Whom Should We Trust?

Greg Mankiw boils the seemingly endless debate about health care and other policy decisions down to a neat question. Whom do your trust?

In a post on healthcare, Paul Krugman makes this observation:

You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don’t trust them — they’re profit-making institutions, and your treatment is their cost. [Emphasis in the original.]

Paul’s comment got me thinking. Perhaps a lot of the disagreement over healthcare reform, and maybe other policy issues as well, stems from the fundamental question of what kind of institutions a person trusts. Some people are naturally skeptical of profit-seeking firms; others are naturally skeptical of government. (There is, of course, the issue that an HMO can be run as a nonprofit organization. The one I use through Harvard is an example. But let’s put that issue aside for another day.)

It’s a very short post so take a moment and read it. It seems to me that this goes to the core of how we view everything from fiscal stimulus to financial reform to health care to … you add your own thoughts. Are we comfortable ceding power that can probably not ever be recalled to a central authority or do we prefer dispersing that power throughout the private sector and limiting the say of government.

I can tell you that I come down on Mankiw’s side. I prefer to have the choice to work for someone else if my employer embarks on policies I don’t want to abide by or the locality I happen to live in adopts programs that I prefer to avoid. Put another way, I’m very wary of investing the federal government with powers that can predictably intrude into my everyday life.

Centralization of power has an historically bad record. I much prefer to live out my life without that complication.


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