So all of this talk about health care reform got me thinking about another public "good," education. The debate of late, especially in South Carolina, where successive governors and ed superintendents, have promised to remedy the state's terrible system, has revolved around school choice. Most people would agree that everyone should have access to both health care and education, but probably hesitate in characterizing either as a "right," yet we've applied disparate approaches in public policy.
Education, even before NCLB and the establishment of the Department of Education, has basically always been a government monopoly. Yes, private schools exist, but standards are still regulated to insure that students are taught essentially the same stuff in either place. Homeschooling is even worse. And everyone pays for public schools.
Health care started in the opposite corner. You get sick, you go to a doctor, you pay for his services. Pretty simple. But then technology exploded and costs became so much more volatile, and insurance was needed to minimize the unpredictability of costs, since you can't exactly predict sickness. The injection of insurance brokers between the doctor and the patient wrecked the perfect Adam-Smithian model, and incentives got all tangled up. Then you had medicare and medicaid, and then we have today.
What I've been trying to find out is whether reform in both of these areas is an inevitable and happy meeting in the middle of these public goods, or are they inherently different things? Either way, maybe we can take something to a comparison.
The two movements: let's use public money to pay for health care costs of some or all Americans; let's use public money to send some kids to private schools. You can characterize it from two perspectives: a health care public option will break the health insurance trusts by making them compete, but the public shouldn't be taxed to give money to private schools; the public option will further distort even an imperfect market, but vouchers will force public schools to get serious about results.
The health care debate might describe the difference more acutely: is it better to insert a new actor into the market, or put up more ropes around the market to force the current actors to actually fight?
And so I think in the end, even when we're talking about such an important good as education or health care, it's about competition. I think even in 2009 recessionist America, we are all still "capitalists," if we use that term loosely. The difference goes to exactly what Smith meant by the invisible hand. Is it the state of nature, or is it the way thinks should be? The laissez-faire libertarian would take the state of nature argument, a more rosy view of human nature, and say that we need to just leave well alone: i.e., no public option and no vouchers. But they would also say board up the public schools. The other side would say that human nature isn't so great, but competition theory still makes sense, so it's OK if we interfere so long as the result is to create more competitive markets and free the invisible hand from our natural greed and ignorance. That means creating a public option, and establishing a voucher program.
I'm pretty unsure about which side of this debate I'm on right now, but we're still operating in a world where we believe that choices and the right to choose interact in a way that generally yields good results. And if you take the reasonable view that either there is no such thing as human nature, or that it's mixed, then the door is open to whether we can make the sort of competition that exists "in the wild" more competitive. That's where the core of our debate should lie, and I think Adam Smith would welcome such a debate. I just think he'd want us to treat things like health care and education with a little more consistency of thought.
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I think you have brought up a very interesting comparison. The inconsistency is interesting. I personally believe that there can be competition within the public options, and secondly, I think the main difference between these two situations is profit.
ReplyDeleteI think there is room for competition within a public option, not just in the private sector. For example, my mother, a teacher for 30 years, does not think vouchers would amount to much because the cost of most private schools is well above any of the proposed amounts for vouchers, so she is skeptical that the voucher program would allow for many new people to attend private schools. One of her suggestions for injecting competition into the schools is to let parents choose teachers. Involved parents generally know who the good teachers are, and they will request the best teachers. This policy, along with other measures, would be a great way to figure out which teachers are doing a good job, and it would let you know which teachers are failing. You could expand that selection to letting parents choose which of the various public schools they want to attend, as there are often large differences throughout a single school system. This idea has begun with charter school programs, and perhaps it is time to expand it further. Perhaps there can be competition within the current system that way.
My second point is that I think it is important to recognize that the big difference between the private options in health care and education is profits. Most private schools are non-profit organizations, but insurance companies are not. Private schools do not have shareholders looking to make money off whether the students end up with degrees in the end. The schools compete amongst each other for other reasons (see: rankings), which is great because they want to be the best at what they do, despite their non-profit status. The goal (and legal obligation) of an insurance company is not to be the best insurance company in the business but only to make money. Perhaps if there were a public option as well as various non-profit insurance companies, we would have a more comparable situation to education. It could be an interesting direction for the debate.