The Tyranny of Homo Economicus

How “thinking like an economist” has thwarted progress in America.

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After the passage of Medicare and Medicaid, universal health insurance seemed to be on its way. In 1971, the New York Times observed that “Americans from all strata of society . . . are swinging over to the idea that good health care, like good education, ought to be a fundamental right of citizenship.” The year before, Senator Ted Kennedy had introduced a bill providing universal coverage with no payment at the point of service, on the grounds that “health care for all our people must now be recognized as a right.” The bill didn’t pass, but it laid down a marker for future health care reform.

But when Democratic presidents and congresses took up health care in later years, they chose a different path. Rather than pitching health care as a right of citizenship, the goal was better-functioning markets for health care as a commodity. From the “consumer choice health plan” proposed by Alain Enthoven in the Jimmy Carter administration through the 1993 Bill Clinton plan and down to Barack Obama’s Affordable Care Act, the goal of reform was no longer the universal provision of health care but addressing certain specific failures in the market for health insurance.

The intellectual roots of this shift are the subject of Elizabeth Popp Berman’s new book Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy. A distinct style of thinking, she argues, reshaped ideas about how government should work and what it could achieve. This “economic style” of thinking, originating among Democrats rather than on the Right, “centered efficiency and cost-effectiveness, choice and incentives, and competition and the market mechanism . . . . Its implicit theory of politics imagined that disinterested technocrats could make reasonably neutral, apolitical policy decisions.” Rather than see particular domains of public life, like health care or the environment, as embodying their own distinct goals and logics, they were imagined in terms of an idealized market, where the question was what specific market failure, if any, the government should correct.

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