Iowahawk Demolishes Krugman

March 5, 2011

(Guest Post by Matthew Ladner)

When you have a Nobel Prize in economics, shouldn’t you refrain from making wild assertions easily dismissed with a casual amount of data analysis?

4 Comments | teacher union | Tagged: , | Permalink
Posted by matthewladner

What Is Competition?

June 5, 2009

Monopoly - Pennybags

He’s done such a good job with your schools,
now he’s going to run your health care!

(Guest post by Greg Forster)

Mike Petrilli notes that Barack Obama and Paul Krugman are using the language of “competition” to mask Obama’s ambitions for a government takeover of the health care sector.

Krugman writes:

The “public option,” if it materializes, will be just that – an option Americans can choose. And the reason for providing this option was clearly laid out in Mr. Obama’s letter: It will give Americans “a better range of choices, make the health care market more competitive, and keep the insurance companies honest.

Mike responds:

You mean just like creating charter schools will give Americans “a better range of choices, make the education system more competitive, and keep the teachers unions honest”?

So in education, where the government is the major player, we’re trying to create competition via the private sector. But in health care, where the private sector is still a major player, we’re trying to create competition via the public sector?

Weird.

Mike, “weird” is not the word you’re looking for. Try “wrong.”

In health insurance, as in education, there’s no “market” deserving the name. But the way the government eliminates the market is slightly different. In education, government destroys the market by providing the service for “free” (of course you pay for it in your taxes, but it’s free at the point of service), making it impossible for anyone to compete; other providers are stuck serving niche markets. Whereas in health care government uses the tax code to force almost everyone to get insurance through their employers, which also eliminates the market, but more sneakily.

It’s as though government told you that from now on, your employer gets to pick one restaurant for you, and from now on you’re only allowed to eat out at that restaurant. They’d say that it’s a free market – because, hey, the restaurants are privately owned and there are multiple options available!

So it’s not surprising if the health sector and the education sector seem similar. Both are government-controlled command economies. The difference is, in the health sector you have these huge privately owned companies acting as rent-seekers, siphoning off tons of money and getting away with it because government has abolished the market forces that ordinarily weed out leeches – as Matt once explained to our Sith apprentice Leo. Whereas in the education sector, the rent-seeker siphoning off tons of money is the government itself.

The Obama/Krugman proposal isn’t about creating competition for private health insurers. That’s a smokescreen. It’s simply the first step toward making the command economy in the health sector more like the command economy in the education sector.

9 Comments | competitive effects | Tagged: , , , , | Permalink
Posted by Greg Forster