A Thinking Reed

"Man is but a reed, the most feeble thing in nature, but he is a thinking reed" – Blaise Pascal

Statism

“Statism” is a word that obscures more than it clarifies. Conservatives and libertarians tend to use it for any government program they don’t like. But everyone who’s not an anarchist admits the need of a state of some sort. The question is what the appropriate duties of the state are.

Hence, I don’t find this column by Gene Healy (via John), fretting about the “statism” of the so-called Millenial generation, very persuasive:

In May, the Center for American Progress released a lengthy survey of polling data on Millennials, concluding that they’re a “Progressive Generation,” eager to increase federal power.

CAP is the leading Democratic think tank, so it has a vested interest in that conclusion. But they’re on to something. In the last election, 18-to-29 year-olds went for Barack Obama by a 34-point margin.

The CAP report shows that Gen Y is substantially more likely to support universal health care, labor unions, and education spending than older voters. And other surveys support CAP’s “Progressive Generation” thesis.

In 2008, the nonpartisan National Election Study asked Americans whether “the free market” or “a strong government” would better handle “today’s complex economic problems.” By a margin of 78 to 22 percent, Millennials opted for “strong government.”

Kids today are a credulous bunch. The 2007 Pew Political Values survey revealed “a generation gap in cynicism.” Where 62 percent of Americans overall view the federal government as wasteful and inefficient, just 42 percent of young people agree.

No wonder, then, that GenNext responds to President Obama’s call for “public service,” roughly translated as “a federal paycheck.”

Here, they differ dramatically from their skeptical “Generation X” predecessors. A 1999 survey asked Gen X college seniors to name their ideal employers; they “filled the entire list with for-profit businesses like Microsoft and Cisco.” What a difference a generation makes. In the same poll today, Gen Y prefers the State Department, Teach for America, and the Peace Corps. That’s a problem for a country built on the entrepreneurial spirit.

What I think is missing from Healy’s analysis (and, let it be said, I think he’s written some fantastic stuff on executive power) is any distinction between the appropriate functions of the market and the state. No one in the U.S., left, right, or center, thinks we can dispose of the market or yearns to implement a Soviet-style command economy.

But what many people–not just those naive youngsters–conclude is that the market does not, left to its own devices, magically solve our “complex economic problems.” What exactly is the “free market” solution to the fact that tens of millions of Americans lack health insurance? Or to environmental problems? Or to ensuring an adequate education for all kids? Funny how Microsoft and Cisco haven’t taken care of all this. Would these companies pick up the slack if we axed what Healy calls our “wealth-destroying Social Security system”?

Conservatives and libertarians are, of course, free to propose solutions to these problems that are more in keeping with their philosophy, but what they mostly do is deny that they are problems and/or that government has any role in addressing them. Liberals, progressives, social democrats, and others, by contrast, see a role for government in stepping into the gaps left by the market. If that’s statism, I’m happy to be counted among the statists.

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10 responses to “Statism”

  1. Matt C

    What exactly is the “free market” solution to the fact that tens of millions of Americans lack health insurance?

    The “free market” solution to medical insurance would be to have it model actual insurance.

    What we have right now is a system of subsidized healthcare coverage, not insurance. We call it insurance because it invovles pooling money into a huge slush fund, where everyone is subsidized. It’s not merely insurance though, because what are you actually insuring against? Getting a prescription for penicillin? Receiving a physical examination and having blood drawn? Having the sheets changed at a nursing home?

    In the free market, insurance is priced by risk. Your car insurance premiums reflect the risk you pose as a driver, based off of your demographics and your driving history. Your insurance however does not pay for your gasoline, your oil changes, your new brake pads, and your 100,000 mile service – it pays for property and personal injury damages associated with your driving. Imagine for a moment if car insurance did pay for all of the items above. We would be facing the same predicament with car insurance as we are with medical insurance; it would no longer classify as insurance, and prices would be inflated by increasing consumption activity.

    So the free market solution is to break down the current healthcare coverage system into 2 components: medical insurance for unforseen severe illness and inury expenses (i.e. catastrophic medical insurance)…and out-of-pocket payments for everything else. Every other medical procedure under this cost level must be paid out-of-pocket by the individual consumer, with local/state/federal governments playing a role by subsidizing these costs for only the poorest consumers.

    I know we have versions of catastrophic medical insurance nowadays, but this market is limited to certain individuals because cheaper coverage is available to most of us through employers and government plans. Here in lies the paradox: the real issue with cost inflation is not the the catastrophic cost per consumer, but the average daily consumption of healthcare resources by the population at large, which is incentivized by the employer/government plans and disincentivized by catastrophic insurance plans. Medicare is a good example of this: the program is going bankrupt not because more people are getting cancer or having myocardial infarctions (though I would imagine the magnitudes of these events are increasing), but because we are paying for more days of routine care for an older, grayer population. That is not the intent of insurance.

    The free market solution would control costs by disincentivizing overconsumption of healthcare resources using high-deductible catastrophic medical insurance. For the millions of people who are too poor to afford these plans, government subsidization is an option.

    Reply
  2. “Statism” revisited « A Thinking Reed

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  3. Gaius Sempronius Gracchus

    No one in the U.S., left, right, or center, thinks we can dispose of the market or yearns to implement a Soviet-style command economy.

    I think you exaggerate.

    The continuing popularity of Che may mean less than is often feared, but the continuing popularity not only of Hugo Chavez but Fidel Castro on the left surely means something.

    Reply
  4. Gaius Sempronius Gracchus

    Even construed as generously as possible, Matt C’s solution would mean everybody could obtain all needed medical care, but only at very heavy costs, inequitably distributed, to people with enough money to pay for the non-insured care he contemplates.

    Equally healthy rich and poor populations would face the same dollar costs, per head, in the long run.

    And the poor are never, in fact, as healthy as the rich, to start with.

    A progressive would rather have these costs picked up by the rich.

    Ideally, nobody would ever face a single bill for any medical care or service.

    Not for a single dollar.

    Within a more or less capitalist economy with large differences in before tax income, all of it would be financed through taxation of the rich as it might be through heavily progressive taxation.

    If the services actually consumed were the same as in Matt C’s scenario, the costs would be distributed much differently.

    And that is a key reason to reject a market solution.

    Whatever has to be bought will cost exactly the same to the rich and the poor.

    A five dollar widget costs the rich man and the poor man five dollars.

    But the rich have lots more money.

    Hence they always get more or better.

    Or they get the same, but have a lot left over after they pay the bill where the poor have nothing.

    It is just these features of the market that are totally unacceptable in the case of health care.

    Hence there is really no point in looking for a free market solution.

    The free market is the problem.

    Reply
  5. Lee

    Even the popularity of Che (which seems largely confined to dopey college students and perhaps a few aging hippies) rarely translates into an advocacy of a Stalinist one-party state, though. It’s precisely the aura of anti-authoritarianism and anti-imperialism that appeals, isn’t it?

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  6. Gaius Sempronius Gracchus

    Hard to say what’s in the heads of kids.

    But not all the fans of Hugo and Fidel who write in well-known, lefty publications are cheering them only for their opposition to the US.

    Few, I would think, are only thinking of that.

    It’s their actual handling of the economy that earns them respect.

    That doesn’t necessarily stop at their egalitarian provision of medical care, for example.

    And surely nobody thinks of Che or Fidel as anti-authoritarian?

    Reply
  7. Lee

    You may be right, re: Chavez and Castro.

    I really do think that Che is perceived as a kind of romantic, anti-authoritarian figure by the kind of people who sport t-shirts with his face on them. I can only imagine it’s because they don’t know much about what he did once la revolucion took power.

    Reply
  8. Gaius Sempronius Gracchus

    No comment on my remarks about Matt C’s market solution, Lee?

    Reply
  9. Lee

    I largely agree with your take. I’d add that their are reasons why a market in medical care isn’t necessarily a good idea (asymmetrical information, e.g.).

    James Galbraith has a good discussion of this–and the role of markets in general–in his book The Predator State.

    Reply
  10. Upturned Earth » “Statism”, Again

    […] certainly shouldn’t have gone in for it so quickly last night. That said, I still don’t agree with Lee: … what many people–not just those naive youngsters–conclude is that the market does not, […]

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