Arnold Kling  

When in Doubt, Regulate?

The Most Memorable Passage in ... Sell-Out Symmetry...

In my view, that is what we can expect from the next Administration.

From a tax perspective, the Democrats will be constrained. All of their beloved "middle-class tax breaks" will be inoperative unless the Alternative Minimum Tax is curtailed. The tax increases that they plan for high-income taxpayers will serve mostly to make up for lost revenue from reforming the AMT. There will be essentially nothing left over for new spending.

...How can the Democrats implement policy changes without large spending increases? The answer is regulation. The business sector is going to be increasingly told what to sell and how to sell it. Particularly in health care and energy, firms are going to be accountable to bureaucrats, not to customers. Products and services will be designed in Washington, not by competition.

As I mentioned here, Alfred Kahn has similar fears.

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COMMENTS (3 to date)
Lord writes:

As the current healthcare system is so very far from market based, it will take something quite innovative to reform it. Throwing money at it would never work. One can call that regulation, and while some bureaucrats may be involved and probably should be if we are to ever see some efficiency introduced into the system, they needn't be the centerpiece of it. Don't fear change, embrace it.

BGC writes:

You could call this the New Labour model, because it is mainstream in the rapidly growing UK public sector. But we are many years down the line.

The creation of a large regulatory state over the past 15-25 years led to very powerful lobby groups within government, so that regulation merely delayed the resurgence of tax and spend, and a resurgence of the centralized command economy.

A doubling of real-money (proportion of GDP) expenditure on UK NHS has led to almost undetectable improvements in health services but a truly appalling set of problems of ineffectiveness and inefficiency, which are intractable due to the lack of incentives and lack of local control.

For example, for several years there have been very serious problems of hospital acquired infections, with national campaigns and comments in speeches from government ministers, investigations, new projects etc.

The solution is not exactly rocket science - simply basic levels of cleanliness and hygienic practices. Yet the problem cannot be solved and is probably getting worse.

The fact is that regulation does not work. This again is not rocket science. The British PM used to know this, but the temptations of power have wiped his memory - and probably the need to buy support from his own party.

Tim writes:

It sounds like something I read recently.

Ostensibly it was a quote of Ronald Reagan decrying the philosophy of government: "If it moves, tax it; if it still moves, regulate it; if it stops moving, subsidize it."

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