Monday, August 15, 2005

Boo Hoo the market is complex

The New York Times, that increasingly less relevant paper in the east, did a story this morning whose main point was that health consumers are overwhelmed by the amount of information available today. This is a fairly consistent mantra for the NYT and for many other liberal screed locations. In a great quote they talk about a patient overwhelmed by her choices on treatment options that could either cure her or kill her. "I'm not a doctor!" she shouted. "I'm a criminal defense lawyer! How am I supposed to know?"

The NYT weltschmerzing is conditioned on two points - both of which are false - but still very real. The first is an assumption about expertise. One could do a long intellectual history about the base of this from the enlightenment but it is conditioned on the notion that all things are ultimately discoverable and more importantly that individuals can develop a clear understanding in an area that will be naturally superior to anything that a mere mortal can achieve. Indeed, as we developed knoweldge over the past several centuries and more importantly as we divided knowledge into discreet "disciplines" that process of elaboration became more and more prominent. But with our growing bodies of knowledge we forgot to think about common sense. Hayek talked about the importance of the knowledge of time and place (that some individuals possessed unique knowledge based on their experiences) but the assumption of communities like the Times is that the knowledge of time and place is not important. Were their dismissal of the knowledge of time and place the only flaw it would be troubling but then they assume that complexity of choices is troubling. That leads to the second false premise.

Namely, the Nanny State. If you posess absolute certainty about the truth then you want to impose that truth on others. And as important, if the market produces many choices people will be overwhelmed and expertise can step in and simplify. For example, before telephone deregulation we had one choice (albeit more expensive and less consumer oriented) but it was reliable. Before deregulation we had fewer airlines that were more expensive but it was simpler. Let the experts control the decisions and they will give you the "right" answers. Think Soviet agriculture or French culture.

One of the base conflicts in modern society was explained by Charles Lindblom in a book he wrote about politics and markets about 25 years ago. Lindblom suggested that one group in society is very optimistic about intellectual capacity but simultaneously believes that the non-elites in society cannot understand the complexities of the world. The other is skeptical of the capacity of any individual to understand the complexity of the world. The first group assumes that the right people (those with the knowledge) will find their way to the top of the heap and benefit us all. The second assumes that even though we are incompetent as individuals to see the whole picture that the combined weight of our decisions will actually come closest to satisfying individual needs and aspirations. That argument was improved upon in James Surowiecki's book The Wisdom of Crowds. In the end we probably benefit more from the second view.

Sure patients have a tough time negotiating the complexities of modern medicine. But so do doctors. And would anyone reasonably chose to go back to where doctors assumed control of our lives? I for one certainly would not.

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