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Matt, Thanks for your article and I must say I agree with many of your impulses to support government programs that work. However, an impulse being what it is, I think you go on to introduce assumptions from these impulses that lead you to less than sound public policy conclusions.
For instance, I agree that “subsidizing poor people to make their own choices in the marketplace” is a good start.
However, you go on to assert that programs such as Medicare, Medicaid, housing projects, and funding for local school districts “tend to underperform private alternatives.” You further state that “nearly every American would choose private health insurance over going through the bureaucracy of Medicare.”
Each statement includes unnecessary assumptions and takes a narrow view that applies the rigorous lens of economics across less than the full spectrum of private activities.
As for your first assertion about underperformance, the opposite conclusion is correct. Medicare actually performs more efficiently than private alternatives when you control for inputs like income level and prior health history. Whether it be the economy of scale or the ability to limit care to comparatively effective treatment, government-run insurance only lags behind in health outcome statistics when compared to private alternatives because private insurance can refuse treatment to certain categories of people.
Further, it is patently untrue that nearly every American would choose private health insurance over Medicare. Health care polling is notoriously fluid, but a clear majority of Americans consistently prefer government managed programs like Medicare.
This line of analysis can continue to housing projects and schools as well. I won’t defend many of the failed experiments in social engineering that arouse out of a desire to house all Americans, but, in the broad marketplace of those who demand shelter, the government could be doing much worse. Further, the overwhelming evidence that vouchers for public housing work isn’t yet there. I’m not saying it wont be, but the move from centralized projects to subsidized private housing and vouchers has had the near opposite effect in Memphis, Tennessee with crime going up and less people transitioning off such assistance after the move to more private forms of aid.
Also, public schools underperform private in some statistics because of the same reason that government managed healthcare seemingly does: public schools exist for the common good and admit all comers. To further demonstrate why public options actually efficiently serve the marketplace, I’ll selectively apply some economics and go ahead and assert that private elementary schools underperform public schools in producing citizens with the values and emotional intelligence necessary for success in a multicultural world. Surely one wouldn’t have to defend all the examples of egregious, unfair, and wasteful policies of private schools throughout our history? The point is not so much that integrated and diverse public schools are more efficient incubators of our democracy in the marketplace of school choice, but that the marketplace is wide and we can’t just limit where to apply our analysis.
I’ll close with your assertion about doctors rejecting patients because the government will not treat them fairly. I reject the assumption about this statement. Doctors reject government patients because they don’t make as much in a reimbursement as they would from private insurance. Fairness has nothing to do with reimbursement rates and, instead, this rejection is a function of an entirely rational decision on the part of the doctor to maximize their utility and make more money. I don’t fault the doctor for looking out for his own interest because, fortunately, we all have a government that exists for the common good.
Such a polity full of individuals maximizing their utility has often rejected private social experiments many small government conservatives seem to suggest and the demand in the marketplace, call it a marketplace of ideas or a marketplace of votes, is for efficient programs that serve the common good.
This is exactly why progressives welcome competition and the market. The American market wants progressive programs.
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