Adam Ozimek of Modeled Behavior recently chided John Stossel for assuming that the market can handle education. He pointed out that markets aren’t best for everything and gave the provision of security as an example. At an ordinary middle-brow blog I’d led that pass, but I demand better from those that can deliver. I dished out arguments about the remedial state and Bruce Benson’s economic analysis of the provision of law & order in hopes that he’d respond with something clever like Tyler Cowen’s network externalities argument against anarcho-capitalism or Peter Leeson’s against vertically integrated proprietary communities. Now those are people who have spent an unusual amount of time thinking about the issue, but someone as economically literate as Adam could have shot back with a less sculpted version of that type of argument. Instead his first response was rights-based and bereft of public choice (or “New Institutional” if you prefer) analysis, something one might expect from a Randian. It then occurred to me that Bryan Caplan has found a similar phenomena for healthcare. Perfectly intelligent economists will say that it’s so important that usual economic arguments go out the window. To someone who thinks markets are a fantastic way of delivering services, the importance of an industry would suggest all the more reason that it be provided by markets.
Some of this may be the result of being a bullet-biter prone to reductionism and economic imperialism. We ask “what’s so special about X that the usual analysis doesn’t apply”. Robin Hanson is particularly fond of that approach, not only for his specialty in healthcare economics but also asking here why we treat dating and employment differently. An argument for why one should not be a bullet-biter is here.