Pre-postmortems

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12 Responses

  1. Jimbino says:

    “Isn’t health care a good thing?”

    Of course it is, like education. Anyone who values either should see to it that the gummint gets out of the business of both. It can’t even deliver the mail without huge losses.

    Your socialist friend from Scotland would do himself a favor by reading a little Adam Smith, a Great Scot.

    Your befuddled friend could also be awakened to the fact that health care, like education, has nothing whatsoever to do with insurance, which is what Obamacare is all about.

  2. mark says:

    “we all do better if we all are well”. Maybe in theory but in the real world (a) in a nation of 310 million people, everyone will not be well at the same time, (b) no amount of legislation or government administration or insurance payments will make all people well, indeed much of healthcare itself does not make patients any better off, (c ) some who are well in health don’t do well for other reasons, (d) some who are not well in health will nevertheless do well in their career etc. The statement reminds me of the kind of proverb priests give out in sermons.

  3. The first comment above invokes the good name of Adam Smith in support of its claim. I address that, and the other propositions and assumptions it makes in what follows:

    Unlike Tea Party aficionados, Libertarians, and recalcitrant neo-classical economists, Adam Smith (1723-1790), the Scottish moral philosopher and pioneering theorist of political economy, did not indulge in the fashionable nonsense that vociferously claims government is the locus of the worst that ails us, economically and otherwise. Smith understood that for markets to realize virtues of efficiency or freedom, the State, by way of its government, has to make and enforce laws regulating the nature and role of property, rules of exchange and contract, in other words, government is rightfully charged with providing the requisite “background” conditions for market exchange and thus, for example, plays an important role in determining whether or not such exchange will be between true “equals” or arise, say, out of desperation, servitude, or any quality that makes for an ethically disturbing disparate standing between parties to an exchange (e.g., a ‘free labor market’ is the product of state regulation!), hence Smith’s concern, for example, with the coercive nature of labor contracts.

    And like Ricardo and Marx (and classical political economists generally), Smith had a corresponding appreciation of the social embeddedness of markets, one utterly at odds, for example, with libertarian-like or abstract neo-classical “imperialist” pictures of the marketplace, one reason Smith could have a nuanced appreciation of how social capabilities may depend on a person’s relative income vis-à-vis those of others with whom he or she interacts (hence the concern with ‘relative’ deprivation and the significance of Smithian economic reasoning in coming to understand why poverty is hard to eliminate solely by raising the average level of income without at the same time addressing issues of inequality of incomes). Smith was likewise sensitive to the coerciveness of labor contracts and aware of the asymmetric power of agents bargaining over the distribution of the social surplus.

    Smith did not view the economy, descriptively or normatively, as independent of law, convention or power and thus could in no way believe government was an impediment to all that is good, an anachronistic ideological interpretation that fails to comprehend the basic social, economic and moral views of Smith. For instance, as Debra Satz recently reminded us, ‘[Smith] was tolerant of governmental regulation of wages on behalf of laborers: ‘Whenever the regulation…is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.’” Smith understood the role of “justice and equity” as a sufficient rationale for intervention in markets, labor or otherwise (Smith could, and did, countenance government intervention for the reduction of poverty). Again with Satz, it is important to recall that Smith’s “arguments against government intervention in markets are focused on a specific social order: feudalism. Many of the regulations that he vociferously condemned were vestiges of a precapitalist and undemocratic social order: the narrow interests of monopolistic merchants seeking to protect their inflated profits and the rules of the powerful guilds that restricted the free entry of individuals into professions and trades.”

    Smith wrote in favor of taxes on luxuries because it was in this way that “the indolence and vanity of the rich is made to contribute in a very easy manner to the relief of the poor.” As Stephen Holmes remarks, “Redistribution by progressive taxation is justified not by a theory that the rich got rich at the expense of the poor, but on the basis of a more general belief that the rich got rich with the implicit or explicit cooperation of the poor.”

    Furthermore, Smith’s views are neither economically or morally compatible with those of Ayn Rand, for example, indeed, were he among us today, one can readily imagine Smith concluding that Rand’s philosophy is conspicuous for its economic and moral repugnance.

    As Amartya Sen points out, “The misinterpretation of Smith’s complex attitude to motivation and markets, and the neglect of his ethical analysis of sentiments and behaviour, fits well into the distancing of economics from ethics that has occurred within the development of modern economics. [….] The support that believers in, and advocates of, self-interested behaviour have sought in Adam Smith is, in fact, hard to find on a wider and less biased reading of Smith. The professor of moral philosophy and the pioneer economist did not, in fact, lead a life of spectacular schizophrenia. Indeed, it is precisely the narrowing of the broad Smithian view of human beings, in modern economics, that can be seen as one of the major deficiencies of contemporary economic theory.”

    For more on Smith, including the references to the quoted material above, please see here: http://ratiojuris.blogspot.com/2011/04/getting-adam-smith-wrongand-getting.html

    As to insurance, no one on the Right or Left who retains at least a modicum of faith in electoral politics (and assuming one is not a fanatical ideologue out of touch with reality in the most basic psychological sense) has attempted to make an argument to the general public for the provision of health care in welfare state capitalist democracies sans insurance of some sort.

    Adam Smith would have well-appreciated the fundamental moral justification for all three types of the modern welfare state (liberal, social democratic, and corporatist; some Asian countries may have states that don’t easily fit into this typology, but they are not far from it): it is used to solve collective action problems that involve discharging our moral duties to dependent others (i.e., especially those vulnerable to our choices and actions). In fact, the welfare state plays an indispensable role in allowing modern capitalist markets to perform whatever social welfare function they’re capable of performing. As Robert E. Goodin explains, the welfare state safeguards three preconditions of the market: 1) secure property rights, 2) the allocation of at least some “goods” outside the market, and 3) the presence of essentially independent agents. Concerning the first, Goodin writes that “a variety of arguments (political, sociological, and ultimately moral) converge on the conclusion that the only way to secure the rights that re transferred in market exchanges is with some extra-market guarantee that everyone’s basic needs will be met regardless of the outcomes of market transactions.” Regarding the second precondition, “A variety of arguments…converge on the conclusion that thare are certain things which must not be marketed [the subject of recent works by Debra Satz and Michael J. Sandel, among others], if other things are to be. In order for there to one sector that is governed by the laws of the market, there must be some other sector that is not.” The last provision covers the fact that “in order for people to participate in the market as independent agents, there must be some non-market sector to meet the sorts of need that would otherwise render those people dependent, and hence unqualified for market relations.” So the welfare state helps satisfy preconditions of neoclassical economic markets in providing for the extra-market provision of basic needs (and thereby prevent the exploitation of dependencies), as well as intervening in cases of market failure (defined as the failure of a market to maximize social welfare), most conspicuously in the case of the supply of “public goods.”

    Apart from satisfying these market preconditions, the modern welfare state by design and default has a role to play in the case of market failure in some insurance markets. For a motley of reasons, some simple and others complex, and some more important than others (e.g., the problem of ‘adverse selection’), private health insurance markets alone have not proven capable of fulfilling their role in meeting our country’s health care needs. Making health insurance compulsory is one effiecient and necessary means whereby we remedy the problem of adverse selection. In addition, as Goodin notes, a private insurance scheme presupposes that each person’s risks are, to a very large degree, statistically independent of everyone else’s. The interdependence of risks means, in short, that premiums from “winners” (the healthy) cannot be guaranteed sufficient to cover claims from “losers” (the sick). This generally is the most compelling argument for collective intervention in certain insurance markets, and certainly in the market for health insurance. To be sure, the insurance industry is not responsible for the fact “rapidly rising health-care costs coupled with expanding job losses have left millions of American families exposed to potential economic crisis when faced with illness or injury,” or that “the number cause for bankruptcy in the US is an unexpected health crisis” (Donald A. Barr). And in the wake of historically high level of economic inequality, we have growing inequality in health outcomes, independently of access to health care. The ACA is not a panacea for all that ails us, but it’s a step in the right direction, and its benefits to date have become clear to all who’ve taken the trouble to notice.

  4. Joe says:

    I think, and I say this for critics on both sides: “the ACA is not a panacea for all that ails us, but it’s a step in the right direction.” But, saying health care is a “good thing” is a bit too simplistic. The issue is the means. Still, and I recommend a graphic account by economist Jonathan Gruber to help explain why, the PPACA is a step in the right direction, one that is constitutional.

    It’s not quite germane, except in a mega-sense, but Judge Goodwin Liu also had an excellent speech at the ACS conference, which can be found on its website. His use of an analysis of the Good Samaritan by Martin Luther King Jr. was particularly well played.

  5. Orin Kerr says:

    Sex is a good thing, too, but I wouldn’t want the government mandating that everyone must have it.

  6. andy says:

    “Orin Kerr – June 21, 2012 at 3:14 am

    Sex is a good thing, too, but I wouldn’t want the government mandating that everyone must have it.”

    I would.

    Could this be the missing link for those who reject. the broccoli argument? The idea of the government forcing everyone to buy an ill-textured vegetable enrages me, but Orin Kerr’s hypo has me reconsidering my position about government mandated activities. . .

  7. Shag from Brookline says:

    Orin’s comment brings to mind this punchline:

    “Nobody eats broccoli anymore.”

  8. Frank says:

    The point “we all do better when we are all well” is true in some cases, but I wonder if the anti-universal-care vanguard does discern at least some of its own interests in denying access to millions or tens of millions of people. For example, less wait time for primary care docs or specialists? Better treatment? And, on the grand scale, more allocation of health care research to diseases of the rich?

    This is from a post of mine from last year (http://www.concurringopinions.com/archives/2011/06/do-the-rich-need-the-rest.html), but relevant:

    I have been skeptical of the progressive “we’re all in it together” line. From a a purely economic perspective, the most efficient business structure would work labor extremely hard, not protect it too much from pollution or other occupational hazards, and deny it expensive health care when expected future productivity declined below the cost of care. We need to disaggregate competitive advantage that arises out of cheap life and overworked labor, as opposed to improved technology and better educated workers. The US’s leading businesses may rationally (if not reasonably, or morally) choose the former strategy over the latter to maximize their own profits.

    In that post, I do point out that there are aspects of medical research that can only be done for a very large aggregate. So with respect to those, perhaps the crusade to cut off access to insurance to an ever-growing share of the population may backfire.

  9. Shag from Brookline says:

    Frank’s past skepticism suggests reversion to slavery and indentured servitude – or the late Kurt Vonnegut’s “Player Piano” future world and the resulting backfire.

  10. Orin Kerr says:

    Andy, surely you don’t think the federal government would just let people choose their own partners.

  11. joav says:

    orin, the government does mandate everyone have sex.

    is called the child deductible. whether you call it a tax penalty vs. a tax credit, is the same thing.

  12. andy says:

    “Orin Kerr – June 21, 2012 at 1:31 pm

    Andy, surely you don’t think the federal government would just let people choose their own partners.”

    Of course not. But the government program at least gives me a *chance* of scoring a 10, whereas that is an impossibility in my present circumstances.

    (In case my wife is reading this — this is all a joke!)