Monday, February 4, 2008

Consequences and Consequentialism

So I've been posting up quite the libertarian storm lately, which for those who have known me a long time seems somewhat out of character. Well, the opposition to wars against Iraqis, Terror and Drugs aren't new, but what's with the attacks on social projects? Aren't I the dude who was always carrying water for social security and public education?

Well, yeah. Unfortunately, the primaries have reminded me that, just like the driver of a sports car finds his actions limited by the laws of physics, social planners are limited by the laws of economics. I'll probably get into those laws shortly, with the usual motivation of exploring my understanding through writing, but for now I'd rather work on clarifying some points for my extensive readership. There are what, three of you now!?!

Anyway, in case it wasn't clear, I want everyone to have access to health care. I'm less inclined to use "every American" than "everyone," but I also recognize that the developing world will take a while to develop, and no amount of effort will bring it up to our standards overnight. I'll probably address this issue separately in the near future, but some glaring issues come to light. First, what do we mean by "healthcare?" Second, we spend an astonishingly large amount on healthcare now, so how might throwing more money at the problem possibly help? Third, while single-payer seems attractive for any number of reasons, what makes health care so special that market competition won't give us the benefits it gives us everywhere else? Fourth, if kids are really expensive, maybe we need to make sure that the people having them can pay for them. My opposition to the plans offered by the Dem candidates are consequentialist: can our economy afford to spend even more on health care without seriously looking at the supply side of the equation?

Public education is a similar situation. If we assume that income inequality is a rough approximation of productivity inequality, better outcomes for all depend on better productive capacity. Productive capacity is limited by social programs that provide incentives for forgoing productive work, but it's also limited by lack of education. In simple terms, my policy preference on this matter is identical to health care: I want for the poorest among us to be able to secure for their children better education than they can presently afford. There are balance of payments issues here of course, but more important is the matter of efficiency in the deployment of cash. I'm running out of ways to run from the conclusion that we're not getting very good education for our dollar. Significantly, outcomes seem largely affected by the character of the students that a child studies with, an effect that puts middle and upper class students at a huge advantage. This is a tough nut to crack since it won't respond directly to a simple commitment to spend more. We have to answer some hard questions about where the responsibility of the state begins and the responsibility of parents, families and peer groups ends. Once again, possibly a topic for another post, a tough commitment for me to make given that I've been spamming on econ for a week now already.

I think what I'm trying to say here is that I'm not trying to be heartless, but I'm trying to avoid bad outcomes from good intentions. Raising the minimum wage sounds great until you price a swath of workers out of the market and leave a bunch of them unemployed. Protectionism sounds great until you've sheltered antiquated industries from world developments for so long that the structural adjustments necessary to once again be competitive have gone from hard to impossible (I'm talking to you, rust belt). Tight accounting practices sound like a great way to prevent the next Enron until you realize that the cost of doing business has gone up enough that you're really just preventing the next Google from listing in the NASDAQ or NYSE instead of somewhere in Asia.

The consequence of consequentialist thinking is that intentions don't count. The War on Poverty hasn't cured poverty. The War on Drugs hasn't removed drugs from the streets. The War on Terror hasn't made the country less terrified. It's not that I'm opposed to having our cake and eating it too, it's that a lot of times it's just not an option.

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