Tuesday, June 7, 2011

The Cold War is over. Someone tell David Brooks. [Updated]

One of today's hot topics on the liberal blogosphere is David "Perennial 4:17AM Punching Bag" Brooks' latest column, which argues for Ryancare on the basis that competition controls health care costs better than "top-down control." His thesis is most neatly encapsulated in his closing line:
Moreover, if 15 Washington-based experts really can save a system as vast as Medicare through a process of top-down control, then this will be the only realm of human endeavor where that sort of engineering actually works.
The column's flaws are both numerous and obvious. First, there's Jamelle Bouie, comparing health care in the UK and Canada to the US. As he points out, there's little doubt which way the evidence points:
Brooks is right to say that there isn't "dispositive empirical proof" for top-down planning or bottom-up competition, but there's plenty of evidence for the top-down approach, and not much for competition.
Ezra Klein takes the same point one step further, and posts a chart comparing the US to, well, basically every industrialized nation. Among these nations, the United States alone lacks a universal, "top-down" health care system. Guess how else it stands alone?


Matt Yglesias attacks Brooks' assertion that top-down engineering has never really worked. As he says, if top-down engineering is ill-suited for price-setting or production of consumer goods, it works just fine for achieving large national objectives like cutting health care costs or winning wars.

I'd add that Brooks, in his eagerness to make broad philosophical points about the virtues of competition, has missed a devastating counterexample under his very nose: you can actually see the benefits of top-down control within the current US health care system, where Medicare costs are growing more slowly than private-sector costs.

But the best response belongs to Kevin Drum:
Look: virtually every real-world instance of human organization works via some combination of top-down planning and bottoms-up competition. The pope is the unquestioned leader of the Catholic church, but in practice there are also lots of competing power centers within the church. Likewise, free market capitalism is primarily a system of aggregating individual preferences, but it works a lot better when there's some top-down planning to regulate the financial system and provide a predictable set of laws and property rights.

Medicare is no different. The basic structure is top-down, but plenty of liberal healthcare wonks favor introducing some aspects of competition. That's never really been the problem with Paul Ryan's Medicare proposal. Allowing beneficiaries to choose between competitive plans has plenty of supporters on both sides of the aisle, but on the liberal side we also want to make sure that funding remains strong enough to guarantee high-quality care that's affordable for everyone.

And he's right. Brooks is playing a shell game with this column, and Drum has found the trick. Very, very few liberals would defend without qualification top-down, Marxist-style planning in health care (or virtually anywhere else in the economy). But because the progressive approach entails marginally more direct government regulation than the Republican alternative, Brooks and his ilk have no problem lumping it in with the sort of centrally-planned economic policy that you'd associate with Soviet bloc states. And having thusly reduced the debate to the absolute simplest terms possible, Brooks and Co. attack the liberal position with creaking arguments against state planning that have been floating around since the days when F.A. Hayek was a mover and shaker.

But F.A. Hayek and his contemporaries had never heard of the Independent Payment Advisory Board, were never asked to confront the specter of skyrocketing private-sector costs, and likely couldn't begin to explain what an individual mandate was. So it should be little surprise that their old, hidebound arguments hardly address the complex mechanisms at work in modern health reform schemes.

Part of the reason they don't work is that health care reform (and most other major progressive initiatives, like cap-and-trade) fall somewhere in the middle ground between competition and top-down engineering. As such, they're qualitatively different from a more pure approach from either direction. The health care bill actually goes out of its way to preserve a competitive private market. And even the more dramatically progressive plans (Medicare for all, for instance) retain a competitive element, as their cost control mechanisms rely in part on forcing hospitals and providers to compete for limited government funds.

David Brooks points out the problem in his reasoning more succinctly than I could, when he says:
Sometimes life presents you with a basic philosophical choice. Americans are going to have to confront a giant one over the next several years.
It's clear why he wants to believe this. He knows the free marketeers won the war against central planning decades ago, so it's natural he'd prefer to keep fighting those battles as long as possible. But he's also very, very wrong. The debate over health care isn't about the philosophy of government. It's about which pattern of competition and regulation works best to provide quality health care for the most people at the cheapest price. And here, evidence, theory, and experience all point in the same direction. It's just not a direction that David Brooks, whose policy thinking is forever caught in a Cold War dichotomy between markets and planning, is able to recognize.

Update: As Jim pointed out in the comments, F.A. Hayek lived into the 1990s and therefore probably did know about individual mandates and the need for cost controls. I don't think this changes my argument at all, for reasons I explain in the comments themselves, but hey, read them and decide for yourself!

5 comments:

  1. "But F.A. Hayek and his contemporaries had never heard of the Independent Payment Advisory Board, were never asked to confront the specter of skyrocketing private-sector costs, and likely couldn't begin to explain what an individual mandate was."

    In other news, Elie Wiesel never heard of fascism, Abraham Lincoln would have had trouble imagining that people would be mean to black people, it's hard to know how FDR would have reacted to hard economic times, and it has just never even occurred to Will to say something making fun of Rob.

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  2. Hm, checking wikipedia, it turns out Hayek lived about forty years longer than I thought. Man, that guy was old; I guess it's true that economists live forever. The point still stands, though: the philosphical distinctions that Brooks and other conservatives rely on in the health care debate stopped being relevant decades ago, and the only way they manage to credibly cite them is to reduce the whole thing into a free/state planning dichotomy that can't really be applied to modern forms of regulation and social welfare. Other than his cherry-picked examples, there's no argument in that column that couldn't have been made in the 40s. That's a pretty good clue that Brooks isn't engaging with the specific dimensions of the health care problem in the US in 2011, or giving any real credence to the massive amount of research and comparative study being done on the topic.

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  3. "Hm, checking wikipedia, it turns out Hayek lived about forty years longer than I thought."

    Yeah, an extra four decades can really matter! Imagine if Einstein had died when he was 36: no General Relativity. If Newton had died when he was 44: no Calculus. If Thomas Jefferson had died at age 43: no Declaration of Independence. If Stancil had died at age 35: he might never have even met Pittelkow!

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  4. Haha, you forgot Jim Morrison at twenty-sev -- oh, wait.

    But again, Jim -- this post wasn't about Hayek and I'm not claiming to know the ins and outs of the man's work. If he mounted some sort of trenchant, sophisticated latter-day critique of 21st century health-care reform that I'm unaware of (or am unaware comes from him), fine. I'm saying that Brooks' arguments are not that; they're just your standard concerns about The Planners, repackaged for the health care debate, and they don't really address anything we've learned about health care policy over the last fifty years.

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  5. Well, since sarcasm has only so much power, I'll switch to normal mode for efficiency's sake:

    The debates of the '40s were not primarily over Marxist-style planning or Soviet-style totalitarianism. They were about precisely the sort of regulation on the margin that you are talking about. That's how the ideas were defended and that's how they were countered.

    I won't say that the political Left, in general, hasn't learned some of the lessons from that debate and adopted better policy as a consequence. But the specific examples that you chose as showing that debate to be out of date are in fact quintessential embodiments of what that debate was about.

    I was not about to pass your unknowing recitation of hackneyed and defeated 70 year old arguments unmocked. It wouldn't be fair to Rob.

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