Megan McArdle on Behavioral Economics,

I must say this is rather good (hopefully Ms. McArdle wont mind copying the entire post).

The post below also applies to behavioural economics, which the left seems to believe is a magical proof of the benevolence of government intervention, because after all, people are stupid, so they need the government to protect them from themselves. My take is a little subtler than that:

1) People are often stupid
2) Bureaucrats are the same stupid people, with bad incentives.

Indeed. Oh and read Ms. McArdle’s post on Medicare linked above.

FILED UNDER: Economics and Business, US Politics, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.


  1. legion says:

    I find it entertaining that McArdle (and many of her commenters) berate the left for wanting gov’t intervention on behalf of individuals, while the right is so clearly in favor of gov’t intervention for corporations… Pick your poison.

  2. Dave Schuler says:

    Steve, the one teeny, tiny problem I have with both Megan’s posts on healthcare and Tyler Cowen’s post ( to which she is reacting in the post you cite) is that our healthcare system is inextricably tied to the government subsidies and regulations they’re denouncing. Inextricably as in “you cannot separate them”. Consequently, you can’t praise the advances of our system or speak of it favorably by comparison with, say, Canada’s without praising the bizarre, unsustainable hybrid we’ve got, too (aptly called “privatized socialized medicine”). No intellectual coherency.

  3. Legion, seemingly everyone on the left always wants more government intervention, whereas many on the right find corporate welfare appalling. But even if what you said is correct, how does it apply. A multitude of wrongs does not help make any rights.

    If I can pick my poison, how about we all die from excessive freedom?

  4. Dave Schuler says:

    charles, corporations don’t arise from the operation of the free market. There’s nothing free about them. They’re an act of government.

  5. ken says:

    People are so stupid that many of them actually believe that these words express achievable goals:

    “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America. ”

    If they were smart like Steve Verdon, or MS McArdle, they would know that any government with such lofty ambitions must fail. Must fail because people are stupid.

  6. Matt says:

    The left is as willing to help out corporations as much as the right is when it comes to politicians. They just have different industries as constituents. The ideological difference between right and left is that the right wants free markets. They neither wish to aid or punish corporations, but since the current system hurts corporations, free market reforms that help everyone and corporatist policies the just help corporations are lumped together.

  7. legion says:

    Individuals have rights. Corporations do not. But more to the point, I was merely pointing out a particular blind spot of many on the right; I do not deny that lefties have issues of our own…

  8. Dave Schuler says:

    Actually, legion, Santa Clara County v. Southern Pacific Railway defined corporations as artificial persons with certain rights, particularly equal protection under the law as required by the 14th amendment. Other rights include the ownership of property both real and intellectual.

    If you mean natural rights you are, of course, correct.

  9. ken says:

    Corporations have only those rights which are granted by the state, and they can be modified or taken away by the state.

    Persons, on the other hand, posses rights independent of any state grant and the state must recognize those rights.

  10. Steve Verdon says:


    I disagree that the links between the subsidies and healht care are inextricable. There is going to come a time when those subsidies and the current growth path are going to be unsustainable and what then? We’ll just keep feeding that beast? I don’t think so. You can’t grow the world’s food supply in a flower pot, and eventually we wont be able to afford our current growth path for health care. Something will be extricated somewhere.


    Well, I think you are being extremely mendacious with that comment. I don’t like corporate intervention/welfare. I think if you look through the OTB archives you’ll find I’ve been critical of such pork barrel legislation as the energy bill and the highway bill. I think McArdle feels the same way, so you are arguing against a position you’ve made up completely.


    The problem isn’t that people are stupid all the time, but stupid often enough that making broad nationwide policies often don’t work or don’t work for very long.

    Corporations have only those rights which are granted by the state, and they can be modified or taken away by the state.

    Uhhhmmmm, yeah that was Dave’s point about natural rights.

  11. Dave Schuler says:

    I disagree that the links between the subsidies and healht care are inextricable.

    You mistake my point. I’m talking the system as it is now. You can’t separate the benefits and advances and attribute them to the workings of the market and then attribute the bureaucracy and waste to the government. It’s just not that simple. We’ve over-invested in healthcare i.e. put more money into it than a pure market would have for 40 years. That’s paying off at least a little. There are more researchers, more, bigger pharmaceutical companies, etc. than there would be in a really free market.

  12. Steve Verdon says:


    Ahhh…you’re right I did mistake your point. Basically, I’d be happier with less investment in health care.