There's another problem besides an imbalance of information which free market idealogy does not handle well–costs transferred to third parties. ~ Ilene
Why Freakonomics Freaks Me Out
The law of supply and demand offers a useful insight: Typically, if you reduce the price of something, people will buy more of it. Unfortunately, some economists can’t help but take the idea too far.
"Freakonomics" authors Steven Levitt and Stephen Dubner tell a story in their new book, "Think Like a Freak," about meeting David Cameron before he became the U.K. prime minister. They tried to make him see the folly of the taxpayer-funded National Health Service, through which people get treatments free of charge. They explained that the market for medical services is just like any other market, and it can't work right unless patients have to pay.
As Levitt, a professor of economics at the University of Chicago, summed it up: “It doesn’t take a whole lot of smarts or a whole lot of blind faith in markets to recognize that when you don’t charge people for things (including health care), they will consume too much of it.”
Maybe Cameron lacks smarts, because he abruptly ended the meeting. Far more likely, he's intelligent enough to know a juvenile ideological argument when he sees one, even if it's made by someone who ought to know better. Economists have understood for years that medical services aren't simple “goods” such as apples or automobiles, and that free markets for such things don't work very well.
The trouble is an imbalance of knowledge. Most of us don't know enough about medicine to diagnose our own problems…
Continue reading Why Freakonomics Freaks Me Out – Bloomberg View.
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