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Editor: Katharine Van Tassel
Akron Univ. School of Law

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Monday, June 29, 2009

Krugman on Health Reform

Oxdown Gazette has an excellent post discussing Paul Krugman's response to George Will's (Washington Post) and Greg Mankiw's (New York Times) editorials on healthcare.   The blogger writes,

Fortunately, Paul Krugman had similar concerns, but expressed them more clearly, and after all, he's a decent economist. In Health Care is Not a Bowl of Cherries, he responds to Mankiw:

Both George Will and Greg Mankiw basically argue that we don’t need a government role because we can trust the market to work — hey, we do it for groceries, right?

Um, economists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough. To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.

Those who follow Krugman, DeLong and other economist blogs know that in several posts over recent months, Krugman and DeLong have been rolling their eyes at economists succumbing to talking points and what they call "The Great Ignorance," in which prominent economists appear to have forgotten what their predecessors figured out decades ago. This began during the stimulus debates.


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