Monday Smackdown: Donald Trump as a Reichstag in Search of a Fire

Monday Smackdown: Yes, The Hoover Institution Made a Bad Mistake in Hiring John Cochrane. Why Do You Ask?

It is interesting that when Charles Dickens's character Ebenezer Scrooge says of the poor that "If they would rather die, they had better do it, and decrease the surplus population”, he is well to the left of John Cochrane.

The position Scrooge takes is that the Victorian workhouse system is a sufficiently well-functioning entitlement that the poor have—not that the poor have "no such law, right, or entitlement" to enough food to keep from starving to death.

What a maroon!:

Noah Smith: Americans Sure Seem to Like Universal Health Care: "In a recent blog post, Hoover Institute senior fellow John Cochrane likens single-payer health care to single-payer food...

..."Is every American entitled to eat?" [really means] "Don't you think the Federal government should establish an entitlement that every American can have the Federal government pay for his or her food, from funds raised by taxation?"... Even to that one the answer has to be no. There is no such law, right, or entitlement. That is a simple matter of fact....

Most people wouldn’t support putting the entire U.S. populace on food stamps, only those in need. But by drawing an equivalence between health care and food, Cochrane is ignoring the long history of economic research showing that the health-care market is very different from others.... The great economist Ken Arrow... asserted that if economists care about human welfare, instead of just about overall economic efficiency, they should favor some form of government provision of health insurance. Without the government, he writes, we could easily end up with a system that uses resources efficiently but causes horrible human suffering... the importance of moral norms... incomplete markets... uncertainty—in health care, people don’t know what they’re buying until it’s already too late to make a different choice. Unlike food, which you buy over and over, open-heart surgery tends to only happen once. This is also the case for college education, and may explain why top universities are all nonprofits rather than for-profit institutions.

One big problem with incomplete information is what economists writing after Arrow’s article have come to call adverse selection.... Another problem Arrow mentions is moral hazard.... There are so many problems with the health-insurance and health-care markets that it’s little wonder that they operate differently from the markets for food or cell phones. The health industry is full of things like doctor-patient trust and expectations of selfless morality, which operate outside normal market mechanisms. And it’s also full of dysfunction—insurers denying claims, hospitals overcharging for everything, people using emergency rooms as expensive substitutes for health insurance. To Arrow, it would probably come as no surprise that other rich countries, all of which use some system of universal health care, end up paying much less for about the same quality of care that Americans receive. Widespread popular support for universal health care would also come as no surprise to this master economist. Free-market purists like Cochrane may not acknowledge the power of Arrow’s reasoning—and of the follow-up work of many excellent economists since—but the American people seem to understand.