Monday, August 2, 2010

Politics Is (Usually) Not a Coordination Game

. Monday, August 2, 2010

Matthew Yglesias sees a bipartisan rationale for overhauling the American political system:

In Canada, their health care system is more equitable and it spends less taxpayer cash per patient. Traditionally, conservatives don’t point to Canada’s health care system as a conservative victory but they do point to Canada’s low taxes which are in part a consequence of its efficient single-payer health care system. So is that a conservative win or a liberal one? Well, it’s both. The main upshot of many features of the US political system that I don’t like is to enhance the influence of interest groups and decrease the influence of ideologues and technocrats. This is basically by design and reflects 18th century state of the art thinking about the dangers of liberal governance being trampled by demagogues. Insofar as the balance we’re currently striking is inappropriate to the conditions of the 21st century United States that’s bad for the right and the left.


This assumes, of course, that politicians are primarily motivated by ideology, and therefore mutually-beneficial common ground is easy to find. Unfortunately for Yglesias, if that were true it would (most likely) have already happened, and he'd have nothing to complain about. His complaint that interest groups are able to successfully lobby policymakers indicates that his assumptions are probably wrong.

But even if the assumptions weren't wrong, his conclusion still would be. Yglesias cites the Canadian health care system as an example of positive-sum policy: both liberals and conservatives can be happy about the outcome. But is that so? Low taxes are not contingent on an efficient single-payer system. After all, taxes could be lower still without any public health care system at all, as I imagine was the case before Canada's universal health care system went into effect. Conversely, the health care system could be even more egalitarian if taxes were higher or more progressive. Any tilt in policy in one direction or the other is generally zero-sum*.

Moreover, even if efficiency gains were created by a new policy, the surplus still has to be distributed somehow. That distribution is by definition zero-sum.

The point is that it's not enough to simply point to some policy outcome and claim it is positive-sum. That judgment must be made relative to some baseline scenario.

*This can get a little bit complicated, but an exception to this rule could occur when there are scale returns at that particular policy margin. But partisans are unlikely to value those scale effects in the same way; e.g. conservatives probably don't want a more efficient public health care sector if the result is a crowding-out of private health providers. Liberals probably don't want a more egalitarian system that leaves all consumers subject to a private monopoly. Etc.

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Politics Is (Usually) Not a Coordination Game
 
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