My Man Kevin D. Williamson does a pretty fair job of pointing out why Obamacare necessarily was and is a failure. It's because, he writes, any human activity in necessarily a process of trial and error, making mistakes and fixing them. Or, in other cases, just admitting failure and moving on.
The whole point of government is to enact the conceit that you can enact any law, lay new taxes, and then sit back for ever and ever admiring your handiwork. That is just not how things work in the real world. In the real world you launch a product and, assuming it isn't a failure from the word go, you spend the next few years getting the bugs out, and really, you never stop adjusting the product and its price in response to price and consumer signals. But government can't do that. That's because the congresscritters and presidents have other fish to fry.
That is why nobody has done anything about Social Security even though it is going to run out of money. That is why the government used Obamacare to make a bunch of changes to Medicare under the table while everyone was arguing about the 35 million without health insurance. That is why education gets more and more expensive but doesn't improve its results.
The reason is that just about everything the government does is an attempt to deny reality. It is the earthly equivalent of religion, which is an attempt to believe that all will come right in the end: the good will go to Heaven and the evil will go to Hell. Or be reincarnated as cockroaches.
The official word on this was enunciated by Ludwig von Mises in his 1920 paper, "Economic Calculation in the Socialist Commonwealth." He argued that while the socialist commonwealth could decide, e.g., how much wine to produce, the problem of how to produce it, and what means, and with what intermediate products and where, and with respect to other possible uses of the means of production immediately becomes too complicated for bureaucratic administration. The human mind "would simply stand perplexed before the problems of management and location." And so, in the socialist commonwealth the socialist manager decides to do nothing. Not until the perplexing problem becomes a national crisis. In other words, without the guidance the price system the socialist manager just does not know what to do. So he blunders forward, making mistake after mistake, only without the price system to give him feedback he does not correct his mistakes, and anyway, the one thing a politician cannot admit is making a mistake.
You can say at least that the folks that look to government have a clear idea of what they want. They want to be free of the stress and heartache of having to face up to the realities of day-to-day life in the marketplace. And when they enact their particular program they get to capture the work of their fellow citizens and apply it, gratis, to supplying their wants. But then things start to go downhill: slowly in the case of Social Security; rapidly in the case of Obamacare. And then the stress and heartache return, big time.
But not to worry. Most of the things that government does are not really that important. Pensions? Well, it is nice to give grandpa some money, but if grandpa didn't get his check the world would go on. Education? Yes, even education is probably not doing that much for us. If government education collapsed tomorrow then mothers would take over. And since most women are now numerate and literate they could teach the three Rs of Reading, Writing, and Arithmetic to the kids in the neighborhood. Health care is a similar good. It is only one of the seven or eight factors contributing to our modern life expectancy. And if there were no Medicare at $600 billion per year, then grandpa and grandma might die a little earlier than right now, but life would go on.
That is the key point. Obamacare may be a failure, but life will go on. The problem only arises in a country like Venezuela where the failures of government policy and the failure to reduce government spending results in runaway inflation and a collapse of normal economic relations.
But even then, as Germany proved in 1923, once the government grasps the nettle and stabilizes its finances then things can get back to normal. But you might get a Hitler as part of the package.
You might ask: But why is government so bad at economic management? I think that the answer lies in the real job of government: protecting us from foreign invaders. In that case there is a single goal, and all must work for that goal. It is bootless to worry about mistakes or blaming anyone, or whether we are winning or losing. The national leader cannot, for a moment admit to making mistakes or the possibility of defeat, because that would affect national morale and reduce the chance of victory.
But the culture of war and existential survival does not apply to the day-to-day process of production and consumption. And so when you apply the culture of war to pensions and health care and education you make a complete mess of it.
Emotionally mature people and highly effective institutions are quick to admit error. The best of them in fact embrace periodic failure as a necessary part of experimentation, learning, and institutional evolution. (Megan McArdle covers this ground brilliantly in The Up Side of Down.)But then he chokes up.
Feedback matters. One of the reasons the private sector often is so much more effective than government is that market competition forces firms and entrepreneurs to admit error or suffer dire financial consequences.I think Kevin misses the point here. The point is that people create government programs precisely because they do not want to admit error. They do not want to follow the dictates of the price system. They do not want to follow the verdict of the consumers. They want something free or subsidized and they want other people to pay for it. And then after they get it they get mad if anyone proposes to reduce their subsidy or free stuff.
The whole point of government is to enact the conceit that you can enact any law, lay new taxes, and then sit back for ever and ever admiring your handiwork. That is just not how things work in the real world. In the real world you launch a product and, assuming it isn't a failure from the word go, you spend the next few years getting the bugs out, and really, you never stop adjusting the product and its price in response to price and consumer signals. But government can't do that. That's because the congresscritters and presidents have other fish to fry.
That is why nobody has done anything about Social Security even though it is going to run out of money. That is why the government used Obamacare to make a bunch of changes to Medicare under the table while everyone was arguing about the 35 million without health insurance. That is why education gets more and more expensive but doesn't improve its results.
The reason is that just about everything the government does is an attempt to deny reality. It is the earthly equivalent of religion, which is an attempt to believe that all will come right in the end: the good will go to Heaven and the evil will go to Hell. Or be reincarnated as cockroaches.
The official word on this was enunciated by Ludwig von Mises in his 1920 paper, "Economic Calculation in the Socialist Commonwealth." He argued that while the socialist commonwealth could decide, e.g., how much wine to produce, the problem of how to produce it, and what means, and with what intermediate products and where, and with respect to other possible uses of the means of production immediately becomes too complicated for bureaucratic administration. The human mind "would simply stand perplexed before the problems of management and location." And so, in the socialist commonwealth the socialist manager decides to do nothing. Not until the perplexing problem becomes a national crisis. In other words, without the guidance the price system the socialist manager just does not know what to do. So he blunders forward, making mistake after mistake, only without the price system to give him feedback he does not correct his mistakes, and anyway, the one thing a politician cannot admit is making a mistake.
You can say at least that the folks that look to government have a clear idea of what they want. They want to be free of the stress and heartache of having to face up to the realities of day-to-day life in the marketplace. And when they enact their particular program they get to capture the work of their fellow citizens and apply it, gratis, to supplying their wants. But then things start to go downhill: slowly in the case of Social Security; rapidly in the case of Obamacare. And then the stress and heartache return, big time.
But not to worry. Most of the things that government does are not really that important. Pensions? Well, it is nice to give grandpa some money, but if grandpa didn't get his check the world would go on. Education? Yes, even education is probably not doing that much for us. If government education collapsed tomorrow then mothers would take over. And since most women are now numerate and literate they could teach the three Rs of Reading, Writing, and Arithmetic to the kids in the neighborhood. Health care is a similar good. It is only one of the seven or eight factors contributing to our modern life expectancy. And if there were no Medicare at $600 billion per year, then grandpa and grandma might die a little earlier than right now, but life would go on.
That is the key point. Obamacare may be a failure, but life will go on. The problem only arises in a country like Venezuela where the failures of government policy and the failure to reduce government spending results in runaway inflation and a collapse of normal economic relations.
But even then, as Germany proved in 1923, once the government grasps the nettle and stabilizes its finances then things can get back to normal. But you might get a Hitler as part of the package.
You might ask: But why is government so bad at economic management? I think that the answer lies in the real job of government: protecting us from foreign invaders. In that case there is a single goal, and all must work for that goal. It is bootless to worry about mistakes or blaming anyone, or whether we are winning or losing. The national leader cannot, for a moment admit to making mistakes or the possibility of defeat, because that would affect national morale and reduce the chance of victory.
But the culture of war and existential survival does not apply to the day-to-day process of production and consumption. And so when you apply the culture of war to pensions and health care and education you make a complete mess of it.
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