Scientific Federalism

posted Nov 13, 2007
in Politics

There are three great political issue categories: Economic, Social, and Foreign Policy. Today I wish to speak on the Economic issues.

Up to quite recently, I've been describing myself as a little-l libertarian on economic issues. I've considered it a good and proper function of government to internalize externalities and to perform some monopoly busting, but to otherwise let the invisible hand do its efficient thing.

But that opinion is effect, not cause. Underlying that opinion is simple pragmatism. What I want is everybody to be rich, or at least what we would have called rich a hundred years ago; to be essentially free of the problems of acquiring adequate food, water, shelter, and basic quality-of-life, and to have it not merely instantaneously available, but to be available reliably across time.

I am a little-l libertarian because of my considered belief that it is the best path to that goal. But I am merely one little human, and I may be wrong. And even if I am right, the optimal tuning for the economy doesn't fall right out of that opinion. Internalize externalities is a descriptive summary, but there are endless nuances in how it is done, who pays for what externalities and when, how to account for subjective value losses, how to account for uncertain externalities, and so on. One of the most important internalized externalities is environmental law, but it's also the worst case scenario; pollution incurs highly uncertain costs against the ecosystem, ranging from "luckily harmless" to "who could have guessed that would result in the extinction of mankind?" with most things lying in between, and while the environment is clearly highly valuable, it is difficult to directly valuate meaningfully.

What do we do about that?

The best thing to do would be scientific experimentation. Since that's impossible, at least trying several things would be a good start.

So, lately, I find myself leaning towards favoring states rights more strongly. Let's let States try things, and see what happens.

On those rare occasions where States actually get to try things, and the Federal government then cherry picks the best results to apply to the nation, it seems to go pretty well. When's the last time you heard about Welfare as a political issue? Welfare reform ended up done that way, though I don't know enough about the history to know if it was well-planned, and it seems to have turned out pretty well, by the metric of "how many people are still screaming about it".

So, national healthcare, good or bad. Personally, I think it's a bad idea and that the bulk of problems we currently face are because it's already effectively socialized, not because it's too free-market. But screw that opinion for now. Maybe I'm wrong. Let's let some of the States try fully statist health care. Let's let California try one thing, and New Hampshire try another, and Colorado try something else. If there's variable levels of success, let's look at who did how well and why. If they all fail, then it's time to stop listening to the national health care advocates. Maybe some other state will be bold and try increasing the market's participation in the health care process.

My favored plan is simply to disconnect health insurance from employers. Give employees the money and let them choose insurance freely. Let the market sort things out, because it is always more efficient than centralized control, and despite the rhetoric deployed by nationalized health care advocates about how wonderful their hypothetical system will be, efficiency = life. Inherently inefficient socialized systems = death. But who knows if I'm right? Let's let a libertarian-leaning state try this out, and see what happens.

The best way to win me over to the nationalized health care is to show me a state with a working State-run healthcare system on the model you favor. (Preferably working better than the actual nationalized health care systems I've examined, which sound pretty when you read the brochure but tend to fare much worse on the hard statistical front. I'm yet to see a nationalized health care system that makes me wish I was in on it; they all have the classic signs of inefficient resource allocation resulting in what we'd call "market distortions" if we were talking about a less emotional domain...)

This economic meta-policy makes a lot more sense to me than any other policy I've heard. The world is complicated and the ideologies blinding; the only way to learn what works is to try it and find out. (Alas, DC doesn't seem likely to give up power any time soon.) Since that's essentially the same approach to knowledge that science takes, I call this Scientific Federalism.

 

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