Rewarding failure

Why and how an institution gets money directed to it may be more important than how much it gets.  This morning's Wall Street Journal article argues that the VA has gotten all the money it ever asked for, and yet it's failing.  The same disturbing pattern afflicts public school financing, which increases endlessly even as its results deteriorate. Paul Krugman argues that freeing the V.A. from the "perverse incentives" of "profit" should be a great thing, but Daniel Greenfield points out his lunacy:

“Crucially, the V.H.A. is an integrated system, which provides health care as well as paying for it,” Krugman wrote.  “So it’s free from the perverse incentives created when doctors and hospitals profit from expensive tests and procedures, whether or not those procedures actually make medical sense.” 

Of course ‘perverse’ profit motive incentives don’t go away.  They just morph into targets that have to be met at any cost.  A quick look at anything from Soviet agriculture to No Child Left Behind would show how that works. 

Krugman was either being dishonest or remaining steadfastly ignorant of how the world works.  And the VA met its targets and budget issues by rationing health care and killing patients. 

The way socialized medicine always does.

Or, frankly, any monopoly that manages to disconnect its funding from its performance by exempting itself from the rigors of competition and therefore from the discipline of consequences of failure.