Politicians: save us from human nature!
May 29th, 2008 | by Brian Schwartz |Addition to Tuesday’s post on medical care in the Czech Republic:
An intriguing part of Sunday’s New York Times article about medical care in the Czech Republic was a quote by Harvard’s Marc J. Roberts, included in the excerpt below:
But many Czechs see it as a matter of principle that health care should be free … “The only analogy I can think of in our political culture is primary schools,” said Marc J. Roberts, a professor of political economy at the Harvard School of Public Health who has worked in Central Europe. “Most people in the United States believe that primary education should be free and open to all and that it shouldn’t be subject to market principles.”
I’m sorry to say that many people probably do think this way. But isn’t this like asking government to run energy policy because something as important as generating energy should not be “subject to the laws of physics”?
“Market principles” is shorthand for economic incentives, and people always respond to economic incentives, regardless of to what degree politicians impose their will in a specific market. Such interference merely changes the incentive structure, and the way people respond to these new politically-imposed (and forcibly) imposed incentives explains why government programs achieve unintended consequences antithetical to their purported goals.
The Concise Encyclopedia of Economics has a good entry on unintended consequences . And then of course there is the classic essay by Frédéric Bastiat, “That Which is Seen, and That Which is Not Seen.” The Wikipedia entry on the broken window fallacy provides a brief introduction. The second chapter of Henry Hazlitt’s classic Economics in One Lesson also does the job. The book is on-line here, and browsing the table of contents is well worth it if you’re not familiar with the book.
See also Public Choice Theory.
