From Brad Delong.
Noah Smith; Unleashing the hellbeasts of stone cold truth since 2011: Market priesthood: "Has economics really become less about 'free market priesthood'?
Well, I think academic econ has. But as for pop econ, there still seems to be a lot of it around. For example, Steve Levitt, one of the most popular pop economists in the world, recently had this to say about health care:
In their latest book, Think Like a Freak, co-authors Steven Levitt and Stephen Dubner tell a story about meeting David Cameron...They told him that the U.K.’s National Health Service--free, unlimited, lifetime heath care--was laudable but didn’t make practical sense. "We tried to make our point with a thought experiment," they write. "We suggested to Mr. Cameron that he consider a similar policy in a different arena. What if, for instance...everyone were allowed to go down to the car dealership whenever they wanted and pick out any new model, free of charge, and drive it home?" Rather than seeing the humor and realizing that health care is just like any other part of the economy, Cameron abruptly ended the meeting...
So what do Dubner and Levitt make of the Affordable Care Act, aka Obamacare, which has been described as a radical rethinking of America's health care system? "I do not think it's a good approach at all," says Levitt, a professor of economics at the University of Chicago. "Fundamentally with health care, until people have to pay for what they're buying it's not going to work. Purchasing health care is almost exactly like purchasing any other good in the economy. If we're going to pretend there's a market for it, let's just make a real market for it."
This is exactly what I call "free market priesthood". Does Levitt have a model that shows that things like adverse selection, moral hazard, principal-agent problems, etc. are unimportant in health care? Does he have empirical evidence that people behave as rationally when their health and life are on the line as when buying a car? Does he even have evidence that the British health system, specifically, underperforms? No. He doesn't. All he has is an instinctive belief in free markets. Of course David Cameron didn't "realize that health care is just like any other part of the economy" after a five minute conversation with Levitt. Levitt didn't bring any new ideas or evidence to the table. And it's not like Levitt's idea was new or creative or counterintuitive. Does anyone seriously believe that the question of "why is health care different from other markets" had never crossed David Cameron's mind before? Obviously it has, and obviously Levitt knew that when he asked his question. He wasn't offering policy advice--he was grandstanding. Levitt wants to present himself as "thinking like a freak"--offering insightful, counterintuitive, original thinking. But if this is "thinking like a freak", I'd hate to see what the normal people think like!
Surely it has not escaped Levitt's notice that the countries with national health systems spend far less than the United States and achieve better outcomes. How does he explain this fact? Does he think that there is an "uncanny valley" halfway between fully nationalized health systems and "real markets", and that the U.S. is stuck in that uncanny valley? If so, I'd like to see a model. But I don't think Levitt has a model. What he has is a simple message ("all markets are the same"), and a strong prior belief in that message. And he keeps repeating that prior in the face of the evidence.
Comments
William F Buckley noted that Conservatives stood athwart history yelling "Stop". Conservatives take pride in their core principles. Facts don't matter as long as you adhere to principle. Paul Ryan is about to release his plan to deal with poverty. The plan will attempt to separate out the lazy and undeserving poor from the worthy. The idea of worthy and unworthy poor was popular in the late 1800s. Charities were set up to deal with the overflow still in need. It was felt that is was better to build up the souls of the poor by giving them encouragement rather than filling their bellies, which "obviously" would make the poor less likely to look for work.
Over time, people realized that without jobs, poverty could not be solved. The poor were not morally inferior, they simply had no jobs. Unfortunately, jobs are not going to be the focus of Ryan's plan. We are going to repeat history if Ryan's poverty plan is passed. Conservatives will relish halting progress and reverting to the good old days. We have facts to refute the Ryan plan, but facts no longer matter.
The history of the Ryan approach can be found in the link below:
http://www.huffingtonpost.com/2014/05/14/paul-ryan-poverty_n_5295555.html
by rmrd0000 on Fri, 05/16/2014 - 9:24am
One of the "victims" of Obamacare was a free clinic in Tacoma forced to close because all of its patients were now enrolled in a health care plan.
by rmrd0000 on Fri, 05/16/2014 - 9:37am
I read your link at TPM and it appears that the 'victim' died a happy death.
The poor clinic was stuck treating all these uninsured folks and in the end the clinic simply used their resources to sign these people up.
Kind of a happy ending, really.
by Richard Day on Fri, 05/16/2014 - 3:09pm
Those delivering medical care were very happy.
by rmrd0000 on Fri, 05/16/2014 - 9:48pm
I recall a cartoon from 1964-I think Herblock- Barry Goldwater snarls at a pan handler "why didn't your father give you a department store"?
by Flavius on Fri, 05/16/2014 - 10:54am
I read your link. I want to point out that Eleanor Roosevelt was a young socialite that spent time working with the poor. FDR was so impressed with her understanding of poverty. He was attracted to her because she thought differently then other young ladies of privilege. She schooled him well on the subject while he was courting her. From that came the New Deal radical approach to poverty.
Paul Ryan is a fool. We know what works well and that was proven in the 40 years of the New Deal.
by trkingmomoe on Fri, 05/16/2014 - 4:48pm
The MSM never puts a competent economist or historian to counter Ryan head to head.
by rmrd0000 on Fri, 05/16/2014 - 6:50pm
That is because they are a corporation and don't want to upset their advertisers. Pundits are just TV personalities. They want some of the advertising money that the Koch bros. are spending on promoting their brand of crazy.
Tampa Bay Times was 2 newspapers until a couple of years ago. ST Pete and Tampa combined into a a non profit news paper. It is now the largest newspaper in Florida and is still growing. I get better opinion and news then most of the country. This looks like the model that will be the future of newspapers. They have been doing some good reporting.
Paul Ryan is doing the Koch Bros. bidding. He needs some of that 125 million that they are spending to buy the mid term election. He has no idea how the poor thinks or how they are managing the day by day problems they face. He just looks for a narrative that justifies his ideology. There is a push back that is gaining momentum and we will see more of their advertising disputing and uncovering the GOP con game. I don't see the beltway being engaged in the debate or push back. They love throwing saddles on goats for the up and coming GOP 2016 Goat Rodeo.
by trkingmomoe on Fri, 05/16/2014 - 9:24pm
Fascinating article...so many things to say about it.
If it were "human nature," then how do the majority of people get up every day and "practice self-denial" by going to work? Why is this piece of "human nature" only expressed by the poor, or one segment of the poor?
And what is "unseen" about this "promise"? Welfare doesn't pay well compared to a well-paying job. And when you're hired, the promise isn't unseen or far off in the future. You see it fulfilled with your very first paycheck.
Indiscriminate Soup...what an amazing title for a book.
There's something much deeper at work here than different ideas about how to end poverty. Conservatives basically want to boil down all social problems to problems suffered by individuals. They see problems afflicting large numbers of people, but they can't think in terms of large scale solutions.
Thatcher is reported to have said: Society doesn't exist. Only individuals exist.
by Peter Schwartz on Fri, 05/16/2014 - 9:11pm
There is a complete lack of empathy. Some of those born into wealth cannot understand why poor people cannot lift themselves up. The wealthy can point back to a point in time when their ancestors were impoverished. Their ancestors triumphed why can't the poor overcome.? The poor must be lazy or immoral. That appears to be one rationalization.
by rmrd0000 on Fri, 05/16/2014 - 9:44pm
Making a profit and limiting health care for only those willing to pay the highest price has got to be disgusting to a Brit. He was too rapped up in his own hubris to even realize that. The glory days of the Chicago School of Economics is long gone. We are living with it's failure.
by trkingmomoe on Fri, 05/16/2014 - 4:07pm
Yes by now the NHS is like a piece of old furniture. It went through a period when Margaret Thatcher and her successors had so cut it back that it was commonplace to be told you had to wait 2 years for a procedure, but the Blair administration fixed that and I think it stayed fixed.
by Flavius on Fri, 05/16/2014 - 4:41pm