates on individual health insurance policies that are not needed (and actually avoided by large companies by Federal law).

The problem is that it is always easier to give someone something new than take away something from someone, even if taking it away will improve the economy. Loss is feared greater than gains. This is a behavioral economic problem that also reveals itself in public choice. Just because the government could behave more rationally than the market doesn't mean it will. Or even usually will. This is the danger of asking government to do something that seems rational.