May 29, 2014

Imagine giving food to the poor using the VA model

Kevin Williamson  calls it the Cloud in the Machine

Nobody wanted these veterans dead, but dead they are. How is it possible that the government of the United States of America — arguably the most powerful organization of any sort in the history of the human race, in possession of a navy, a nuclear arsenal, and a vast police apparatus — cannot ensure that its own employees and contractors do not negligently kill its other employees and former employees? Never mind providing veterans with world-class medical care — the federal government cannot even prevent bureaucratic homicide
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Ludwig von Mises was developing a complexity-based theory of his own, the famous socialist calculation problem — arguing that, without the information communicated by market prices, economic calculation is not inefficient but impossible, and that the so-called scientific socialists, looking down at their five-year plans and their model villages like an archduke playing with his orrery, could not, in fact, actually do what they purported to want to do: rationally manage industries and national economies.

Markets, the brain, and weather are among the textbook examples of complex systems, and they have something in common: Their behavior cannot be calculated beforehand.
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How confident should we be that our policies will produce the desired outcomes? That will depend in some part on how complex the system is that you are attempting to influence. Housing and mortgage markets are very complex, and politicians’ efforts to turn them to their own ends went very badly in 2008, and will go very badly again in the future. Health-insurance markets and medicine are both very complex, and we see how political efforts to manage those have been going.

Operating hospitals is a complex business, too. Consider a counterexample: Our food-stamp program has many problems, but imagine what a Hieronymus Bosch nightmare it would be if, instead of the current practice of giving poor people vouchers for food, we applied the VA model and attempted to have the government deliver the service itself rather than simply paying for it. That would mean federally operated farms, ranches, and slaughterhouses, government grocery stores, warehouses, distribution centers, transportation networks, etc., all managed with the competence and decency exhibited by the VA. Rather than trying to politically steer the extraordinarily complex system of producing and distributing food — rather than biting off way more than we can cognitively chew — we instead chose the relatively simple method, giving poor people vouchers for food. Of course that has its problems and unintended consequences, but they are milder than, say, national famine, which is probably what would come of government-run agriculture. We let the complex problem of food production meet the complex solution of the market.

Not every regulation or government program is doomed to fail. But we might consider the slightly terrifying possibility that when government does get something right, it does so by accident, temporarily, and for reasons that it cannot understand or replicate. This may be why the sheer volume of law and regulation has been climbing so rapidly: Intuiting its own inefficacy, Washington is throwing everything at the wall and seeing what sticks. The Entity with Whom politicians sometimes confuse themselves needed only ten commandments, not the ten thousand a year that Washington produces. Some of those coming down in the near future will be intended to reform the VA. The rational thing to do would be to abolish it. We’d be far better off paying veterans’ medical bills out of the Treasury than trying to operate a network of hospitals and clinics. And no matter what Washington promises to do to solve this problem, it is a good bet that the policy enacted will not produce the result intended. Reform is a random walk.
Posted by Jill Fallon at May 29, 2014 12:27 PM | Permalink