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Mental Health Economics Overheads

by Gregory Rehmke, Foundation for Economic Education
Presentations at Kansas State University, July 7-9, 2002

  1. Overview questions.

  2. Society vs. The State.

  3. Federal spending & plan funding.

  4. The Iron Triangle of federal funding.

  5. Regulatory capture and the Soteria Project.

  6. The Therapeutic State: Justifying Govt. at Centry’s End.

  7. Mad in America webpage.

Overview Questions
1. What is the proper role of government in a free society? Says who...?
2. What ’s right with government and what’s wrong with government?

"Government is not reason; it is not
eloquence. It is force. Like fire it is a
fearful servant and a terrible master."

-George Washington
-Is it just?
-Is it Constitutional?
-Will it work?
-And if it doesn’t work, will it matter for future funding (The Iron Triangle, p.4)

Society vs.The State

Civil society

Voluntary institutions

  • family

  • churches

  • associations

  • companies


  • self-reliance

  • voluntarism

  • persuasion

  • certification


  • public goods



State institutions

  • legislatures

  • govt.agencies

  • police

  • courts


  • collectivism

  • draft/force

  • coersion

  • regulation


  • special interests


Federal Spending & Plan Funding

"Bush Budget Reads Well, Numbers Disappoint "
Chris Edwards, April, 2002

Health & Human Services
$459 billion for Medicare, Medicaid, & other programs...HHS has 40 human resource offices and 70 public and legislative affairs offices. (Option to transfer funding within HHS.)

Farm Subsidies
$174 billion over ten years (estimated, and last farm bill cost approx.three times estimates over seven years).

--Farmers subsidized to keep prices up.
--Food stamps for poor to pay higher prices.
--Significant environmental damage.
--Bankrupts farmers in Africa and elsewhere.
--And abolish Dept.of Agriculture with it's 1 bureaucrat for every 6 farmers.

Corporate Welfare (Cato Handbook)

--Terminate direct grants to businesses.
--Eliminate research/services for private firms.
--End subsidized loans and insurance.
--Eliminate trade barriers that protect U.S.firms.
--Base defense spending on national security (not number of jobs created in cong.districts).
--Eliminate income tax loopholes created for specific industries (and lower overall tax rate).

Cato Handbook

The Iron Triangle

  1. Why were America’s founders so insistent on limiting the powers of state and federal governments? Why were they so concerned about the expansion of power and the fragile nature of liberty?

  2. The founders and the problem of “factions.” The Federalist Papers, the Anti-Federalists.

  3. Today’s reality: The Iron Triangle of federal funding. The role of special interest groups.

  4. Recommended reading: James Bovard’s Freedom in Chains: The Rise of the State and the Demise of the Citizen “The price of liberty is eternal vigilance”

Regulatory Capture Theory and the Soteria Project

  1. One view:government regulatory agencies help "tame" the forces of the marketplace.Statue in front of regulatory agency...

  2. First major Federal Agency: ICC (Interstate Commerce Commission)established to a) protect the American public from the rapacity of the railroads? or b) to protect established railroads from competition from new upstart railroads?

  3. The CAB (Civil Aeronautics Board). Set up to: a) protect the flying public?, or b) protect established airlines from new competition? See in The Commanding Heights documentary explanation by Alfred Kahn, who during President Carter time in office abolished CAB and deregulated transportation in America.

  4. The "Capture" theory of regulation.

  5. Application to health care and mental health topic.
    --National Institutes Health, Cancer, Mental Health (cancer research, heart research, ulcer research, Soteria project funding).
    --FDA (Food & Drug Administration).
    --Other examples.

  6. The Soteria Project --and other examples around the world:

The Therapeutic State

Justifying Government at Century's End

James L. Nolan Jr.

The United States has always been profoundly conflicted about the role and utility of its government. Simmering just beneath the surface of heated public discussions over the appropriate scope and size of government are foundational questions about the very purpose of the state, and the basis of its authority. America's changing and diversifying cultural climate makes common agreement about the government's raison d'etre all the more difficult.

In The Therapeutic State, James L. Nolan, Jr. , shows us how these unresolved dilemmas have coalesced at century's end. Today the American state, faced with a steady decline in public confi - dence, has embraced a therapeutic code of moral understanding to legitimize its very existence.

By ranging widely across education, criminal justice, welfare, political rhetoric, and civil law, Nolan convincingly illustrates how the state increasingly turns to the therapeutic ethos as a justification for its programs and policies, a development that will profoundly influence the relationship between government and citizenry. In a tone refreshingly free of polemic, Nolan charts the dialectic relationship between culture and politics and, against the backdrop of striking historical contrasts, gives example after example of the emergence of therapeutic sensibilities in the processes of the American state.

Reviews (From Booknews)

An analysis of the commingling of the therapeutic and political cultures in America. Nolan (anthropology and sociology, Williams College) supplies his background by looking at trends such as the emotivist ethic, the pathologization of human behavior, the rise of a new priestly class, and the legitimization of the state. He then looks specifically at emotionally and psychologically based personal injury cases, public education from the colonial period through the progressive era to what he calls "therapeutic education, "welfare policy, and presidential election debates from Lincoln-Douglas through Clinton - Bush - Perot. Nolan concludes with an examination of the "therapeutic state" itself, discussing therapeutic utilitarianism, postmodernism, and coercion.

Table of Contents

The Therapeutic Culture - The Emancipated Self - The Emotivist Ethic - A New Priestly Class - The Pathologization of Human Behavior - Victimization - The Therapeutic Ethos - Legitimation of the State - Theoretical Considerations - Older Sources of Legitimation - State Expansion - Public Disenchantment - The Therapeutic Alternative - Civil Case Law - Personal Injury Law - The Doctrinal History of Emotional Damage Cases - Recovery of Emotional Damages in the New Legal Climate - Psychologists as Expert Witnesses - Litigation Reform: Therapeutic and Utilitarian Defenses - Criminal Justice - Drugs and Crime - The Historical Antecedents to Therapeutic Justice - Courtroom Therapy - Prison Therapy - Public Education - The Colonial Period - Universal Free Education - Compulsory Education - The Progressive Era - The Cosmopolitan Era - Therapeutic Education - School Counselors - In a State of Esteem - Welfare Policy - Congress and the Well-Being of Children - Child Labor Laws and the Children's Bureau (1906 - 1912) - The Sheppard - Towner Act (1921) - Social Security and Emergency Wartime Aid to Children (1939 - 1945) - Head Start and Operation Good Start (1965 - 1970) - Head Start and Child Abuse...

Mad in America

What readers are saying about Mad in America: Bad Science, Bad Medicine, and the Enduring Mistreatment of the Mentally Ill

"Investigative journalism at its scholarly, perceptive, and explanatory best. Mad in America presents an insightful, courageous expose of how madness went from 'out of sight, out of mind,' to be a source of massive corporate profits. A must read for anyone with a friend or family member labeled 'mentally ill, 'for psychiatric 'survivors,' mental health professionals, and those interested in the history of science and the corporate buyout of a profession."
Loren Mosher, M.D.
Former Chief of Schizophrenia Studies
National Institute of Mental Health

"Robert Whitaker has written a fascinating and provocative book --a history of the way Americans understand schizophrenia and attempt to treat it,each twist and turn of which is marked by the hubris that at last we have the answer.And as he makes clear,we still do not, nor are we anywhere near as humane in caring for the schizophrenics in our midst as we think we are."
Marcia Angell, M.D.
Former Editor of the New England Journal Of Medicine

"Mad in America is a dose of truth therapy for a seriously disturbed mental health system.Whitaker uncovers the secret underside of the psychiatric establishment,and some of its most hazardous treatments.This courageous book made me want to stand up and cheer."
David Oaks
Director of Support Coalition International

"An extraordinarily well-researched work on a part of our history that most Americans don't know the first thing about.A simply fascinating read, whether you are involved in the American mental health system or not."
Margot Kidder

"Mad in America will likely shatter public illusion about current schizophrenia treatment:neither the efficacy of today's new drugs nor claims of improved patient outcomes stand up when tested against the evidence."
Vera Sharav, President
Alliance for Human Research Protection