Undisciplined Obamacare

I haven’t been following the issue closely, but the Obamacare website has been experiencing significant technical problems. Some people want to argue that this proves Obamacare is a huge failure. I’d argue that the real test of success (or failure) is whether healthcare costs are eventually kept down and, more generally, whether it actually achieves its objectives (net of costs). But, because I don’t know much about Obamacare to begin with, it’s better for me to not pass judgment on on the debate at all.

But, I feel compelled to comment on Steve Landsburg’s “Six Observations.” Specifically,

It seems pretty likely that a big part of the reason why Amazon’s website works so well and Obamacare’s website works so poorly is that Obamacare, unlike Amazon, is not subject to the discipline of the market (and therefore, for example, employs coders with no equity in the enterprise).

This is a strange framing of the problem. Socialist countries are typically known for being very technically proficient. But, technical efficiency is not economic efficiency. The case against socialism is that without a pricing process, we don’t have a proxy that informs us on the relative scarcity of the factors of production. So, for all the technical efficiency of central planning, it all nonetheless represents an incalculable welfare loss, because the inputs were not pitted towards the highest valued ends.

There is a competitive aspect to the technical problems suffered in the early stages of Obamacare. If this were a competitive, private market, the second I suffered difficulties in signing up for one program or another, I would have an added incentive to simply opt for a competitor. Obamacare doesn’t give me that option. This is a cost to the system, but it’s a cost that must be weighed against the benefits, and to know the benefits we have to wait until they appear. (Just to clear: there are theoretical arguments for/against Obamacare, but I’m strictly talking about empirical falsification — pointing out the technical difficulties is an attempt at empirical falsification.)

My general point is that if you want to make an empirical case against Obamacare, these early glitches are probably not the best evidence. They, in my opinion, don’t get to the root of the problem with central planning. Rather, they’re errors that are just as likely to show up in private provision — technical ignorance has never been a strong argument against central planning. In fact, those who advocate socialism often point to historical evidence of great technical efficiency; e.g. the mass production of war material during the Second World War. The task of the economist is to show, as aforementioned, why technical efficiency is not economic efficiency.

By the way, I’m pretty sure that people hired by the government to code a website earn a wage, with some relation to market prices, and face some risk of being fired if they don’t preform their job well. So, I don’t think there is any basis for Landsburg’s suggestion that there may be an incentive problem behind Obamacare’s website’s technical issues.

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