There are lots of academics endowed with tremendous technical knowledge, but whose understanding of American politics is rather shallow. For some reason, those who happen to be economists tend to have their political opinions treated with unusual deference, even though they often have no more knowledge than the average math professor. For instance, Greg Mankiw chastises President Obama for merely proposing deficit-neutral health care, rather than reforms to reduce the net cost of the system. Ezra Klein exposes Mankiw's ignorance:
There are at least four ideas in the health-care reform debate that
have the potential to deliver on long-term savings. Mankiw does not
make mention, or even reference an awareness, of any of them.
the theory that comparative effectiveness review -- particularly when
combined with a new IT infrastructure that could eventually help guide
physician decisions -- will cut down on unnecessary treatments and
allow us to bring high-spending regions of the country into sync with
their low-spending brethren.
There's the idea that the Independent Medicare Advisory Council will
be the locus for a continual process of Medicare reform that will begin
to bring down costs in the Medicare program, and also create a sort of
"best practices" laboratory where experiments can be attempted and the
best efforts can be further developed.
There's the argument for the public plan, and in particular the
public plan with Medicare powers, that implies that a large purchaser
in the center of the system could bargain better discounts with
There's the argument that the health insurance exchange will grow to
become the primary insurance market and that as insurers begin
competing on grounds of cost and quality -- as opposed to risk
selection -- that efficiencies will emerge and spending will drift
downward, and over time, the employer-based market, which is
responsible for many of the costly problems in the system, will begin
to migrate toward the exchange.
All of these are speculative. But that's true for any cost-saving
measures that aren't either single-payer or some radical turn toward
the free market that rips away subsidies for the poor and benefits for
the elderly. Mankiw, however, doesn't engage with any of them. Not even
glancingly. They don't exist anywhere in his post. Nor do the political
difficulties facing not only these approaches, but anything stronger.
These are pretty fundamental concepts in the health-care reform
debate as it's currently progressing. I don't know if Mankiw is missing
them or just ignoring them. But if you're concerned enough to write
about the need for long-term cost control, you should be concerned
enough to learn about some of the ideas for controlling costs.
Elsewhere on his blog, Mankiw challenges Obama:
During your campaign, you said,
"The danger in a cap-and-trade system is that the permits to emit
greenhouse gases are given away for free as opposed to priced at
auction. One of the mistakes the Europeans made in setting up a
cap-and-trade system was to give too many of those permits away." The
climate change bill now being considered in Congress does the same thing. Are you now willing to have the United States make the same mistake the Europeans made, or would you veto the bill?
Does Mankiw really not understand the difference between legislation that makes a sub-optimal improvement upon the status quo and legislation that makes the status quo worse? I hope he's just pretending to be this ignorant to score a cheap shot. Because if he really doesn't understand that, then he should immediately cease all writing on subjects that don't directly pertain to his specialty.