Categories:
Free Markets
Here’s a tweet by Matt Yglesias:
Is it really that “strange”? Yes, there’s far too much government planning in the housing sector.
But housing is a laissez-faire paradise compared to America’s second largest sector—health care.
And health care is a laissez-faire paradise compared to America’s third largest sector—education.
And then there’s agriculture. Law. Transportation. I could go on and on.
To be clear, America is a more free market economy than most other countries. But how often to you see pundits claim that, “Actually, country X is not a free market economy”, and then cite some intervention that is fairly minor compared to the widespread interventions in America’s second and third largest sectors?
READER COMMENTS
KevinDC
Dec 20 2020 at 2:51pm
Indeed. This is especially frustrating for me in the area I know best in my professional life – health care. (I’m a healthcare economics consultant, if anyone cares.) I can’t count the number of times I’ve heard people say something to the effect of “America proves what a disastrous idea it is to have a free market in health care” – as if the American health care system was within a light year of a free market system! If someone wants to argue that the American health care system is badly regulated – I’d be all on board with that! But as a general rule in conversation, if the rules and regulations regarding an industry produce reams of paper thick enough to bludgeon a goat to death* or block a fifty caliber bullet, you don’t get to call it an unregulated free market! Assuming, you know, words mean things.
*For the record, I do not advocate the bludgeoning of goats or any other animal.
Mark Z
Dec 20 2020 at 4:57pm
Yeah, healthcare in the US seems closer to the ‘socialist’ end of the spectrum than the capitalist end, and more socialist than in at least a few European countries. To many people, ‘free market’/capitalism = nominally privately owned. But what the US has is more like a collection of monopolists insulated by regulation and subsidies from competition within their little fiefdoms. The fact that most of the major insurance companies are ancient, and none were established less than a few decades ago, tells us a lot about how bad barriers to entry are.
Scott Sumner
Dec 20 2020 at 5:32pm
Kevin and Mark, Yes, our “private” insurers are so heavily regulated and subsidized as to be functionally equivalent to socialized medicine. Not as socialized as the UK, but every bit as socialized as much of Europe.
Iskander
Dec 20 2020 at 4:44pm
Scott, when are you going to start properly using Twitter?
Scott Sumner
Dec 20 2020 at 5:29pm
I don’t know.
robc
Dec 20 2020 at 5:44pm
Not using it is the only proper way.
john hare
Dec 20 2020 at 7:04pm
It’s amazing to think about the problems that could be solved if it were legal to do so. Homelessness, back off the barriers to work and cheap housing, okay next.
I’m in construction and a little annoyed at some of the directions I see it headed. I’m sure some of it is motivated reasoning on my part, but equally sure much of my annoyance is legit.
Lord Canes
Dec 20 2020 at 10:28pm
Oddy, the US is regarded as a global leader in the very industries that are most heavily intertwined with government regulation and subsidy.
People by rote say US hospitals are the best in the world, and US farmers the most advanced and productive. US remains a player in aerospace (think national and global security spending).
The “tech” industry is such a big and rambling category that perhaps generalizations are meaningless. Other nations have captured much of the industry through public-private partnerships (public-private being a blend in much of the Far East and Europe). The US government seems to have helped certain tech industries evolve, notably the whole DARPA thing.
On housing, the manifestations of government involvement appear completely negative, save perhaps certain fire, safety and health issues.
Like everyone, in education I I wonder who so many people are going to college, where they spent four years (if not seven or eight) spinning wheels, in terms of economic output. I suppose credentialism is rife, and this may reflect what private-sector employers want. Can you get a job at Bain & Co. with a high-school degree, and two years of OTJ training?
Surely, four-year programs in law and business could be developed, and grad schools eliminated.
robc
Dec 21 2020 at 7:29am
The question is did the US become the leader and that led to more regulation or the other way around? For hospitals and farming, I think we became the leader first.
For aerospace, for military reasons, it was the other way around. Although the long term trend of NASA has shown that government spending is good for hitting a big, expensive goal (D-day, Manhattan project, moon landing) but not long term ongoing operations (Afghanistan, nuclear industry, space travel).
Scott Sumner
Dec 21 2020 at 12:34pm
The reason our hospitals are so good is that we spend at least twice as much on health care as other countries. If America banned cars costing less than $40,000, we’d also have the best cars in the world.
Lizard Man
Dec 21 2020 at 5:53pm
The same is probably true for higher education as well. The US spends a ton of money on higher education, and so has a disproportionate share of the best universities in the world. This does suggest, however, that China, if they wish, can spend their way to having a world class ecosystem of research universities. Which would be good for Americans and everyone else who benefits from more advances in science and technology, but perceived as bad by DC elites.
mm
Dec 23 2020 at 8:20am
I guess he never heard of regulatory capture- the big boys like regulation-keeps the startups out of the business.
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