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(Bad) Economics 101 Colonialism


Krugman is exactly right on the eighth-baked Levitt/Dubner plan to fix health care (which, indeed, would fix you real good):

I think there are actually several things going on here. One is a Levitt-specific, or maybe Freakonomics-specific, effect: the belief that a smart guy can waltz into any subject and that his shoot-from-the-hip assertions are as good as the experts’. Remember, Levitt did this on climate in his last book, delivering such brilliant judgements as the assertion that because solar panels are black (which they actually aren’t), they’ll absorb heat and make global warming worse. So it’s true to form that he would consider it unnecessary to pay attention to the work of lots of health economists, or for that matter the insights of Ken Arrow, and assert that hey, I don’t see any reason not to trust markets here.


But one thing you surely shouldn’t do — one thing that even Friedman would or at least should have said you shouldn’t do — is cling to the idealized free-market model when it makes lousy predictions.

In the case of health care, we know that all the assumptions behind free market optimality are grossly violated. Maybe, maybe, you could still justify treating health as a normal market if free markets in health care seemed, in practice, to work well. But they don’t!

Levitt is arguing that the NHS, which comprehensively covers the population for far less money than non-comprehensive coverage costs in the United States, should be made more like the American system. This is what happens when you wade into a subject in which you not only obviously have no specific expertise but haven’t even thought through the issues carefully.

Reading Levitt on health care or climate change, I immediately think of what Katha Pollit said about Christopher Hitchens on abortion:

I never got the impression from anything he wrote about women that he had bothered to do the most basic kinds of reading and thinking, let alone interviewing or reporting—the sort of workup he would do before writing about, say, G.K. Chesterton, or Scientology or Kurdistan. It all came off the top of his head, or the depths of his id. Women aren’t funny. Women shouldn’t need to/want to/get to have a job. The Dixie Chicks were “fucking fat slags” (not “sluts,” as he misremembered later). And then of course there was his 1989 column in which he attacked legal abortion and his cartoon version of feminism as “possessive individualism.” I don’t suppose I ever really forgave Christopher for that.

It wasn’t just the position itself, it was his lordly condescending assumption that he could sort this whole thing out for the ladies in 1,000 words that probably took him twenty minutes to write.

Relatedly, see Krugman on Brooks’s absurd “A Simpson/Bowles for every pot” argument yesterday. Among the countless reasons that government-by-insulate-elite-consensus doesn’t work is that beliefs like “the market for health care is just like the market for automobiles” and “during a period of mass unemployment, the top priority should be cuts to entitlement spending” are likely to be disproportionately represented.

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