Capitalism makes people wealthier. And happier. And more productive.

I've long been fascinated by the changes that occur in a medical practice when that practice is bought by a third party. I’ve had several friends who ran their own practice for years and were outstanding docs. Then the regulatory environment gets increasingly complex, Medicare gets increasingly complex, revenue goes down, overhead goes up, and he gets concerned. Then the local hospital or some other large organization comes in, offering to buy his practice – pay him some money upfront, then put him on salary as an employee. He knows that he can’t keep up with governmental complexity anymore, and that the hospital has a legal department, a management department, and Lord knows what else. So he signs up.

What I find so fascinating is that the quality of care invariably drops significantly. That’s amazing, because it’s the same doctor, taking care of the same patients, with the same staff, in the same building. But now it's much worse. Nothing changes except ownership. Why does ownership matter so much?

When he was running his own practice, he got paid by the patient. So he tried to do a good job, and keep everybody healthy and happy. On busy days in the office, he was happy – he was making money. On slow days, he wouldn’t cover his overhead – he was paying to go to work. So he was happy to see patients when they showed up, and his enthusiasm trickled down to his staff. Everybody was eager to do their jobs, and to do them well.

Once he’s on salary, then he makes the same amount of money whether anybody shows up or not. So every patient he sees is now an imposition – a hassle. He likes the slow days, he hates the busy days, and he complains on all the days. He naturally becomes less efficient, seeing fewer patients in more time, and his entitled, lazy attitude trickles down to his staff.

Note that I'm not criticizing this doctor. I'd do the same thing. So would you. Of course.

But now the patients are unhappy, the doctor is unhappy, the staff is unhappy, and everybody is making less money. With the same doctor seeing the same patients with the same staff in the same building. Everything is worse. And nothing changed. Except incentives. It's so simple.

Government workers get paid the same amount no matter what happens. And to make it even worse than a medical office, they can’t be fired. And their primary goal is to hang on until retirement, they have the best pension and benefits package available anywhere in America. So they’re just hanging on, passing time, and they don’t care what happens in between.

Why would they care? They get paid the same no matter what. And they can’t be fired.

I know that there are exceptions to this generalization. There are government employees who work hard and do a good job. But there are lots of people who fit this stereotype. Including lots of doctor friends of mine. Once they lose direct incentives to do a better job, they become lazy, entitled, and unhappy.

Capitalism makes people wealthier, of course. But it also makes them happier and more productive.

You know this if you’ve ever been to a doctor’s appointment at a large medical group. Or renewed your license plate at a DMV. Or called a call center about your phone bill.

It turns out that people are better about doing what you want them to do, when they want to do it. Imagine that.

Capitalism improves human nature. It’s so simple.

Unfortunately, it doesn’t involve increasing government power, so government will not tend to promote this simple tool, no matter how beautiful the results.

So we vote for poverty, laziness, and unhappiness, regardless of which party we vote for. Then we pretend to be surprised by the results.

This will be an ongoing struggle. But it's a battle worth fighting. Because it's better to be wealthy and happy than poor and unhappy.

It's so simple.