US debates govt’s role, lobbyists smile

I’d like to introduce you to two friends of mine, Mr Bentham and Mr Hume.
Mr Bentham knows everything. He went to Stanford, then to the Kennedy School before getting a business degree. He’s got multivariate regressions coming out of his ears, and he sprinkles CBO reports on his corn flakes for added fibre.
Mr Hume is very smart, too, but he doesn’t seem to make much use of his intelligence. He worked on Wall Street for a little while, but he never could accurately predict how the market was going to move tomorrow or the day after that.
Mr Bentham is a great lunch partner. If you ask him to recommend a bottle of wine, he’ll reel off the six best vintages on the wine list, in ranked preference. Mr Hume can’t even tell you which entree to order because he doesn’t know what you like.
If you put Mr Bentham in charge of the government, he’d proceed with confidence. If you told him to solve a complicated issue like the global-warming problem, he’d gather the smartest people in the country and he’d figure out how to expand wind, biomass, solar and geothermal sources to reduce CO2 emissions. He’d require utilities to contribute $1 billion a year to a Carbon Storage Research Consortium. He’d draw up regulations determining how much power plants would be allowed to pollute.
He’d know about battery efficiency and building retrofit programmes, and he’d give you a long string of dazzling proposals. So then you’d ask him to solve the healthcare mess.
He’d say we have to cover the uninsured without bankrupting the country. He’d design a set of insurance policy regulations to make sure everybody gets uniform care. He’d get out his magnifying glass and help pay for expanded coverage by identifying waste in Medicare.
Then, he’d say, we’ve got to change the way government reimburses providers. He’d set up a $1 billion-a-year Innovation Centre within the department of health and human services. He’d organise a superempowered Medicare commission to rewrite regulations and hold down costs. He’d set up comparative effectiveness research centres with teams of experts who would determine what treatments work best. He’d encourage doctors to merge their practices into efficient teams because he’d seen successful pilot programmes along that line.
Mr Hume, I’m afraid, wouldn’t be so impressive. If you asked him to take on global warming, he’d pile up reports on the problem. But if you walked into his office after a few days, you’d find papers strewn in great piles on the floor and him at his desk with his head in his hands.
“I don’t know the best way to generate clean energy”, he’d whine, “and I don’t know how technology will advance in the next 20 years. Why don’t we just raise the price on carbon and let everybody else figure out how to innovate our way toward a solution? Or at worst, why don’t we just set up a simple cap-and-trade system — with no special-interest favourites — and let entrepreneurs figure out how to bring down emissions?” On healthcare, he’d be much the same. He’d spend a few days reading reports. Then one day you’d find him in the foetal position, weeping. He’d confess that he doesn’t know enough to reorganise a fifth of the economy. He can’t figure out which healthcare delivery system is the most efficient. “Why don’t we just set up insurance exchanges with, say, 12 different competing policies? We’ll let everybody choose a policy, and we’ll let people keep any money they save. That way they can set off a decentralised cascade of reform, instead of putting all the responsibility on us here”. And then Mr Hume would beg you to leave him alone.
I’ve introduced you to my friends Mr Bentham and Mr Hume because they represent the choices we face on issue after issue. This country is about to have a big debate on the role of government. The polarisers on cable TV think it’s going to be a debate between socialism and free-market purism. But it’s really going to be a debate about how to promote innovation.
The people on Mr Bentham’s side believe that government can get actively involved in organising innovation. (I’ve taken his proposals from the Waxman-Markey energy bill and the Baucus healthcare bill.)
The people on Mr Hume’s side believe government should actively tilt the playing field to promote social goods and set off decentralised networks of reform, but they don’t think government knows enough to intimately organise dynamic innovation.
So let’s have the debate. But before we do, let’s understand that Mr Bentham is going to win. The lobbyists love Bentham’s intricacies and his stacks of spending proposals, which they need in order to advance their agendas. If you want to pass anything through Congress, Bentham’s your man.