The New Health Care Economy
by Francis Cianfrocca
Something new and different happened in Washington tonight: a razor-thin majority in Congress enacted legislation that the American people don’t support, don’t understand, and of which they are very wary. The battle now shifts to public relations, as a small number of very powerful Democrats and their allies in certain health-related industries seek to convince Americans that they’re going to like what’s in this legislation.
I’ve always felt that America is the one place where a small number of oligarchs can’t control society, because of the powerful buffer created by popular sovereignty. Government can’t act arbitrarily as long as they feel constrained to act as the people wish. Tonight, a totally different governing philosophy, and one new to Americans, had its first major success: “We’ll give you what WE want, not what YOU want.”
In a way, this is a perfectly natural extension of the progressive impulse which seeks to establish an ordered society by applying rational principles. Throughout the Twentieth century, this idea has maintained an uneasy truce with a different and considerably older one: Adam Smith’s idea that a society of well-intentioned people pursuing their own interests spontaneously produces satisfactory outcomes.
In short, the tension is between planning society, and allowing it to muddle through. It’s been said by many that the Reagan presidency established a golden age of muddling through (or in other words, of relative freedom in the social and the economic spheres). It’s also been said that the financial crisis proved the inadequacy of letting society more or less run itself. We’ve entered a golden age of planning, in no small part as a reaction to the market failures of 2007-08.
Let me tell you what the great risk of this is. We’ve been letting 300 million people freely pursue their own interests, make their own investments and their own decisions about life, and letting other people form businesses to serve those freely-expressed wants and needs. Along the way, everyone makes mistakes. Some are bigger than others, and some produce societal injustices that can and should be ameliorated by government.
But the mistakes made by a free society generally tend to be recognized and corrected rapidly, and in any case they’re buffered by the rest of society.
When we place our faith rather in the ability of experts to plan and control our society and economy according to rational principles, their inevitable mistakes are nearly impossible to correct. That’s because they’re applied broadly across the whole of society. A poorly-chosen investment can only do so much damage. Its scope is limited after all by the size of its capital input. But a bad government policy faces no natural limits, so it can do damage to everyone’s life.
And political actors are exceptionally loath to admit their mistakes. They face no direct consequences from them in any case. So their mistakes rarely if ever get adjusted. With no feedback loop to correct them, they just keep getting funded year after year.
State-driven economies are known to work. But because the effects of policy errors are magnified and not subject to natural correction mechanism, state-driven economies also tend to be very fragile. The political economy of the United States has for two centuries enjoyed exactly the opposite characteristic: stability, self-correction, and a tolerance for public and private policy errors.
As of tonight, we’re going to start trying it the other way.
by Francis Cianfrocca
Something new and different happened in Washington tonight: a razor-thin majority in Congress enacted legislation that the American people don’t support, don’t understand, and of which they are very wary. The battle now shifts to public relations, as a small number of very powerful Democrats and their allies in certain health-related industries seek to convince Americans that they’re going to like what’s in this legislation.
I’ve always felt that America is the one place where a small number of oligarchs can’t control society, because of the powerful buffer created by popular sovereignty. Government can’t act arbitrarily as long as they feel constrained to act as the people wish. Tonight, a totally different governing philosophy, and one new to Americans, had its first major success: “We’ll give you what WE want, not what YOU want.”
In a way, this is a perfectly natural extension of the progressive impulse which seeks to establish an ordered society by applying rational principles. Throughout the Twentieth century, this idea has maintained an uneasy truce with a different and considerably older one: Adam Smith’s idea that a society of well-intentioned people pursuing their own interests spontaneously produces satisfactory outcomes.
In short, the tension is between planning society, and allowing it to muddle through. It’s been said by many that the Reagan presidency established a golden age of muddling through (or in other words, of relative freedom in the social and the economic spheres). It’s also been said that the financial crisis proved the inadequacy of letting society more or less run itself. We’ve entered a golden age of planning, in no small part as a reaction to the market failures of 2007-08.
Let me tell you what the great risk of this is. We’ve been letting 300 million people freely pursue their own interests, make their own investments and their own decisions about life, and letting other people form businesses to serve those freely-expressed wants and needs. Along the way, everyone makes mistakes. Some are bigger than others, and some produce societal injustices that can and should be ameliorated by government.
But the mistakes made by a free society generally tend to be recognized and corrected rapidly, and in any case they’re buffered by the rest of society.
When we place our faith rather in the ability of experts to plan and control our society and economy according to rational principles, their inevitable mistakes are nearly impossible to correct. That’s because they’re applied broadly across the whole of society. A poorly-chosen investment can only do so much damage. Its scope is limited after all by the size of its capital input. But a bad government policy faces no natural limits, so it can do damage to everyone’s life.
And political actors are exceptionally loath to admit their mistakes. They face no direct consequences from them in any case. So their mistakes rarely if ever get adjusted. With no feedback loop to correct them, they just keep getting funded year after year.
State-driven economies are known to work. But because the effects of policy errors are magnified and not subject to natural correction mechanism, state-driven economies also tend to be very fragile. The political economy of the United States has for two centuries enjoyed exactly the opposite characteristic: stability, self-correction, and a tolerance for public and private policy errors.
As of tonight, we’re going to start trying it the other way.