Friday, January 6, 2012

Another Academic Economist in Action

Today's example of absurd economics coming from academia is Professor Uwe Reinhardt's blog post in this morning's NY Times entitled "What Price Pluralism in Health Insurance?"

It is really hard to believe that Professor Reinhardt put pen to paper with this nonsense. Here is his argument: In the US, people have a tough time figuring out which health insurance plan to buy because there is such a diversity of plans. No such problem exists in some European countries through the simple expedient of requiring everyone to purchase identical plans. "Premium shopping among insurers is easy, because the standard benefit package is common to all."

Why not apply this logic to cars, television sets, fitness centers, etc? If the government would simply mandate that only one type of car, only one type of television set, only one type of fitness center, etc, can exist, think how easy it would be for consumers to comparison shop! Consumers would no longer have to make the difficult decision between a Chevrolet and a Ford. Now, the government would require that Chevys and Fords be identical. What a boon for consumers, according to Professor Reinhardt.

This is, of course, the identical system that Russia and China once had in place. Consumer choice is "inefficient' and "expensive," according to Professor Reinhardt, who teaches this stuff to young folks at Princeton University.

Your tax dollars and tuition dollars at work.

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