28 October 2013

Be Careful of What You Wish For. Or: Nudging Cass Sunstein Out the Door

Way back in May of this year (which seems politically so long ago), I posted here about the hypocrisy of House Republicans who opposed funding high-risk health insurance pools. This was, I submitted, less an action of Constitutional conviction than one of political gamesmanship. Little did I know the degree of gamesmanship that would later be on display in the government funding/debt ceiling imbroglio.

In any event, I worried then that sabotaging implementation of the Affordable Care Act would lead ultimately to enactment of a single-payer system sometime around 2026. I continue to believe this in part because supporters of the Act can attribute the failures in implementation of the federal health insurance exchanges to Republican intransigence. That such is not the case may not be remembered a year or more hence. Of course, if Congressional Republicans manage to take the spotlight off ACA implementation by pulling another funding/debt ceiling fiasco, they will have only themselves to blame if the holds them responsible instead of administrative incompetence. 
Cass Sunstein

Moreover, supporters of the Affordable Care Act will point to the relative successes of state-level exchanges as evidence that failures at the national level can be resolved by more rather than less federal involvement. And what greater level of federal involvement in the provision of health care would there be than to federalize it entirely? In other words, as Ross Douthat could have put it, the failure of Obamacare will discredit Cass Sunstein's notion of "nudge" only to replace it with good 'ole New Deal/Great Society liberalism.

Nudge, as I commented here, is the idea that careful rearrangement of individual incentives by a multitude of government (dis)incentives can get the market to do what social planners believe is best. Since individual and ultimately societal desires are generated by a multitude of material causes, Sunstein believes, manipulation of those causes by a series of well-designed "pinpricks" will cause us to want what is "better" for us than whatever we would otherwise desire. Neo-classical economics championed by the Chicago School of Economics meets state planning.

Contrast nudging with traditional Progressive liberalism that skipped the middle-man and went straight to government provision/control to make better citizens. The concepts of rent-seeking and agency capture (the situation that obtains where the regulated suborn the loyalty of the government regulatory apparatchiks), also refined by neo-classical economists of the Chicago School, put a serious dent in the confidence in the top-down government control. Nonetheless, if Obamacare collapses, expect to see a revitalization of traditional liberalism within a decade, especially if economic activity does not pick up and the middle class remains concerned about its security. .

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