Appleton, WI: Megan, since you support some form of income redistribution, and seem to support some form of health income supplementation, what is it that this bill gets the most wrong? Or is it simply its irresponsible long-term budget? This seems like an entitlement you support, if there were more first-dollar consumer discretion and funding. Do you really feel in all honesty that this bill will do more long-term harm to medicine than it will do short-term good, with the rate at which technology advances? I just don't see how the poor currently overeconomizing on health care is a positive curb on the system. Please help me agree with you that the bill isn't worth it over any time span.
Megan McArdle: One of the hardest problems that economists deal with is how to weight the interests of future people. The problem is, there are so damn many of them (we hope!). Because the number of people who will be alive in the future is so much larger than the number who are alive now, straight utilitarian calculus can easily lead you to say that people alive now should give up 90% of their income to do anything that increases the income of future people by a penny a year.
The natural answer is to discount the utility of people in the future--in much the way that you discount your own future utility, so that someone has to pay you (interest) in order to get you to defer consumption.
Unfortunately, because the future is very long, even a low discount rate ultimately means that you put basically no weight on people who are alive beyond about 50-100 years from now.
This is a big dilemma for environmental economics, and I think it is also a dilemma here. I am fairly skeptical of the claims that this bill will save thousands, or tens of thousands, of lives a year. (see here: http://www.theatlantic.com/magazine/archive/2010/03/myth-diagnosis/7905/) But even if you think this is true, placing any value at all on the lives of people in the future means that if you save those lives by causing even a small reduction in the rate of innovation (through price controls or regulation), you will end up killing far, far more people than you save. Compound interest is a killer.
I hope that's not too abstract and boring. It's a really tough, really interesting problem, and at some level, it's simply a value judgement about how to weigh the lives of current and future people.
But I'll note that both sides do this very inconsistently: the left wants a high weight on current lives and a low weight for future lives in analyzing health care, but wants to reverse this for the environment; the right takes the opposite stance. Or, in many cases, they simply deny that there is any possible tradeoff between current and future welfare. I find those denials pretty unconvincing--which is one of the reasons I'm for a carbon tax, and against this legislation. There's also the fiscal problem, which I've addressed in other questions.
No comments:
Post a Comment