June 14, 2005
#184: Let's ignore those who believe in the marketplace...
KRUGMAN TRUTH SQUAD
One Nation, Uninsured (06/13/05) is clearly a fill-in column for Paul Krugman– maybe he had to grade some late papers or something. In any case, it reveals some fault lines in his analysis of national health care insurance and confirms what we always knew his position to be – a single payer (read government) system. For example, he says right off the bat:
“Let's ignore those who believe that private medical accounts - basically tax shelters for the healthy and wealthy - can solve our health care problems through the magic of the marketplace.”
Well, we say, why ignore them? Why ignore arrangements that have worked for all other necessities of life, such as housing and transportation? Krugman is silent.
Then on the possible downside of a federal takeover of healthcare, he says:
“Some people, not all of them right-wingers, fear that a single-payer system would hurt innovation.“
Hey! That’s a real concern. If there is no incentive to innovate, why innovate? Again Krugman is silent.
We think this is all pretty simple. Krugman wants to bottle up the victim vote by promising to distribute health care equally and thereby achieve the great liberal dream of making all people dependent on government for healthcare. The scary thing is, it may work.
[The Truth Squad is a group of economists who have long marveled at the writings of Paul Krugman. The Squad Reports are synopses of their discussions. ]
Just on healthcare generally (I know, you want to keep more on topic in your comments...): It is not necessarily true that government-sponsored (socialized, if you prefer) necessarily equals single payer...
Markets are very, very good things, and need to be encouraged. The problem with the healthcare industry is that the incentive structure is rigged so strangely that people who need insurance the most have a hard time getting it. Imagine if, in order to buy a Mercedes you had to prove that you worked no more than 5 miles from home...
The trick would be, I think, to create a government program which everyone is enrolled, everyone must contribute to, and which people could choose to supplement if they wish to/can afford to. On top of this, insurance companies should only be allowed to make in profit an amount relative to what they pay out in services. This keeps markets around (yeah innovation!), but makes the sick actually attractive to (rather than repulsive to) insurance companies...
The problem, of course, is that Americans would never go for it...
Andrew, you're forgetting to ask two questions: Just WHY is it that the markets are rigged? And what entity is doing the rigging, and is in fact the only entity with enough power to do the rigging?
(arched eyebrow)
And we are to RELY on that entity to straighten out the mess, when it is responsible for creating the mess in the first place??
(/arched eyebrow)
Well, three questions, actually.
Hale, ok, you think the Government is doing the rigging. Prove it.
Posted by: Andrew Cory at June 16, 2005 07:10 PM"Hale, ok, you think the Government is doing the rigging. Prove it."
Who else could possibly rig it?
Posted by: Ken at June 17, 2005 08:20 AMKen hits the nail on the head, Andrew.
Only *governments* have the coercive power to rig a market permanently, through the power of law.
It's true that a private concern (i.e., a partnership or corporation or some other private cooperative) can rig a market to a greater or lesser degree for a longer or shorter time, OPEC being a prime example. But eventually the plot fails as other players figure out how to work the rigged market to their own advantage and undermine the power and profits of the market-riggers, causing their collapse-- again, see OPEC.
Government, on the other hand, is immune to such pressures-- subvert *its* efforts to rig the market, and you go to jail for breaking the law.
Quod erat demonstratum, Andrew.
Posted by: Hale Adams at June 17, 2005 03:33 PM
