Krugman, Bastiat, and Freedom to Choose
Don Boudreaux has an interesting comparison of Paul Krugman’s thinking with that of Frederic Bastiat’s when it comes to competition, freedom and the ability to make one’s own decisions.
Boudreaux quotes Krugman,
is giving individuals responsibility for their own health spending really the answer to rising costs? No.
….it’s neither fair nor realistic to expect ordinary citizens to have enough medical expertise to make life-or-death decisions about their own treatment. A well-known experiment with alternative health insurance schemes, carried out by the RAND Corporation, found that when individuals pay a higher share of medical costs out of pocket, they cut back on necessary as well as unnecessary health spending.
As well as quoting Bastiat,
After all, what is competition? Is it something that exists and has a life of its own, like cholera? No. Competition is merely the absence of oppression. In things that concern me, I want to make my own choice, and I do not want another to make it for me without regard for my wishes; that is all. And if someone proposes to substitute his judgment for mine in matters that concern me, I shall demand to substitute my judgment for his in matters that concern him. What guarantee is there that this will make things go any better? It is evident that competition is freedom. To destroy freedom of action is to destroy the possibility, and consequently the power, of choosing, of judging, of comparing; it amounts to destroying reason, to destroying thought, to destroying man himself. Whatever their starting point, this is the ultimate conclusion our modern reformers always reach; for the sake of improving society they begin by destroying the individual, on the pretext that all evils come from him, as if all good things did not likewise come from him [emphasis added].
While the part the Boudreaux highlights is indeed relevant I also liked the part about how destroying freedom of action (one’s ability to choose) also destroys judging, comparing, reason, though and ultimately man himself.
Moreover, I’m not very thrilled with Krugman’s view of how things have to work. After all, I’ve already documented how his approach can result in people not getting medical procedures that they can and are willing to pay for out of pocket.
Krugman is right that medical care is complex and that many people could have a very hard time determining what is the best course of action. However, one thing the government could do is help reduce this problem by making information available cheaply or even with a price of zero (e.g. the Consumer Price Index which can be downloaded for “free”). Also, people could and perhaps should get second opinions on treatments, procedures as well as medication. Krugman is, when you get right down to it, is advocating that people be kept ignorant of medical issues and rely simply on the government for the answers. Basically, “Hello, I’m from the government and I’m here to help you.”
And for those of you who think Krugman recall this story about the young man who wanted to fight his Hodgkin’s disease with an alternative treatment, but was stopped by the government. While I think that the young man in that story made the wrong decision in terms of treatment I’m not ready to coerce him into what I think is the right therapy…Krugman however would seem quite happy with that decision.
As for the observation that when people pay more of the cost out of their own pocket induces them to cut back on both unnecessary and necessary treatments, well derrr. That is what any economist would likely predict. Further, it isn’t clear that this is a “bad thing” in that people are deciding on how best to spend their money. That I or Krugman would spend their money differently doesn’t mean that they made the wrong choice, merely a different one. Krugman is definitely guilty of Hayek’s notion of Fatal Conceit.