New podcast episode with Brink Lindsey and Steven Teles about their new book The Captured Economy:

Brink Lindsey and Steven Teles argue in their new book “The Captured Economy” that the last few decades have been characterized by an increase in political rent-seeking. Focusing on the financial sector, intellectual property laws, occupational licensure, and land use, they show how legislation has been captured by special interests in ways that slow growth and increase inequality. In this episode, Lindsey and Teles discuss how these policies distort various markets and cause upward redistribution, as well as the different ways we can work to better “rent-proof” our politics.

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At the Oxford Practical Ethics blog, Matt Baum objects to cities that have bike rental programs but don’t provide helmets to riders. His conclusion:

I applaud these city-transport schemes for being innovatively convenient and environmentally friendly. But the city, if it is going to provide such a scheme, has a responsibility to make it possible to (and indeed encourage people to) use it safely. In this case, the city has a responsibility to provide helmets.

To be sure, there’s a tension here between public health officials’ campaigns to increase rates of helmet use and local governments renting bikes to people without providing helmets. But I don’t think this is ethically such a big deal, because there’s a lot of evidence that bike helmets don’t do much to make bike riding safer.

Western Australia enacted a mandatory bike helmet law in 1992, causing helmet use rates to rise from 37% to 82%. Here’s a graph with the results:

Head injuries didn’t obviously decrease all that much, while upper limb fractures rose a lot. Risk compensation could explain why increased helmet use may not have the beneficial effect that its proponents hoped for: people who wear helmets feel safer and thus are less careful when they are riding.

Here is a study reporting results that “are consistent with the notion that those who use helmets routinely perceive reduced risk when wearing a helmet, and compensate by cycling faster.” This study found that automobile drivers are less careful around helmet-wearing cyclists than they are around bare-headed cyclists.

There are other studies that showing that helmet use does decrease head injuries (here is one), but based on my cursory examination of the literature, it doesn’t seem like there’s good enough evidence that bike helmets make cyclists safer to justify legislation mandating them. And the evidence definitely is sufficiently inconclusive to exonerate governments of cities with non-helmet providing bike share programs from any moral culpability.

In addition to the post arguing against the mandatory licensing of barbers that W. Jerome highlighted last week, Matt Yglesias has gone on something of a liberaltarian rampage recently (see here, here, here, and here).  He’s taken some flack from his commenters for it.  His response:

A colleague mentioned to me the other day that I’m “pretty conservative” on some state and local government issues, with reference to some recent posts on occupational licensing…. I’m not. And I think that whole framing represents a bad way of understanding the whole situation.

I think it’s pretty clear that, as a historical matter of fact, the main thing “the state” has been used to do is to help the wealthy and powerful further enrich and entrench themselves…. The “left-wing” position is to be against this stuff—to be on the side of the people and against the forces of privilege… dismantling efforts to use the state to help the privileged has always been on the agenda. Don’t think to yourself “we need to regulate carbon emissions therefore regulation is good therefore regulation of barbers is good.” Think to yourself “we can’t let the privileged trample all over everyone, therefore we need to regulate carbon emissions and we need to break the dentists’ cartel.”

Our ideologies tend to encourage overly simplistic thinking on these issues.  Liberals make arguments about the existence of market failures to justify a pro-regulation stance, and conservatives/libertarians make arguments about the efficacy of free markets or the unavoidable ham-handedness of government intervention to justify an anti-regulation stance.  This ideological division makes it so that if a conservative allows that, in a given circumstance, regulation may be justified, it seems like she’s conceding something to the liberal, and vice-versa.  This makes people become increasingly entrenched in their ideological priors so that analysis of real-world issues involves little more than post-hoc justification of a forgone conclusion.

It’s too bad that political discourse is so often conducted in this way.  The world is complex; sometimes regulation is justified, and sometimes it isn’t.  It’s nice to see somebody like Yglesias who is a sophisticated enough thinker to recognize this and move beyond the one-size-fits-all arguments that are favored by his political tribe.

I meant to respond to this a while ago, but a bunch of things came up, so I’m just now getting around to it.  But anyway, here goes.  In W. Jerome’s post on reducing health care costs, commenter Joe said,

We should stop requiring that people get drivers licenses to be able to drive. The government costs in running DMV’s and driver education programs are completely unnecessary. Driving accidents continue to occur even though so called “licenses” are issued every day.

I’m kidding. I’m just pointing out that you are completely neglecting the concept of safety standards in the name of capitalism and competition. The point is that standards and licensing procedures must be constantly reformed and changed as new problems arise, but never completely done away with. It seems that system you propose would result in a class based system of doctors where the rich get “gold star” doctors and the poor get doctors that by today’s standards would be completely illegitimate.

I realize you probably have a good point to make here, but you must understand the ridiculousness of the idea of a medical free for all.

First of all, comparing drivers licenses to medical licenses just doesn’t make sense. When you drive, you have very little control over whom you are sharing the road with. Having a lot of people driving around without the basic driving skills you need to get a drivers license would make driving more dangerous for everybody. It’s completely different for doctors. If there’s a bad doctor, anybody can choose not to go to her. When we drive, we can’t choose whether or not to interact with inept drivers; when we shop for medical services, we can choose to avoid inept doctors. Now, this doesn’t show that medical licenses don’t make sense and drivers licenses do. It just shows that, in certain respects, medical licenses need to be justified on different grounds than drivers licenses.

As W. Jerome said in his post, I tend to be skeptical of medical licensing. The state-enforced monopoly on medical certification creates artificial scarcity in the medical profession and prohibits a lot of voluntary transactions. Doctors have to go through an enormous amount of training to get their MDs: undergraduate pre-med courses, four years of medical school, residency. Buying services from anybody with this much training is enormously costly. And for many complicated medical procedures, this makes sense. Your really do need tons of training to perform brain surgeries. But for many tasks that doctors commonly perform, this amount of training seems unnecessary. Do you really need eight years of undergrad and graduate training to prescribe drugs, set broken bones, and diagnose basic illnesses? But the American Medical Association actively tries to limit the ability of non-MDs, such as nurse practitioners, to do these things. This results in higher health care costs and huge rents for doctors.

But how would you know the difference between good and bad medical care providers under a health care system without licensing?  Well, for one, the internet makes it much easier to get information about things like this.  Right now, I can go to Google Maps, search for restaurants and other businesses, and find user generated reviews.  There’s no reason why this couldn’t exist for medical care.  I think one reason that it currently doesn’t is that our state-enforced medical licensing system creates a false sense of security among health care consumers.  The fact that the government guarantees the quality of licensed doctors makes it so that the consumer doesn’t have to worry about it as much (although consumers probably still should worry, because we have plenty bad doctors providing care despite the government guarantee).  Having a strong consumer feedback system would give medical care providers a strong incentive to give high quality service.  All that said, there probably is still a place for government regulation of medical care provision, but I think that we would be better off if we moved to a system with lower entry barriers where a body other than the AMA determines licensing standards.

An Upset Patterns reader writes in:

In all your politicalness, I don’t hear you talking much about healthcare.

True.

A cookie-cutter libertarian answer to the problem of soaring cost in health care is similar to any issue: deregulate the industry, stop giving away goodies like medicare and medicaid, and don’t give tax-breaks to company-provided health care. All of these things distort the spontaneous order of the market for health care. Regulations drive up costs more than they benefit consumers. Freebies like medicare and medicaid mean that when people are buying healthcare, they aren’t using their own money, which means they’re more likely to buy more than they otherwise would. Tax-breaks to company-provided health care mean that companies are less responsible in buying the insurance, self-employed people are crowded out, etc.

All of this make sense to me. If one is to look at a graph showing the rising cost of health care over time, there are two major “blips” in the general trend: new tax policy related to employer-provided health care after world war II and the introduction of medicare. America, by having government currently spending 50 cents of every healthcare dollar, seems to have a tragic mix of socialized and capitalist medicine.

But maybe the “get the government out” answer is too simple. Do adverse selection problems in insurance mean that making everyone buy health insurance – even those who do not need it or want it – will lower costs and expand affordability? Is there a moral concern to provide health insurance to everyone, regardless of its effect on increasing the deficit? Are insurance companies actually – as people seem to believe – screwing people out of coverage?

Obama’s proposed “public option” is a relevant issue worth discussing. What needs to be considered:

  • Is this actually not going to raise the deficit? What makes it a public option if it’s not subsidized?
  • Obama himself said that “UPS and FedEx are doing just fine. It’s the Post Office that’s always having problems.” Why will a government-run system be more efficient than private ones?
  • This is a huge liability for the future. Programs like this one don’t go away. If costs of it get out of control in the future, as has happened with social security and medicare, it’ll be a gigantic strain on the budget.
  • The number of uninsured Americans is commonly said to be about 45 million. Well, of that number, a third make over $75,000. Those are people that could afford it but don’t buy it. Is making them be covered when they choose not to be really a good answer?
  • What about for people who decide, since they will get free health care no matter what, that they will start smoking, become obese, and become a crack addict? Should healthy people pay for them?

A last thought from The New Atlantic:

I’m a Democrat, and have long been concerned about America’s lack of a health safety net. But based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm.