Rationalizing markets

A healthcare blog makes the tongue-in-cheek suggestion that we treat legal fees like medical costs:
It makes one think: If the lawyers are designing the health-care system, shouldn’t they be forced to operate under regulations similar to those they’re imposing? How, for example, do lawyers get paid? Today, they negotiate fees with clients. That hardly seems fair. In health care, doctors don’t negotiate fees with patients, they get paid according to an opaque schedule determined by health plans. Lawyers should do the same. The solution is “legal insurance.” After all, who amongst us knows when we’ll need a lawyer? It is often an unpredictable expense, and yet the “market” seems to have failed to provide such insurance. Government must intervene.
The sad truth, of course, is that we do something very much like this in all fee-shifting cases in the legal field, and it works about as well there as is does in the healthcare field.  It's a good point, though.  Why don't we imagine that we can apply the lessons of healthcare to every critical need in life?  Why do we trust people to supply themselves with their own food and shelter, for instance?  It's true that healthcare often demands more foresight than our other daily needs.  There aren't many people who are so disorganized that they can't be trusted to plan for satisfying their daily hunger, but many people will fail to plan now for a statistically likely medical bill in ten or twenty years.  Similarly, some people make a concerted effort to save up for their children's college tuition well ahead of time, while others look around one day in shock and realize their eldest is 18 and needs to do something about it next month.  Now where is that student loan application?  And by the way, I'm 55 and would like to retire soon.  Who's been saving up for me?

Nevertheless, it puzzles me why people imagine the government can substitute for their own role in virtually all long-term planning.  As Glenn Reynolds said recently, liberalism includes the belief that the voters aren't capable of planning for their own retirement, but they're capable of planning for mine.


Assistant Village Idiot said...

Once something acquires the status of a "right," then "society" has to pay for it.

If the people who are being told to pony up balk, then their right to the fruit of their labors is threateningly held up to scrutiny.

Grim said...

I was reading some reporter who was talking about how he really had planned for his retirement -- only to have half of it wiped out in the dot-com bust, half of what was left walk out the door in a late-life divorce, and most of the rest destroyed in the housing crash.

There's a fair point there as well: it's impossible to plan for the unknown, even if you're quite careful about planning for the statistical likelihoods.

E Hines said...

I was reading some reporter....

I read that Nocera piece, too. He's a text book example of obliviousness. He loaded up his 401(k) portfolio in a very narrow set of equities and then just walked away--willfully not paying attention to what he had.

Re his late-life divorce: while possibly a complete surprise, I think he would have had to have been paying no attention at all to be surprised by his. Marriages don't generally fail overnight.

And then he borrowed from his remaining 401(k)!?

And he adds Lately, I’ve been seeing a lot of doctors, just to make sure everything still more or less works. With no justification whatsoever, this just sounds to me like he's a hypochondriac.

I have no sympathy for such as these, and little interest in indemnifying him for his negligence.

It is impossible to plan for the unknown, in detail, but it is possible to minimize its negative effects by actually paying attention to what one's doing with one's money (or with mine, since my tax money is going to support Nocera in his dotage).

And discipline is both key and often hard. But hard means possible.

Eric Hines