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Libertarianism, Neoliberalism and Medicare for All?

by Logan Zoellner1 min read14th Oct 2020No comments

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I suspect there are a fair number of people on this site who self-identify as libertarian or neo-liberal.

 

This question is more for neo-liberals--those who believe "the market should do what markets are good at, governments should do what markets are bad at"-- but I would appreciate a libertarian perspective as well.

I have a basic intuition that goes like the following:

If the government is going to mandate something, it should also pay for it.

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For example, rather than mandating a minimum wage, it would be preferable if the government were to provide a minimum income--and pay for it using government funds.  This provides the benefit of guaranteeing people a certain level of income, but avoids the drawback of tying people to certain jobs and mandating that those whose skills are worth less than the minimum wage remain unemployed.

 

Applying this same logic to health care, it seems one would conclude that "Medicare for all" is superior to a Public Option or requiring that employers pay for their employees health care.

 

The intuition is this:  if the government has already identified a minimum level of health care, there is no additional benefit to privatizing the task of buying that health care.  If coverage for a certain treatment is mandatory, then it becomes an inelastic good--demand no longer depends on price--therefore the only thing that matters is negotiating power.  By negotiating "on behalf of us" the government has the most negotiating power possible and hence should be able to get the best prices.

 

This heuristic has the additional benefit of forcing the government to internalize the costs associated with its policy.  No longer can the government create unfunded mandates only to discover they have a devastating ripple effect across the rest of the economy.

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So my question is: does this heuristic seem correct?  What are some obvious drawbacks or counter-examples?  What are some unintuitive cases where this heuristic could be applied--perhaps with foreseeable good or bad results?  How would this be codified into law?

One interesting case is, how would this heuristic apply in the case of "negative mandates"?  For example "emitting carbon dioxide is forbidden" is a foreseeable government mandate, but the best policy is generally agreed to be a carbon-tax.  Perhaps this simply means that the proceeds of the carbon-tax should be refunded on a per-captia basis rather than used to fund other programs?

For the purpose of this question, assume that all government revenue comes from a VAT with a UBI prebate that is set at a level to ensure government deficits are zero "over the course of the business cycle".  Adding additional spending will require raising the VAT or lowering the prebate.  Set the prebate according to your own political preferences: 

  • 0 = libertarian
  • minimum wage=neo-liberal
  • living wage=liberal
  • level which maximizes income for the poorest=leftest

 

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PS.  Is there a shorter word for "level which maximizes income for the poorest"?

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