The former Bush administration economist N. Gregory Mankiw is well known for his love of rich people and his outspokenness on economic matters. But in his semi-regular New York Times column on Sunday, Mankiw veers slightly out of his comfort zone. Apparently feeling that good objections to Obamacare and a higher minimum wage come from philosophy as well as economics, he has attempted, unsuccessfully, to write a piece that combines both.
Mankiw begins by noting that economists are also "political philosophers" whose judgements concern what they deem to be a "good society." Fair enough. What becomes difficult, he explains, is evaluating policies that reward some and hurt others. While Obamacare has allowed various people to get health insurance, he writes, it has also led to other Americans to lose their plans. How to find the right balance? According to Mankiw, one school of thought argues in favor of a "'social welfare function' that aggregates individuals' well-being into a summary measure."
Mankiw identifies this approach with the philosophy of utilitarianism, which he clearly dislikes. As proof of utilitarianism's flaws, he offers up this familiar scenario:
You are a doctor with four dying patients. One needs a new liver, one needs a new heart, and two need a new kidney. A perfectly healthy patient walks into your office for his annual checkup. Are you still willing to pursue the utilitarian course of action? At this point, almost everyone balks. Sometimes, respecting natural rights trumps maximizing utility.
If Mankiw would ask even a (high school) freshman philosophy student about this question, he might receive the obvious answer: the scenario is essentially impossible, and if doctors started killing some patients to save others it would quite obviously lead to a society that was not better by any calculation, including a utilitarian one. (Just try to imagine it.)
But Mankiw wants utilitarianism to appear silly, since he sees it as underpinning policies such as Obamacare and a higher minimum wage. But like many critiques of utilitarianism, this one starts to seem...oddly utilitarian.
Another problem with the utilitarian approach is that there is no objective way to compare one person’s happiness with another’s, especially when people have different preferences. Peter may work long hours at a dreary job to earn a high income because he gets a lot of utility from money. Paul may be forgoing a higher income for a job that requires fewer hours or offers more personal satisfaction because he doesn’t care as much about money. In this case, equalizing incomes by moving a dollar from Peter to Paul could reduce total utility.
Notice that Mankiw first claims there is no way to compare people's happiness, and then he goes ahead and...makes a comparison, just in the opposite direction. If Mankiw is able to do this in a tossed off column, is it really surprising to think that healthcare policymakers could also do it? Government makes regulations all the time that weigh different costs and benefits, which of course boil down to some version of "happiness."
But the bigger flaw with Mankiw's argument concerns Obamacare directly:
If you were ill at the beginning of the 19th century, a physician was your best bet, but his knowledge was so rudimentary that his remedies could easily make things worse rather than better. And so it is with economics today. That is why we economists should be sure to apply the principle "first, do no harm." This principle suggests that when people have voluntarily agreed upon an economic arrangement to their mutual benefit, that arrangement should be respected. (The main exception is when there are adverse effects on third parties — what economists call “negative externalities.”) As a result, when a policy is complex, hard to evaluate and disruptive of private transactions, there is good reason to be skeptical of it.
What's so interesting about this excerpt is the way that it views the pre-Obamacare status quo. Ask yourself this: would someone who didn't have health insurance ever describe the pre-Obamacare system in these terms? We already had a healthcare system that made all kinds of trade-offs. And many people, of course, never really "voluntarily agreed" to the system, even if they were lucky enough to have had insurance. Was paying high premiums because of pre-existing conditions a choice? Was taking the plan from your employer a choice? In Mankiw's world, however, things only became disruptive after Obamacare.
The status quo, whether in terms of the minimum wage or healthcare, was not just some completely fair system that is now being messed with by statist liberals. Our system of government and economy have been "disruptive" for a very long time.