Hail Victor Fuchs
By Bryan Caplan
One of my favorite passages in The Myth of the Rational Voter argues that economists should often support markets even when they aren’t working very well. Why? Because in the real world, government habitually make genuine market failures worse in order to pander to the public’s irrationality:
Before we emphasize the benefits of government intervention, let us
distinguish intervention designed by a well-intentioned economist from
intervention that appeals to noneconomists, and reflect that the latter
predominate. You do not have to be dogmatic to take a staunchly
promarket position. You just have to notice that the “sophisticated”
emphasis on the benefits of intervention mistakes theoretical
possibility for empirical likelihood.
Despite all the media coverage (or maybe because of it), most of the
public has a very limited understanding of the health care system and
health policy. They think the insurance companies are the main problem.
They think an employer mandate is a good idea because employers pay for
care. They want to control cost, but oppose every policy that might do
that except for thinking that drug company and insurance company
profits are too high. They say they want everyone to have access to
care but only one in four favors an individual mandate.
I think that market failures in health care are vastly overrated. But suppose I’m wrong. Imagine that economists could easily design regulations to vastly improve market performance. I would still say: “So what?” Politicians aren’t trying to please a handful of economists. They’re trying to please normal people. And unfortunately, as Fuchs observes, these normal people are not only economically illiterate, but childish.