don’t blame incentives

Psychology which explains everything
explains nothing
and we are still in doubt.

—Marianne Moore, Marriage

I was tempted to title this post “against incentives”. But really my objection isn’t to “incentives” per se. To be “against incentives” makes about as much sense as being “against breathing” or “against food” or “against gravity”. What I’m against is the mindless talk about “incentives” which is now ubiquitous. “Incentives” explain all social, economic, and political behavior — or are the only explanation that is needed. And a reference to “incentives” is all that is required to define the purpose and the goals of public policy. The problems that public policy are concealed by the all-purpose veil of “good incentives”. The causes of those problems remain unidentified and unaddressed once it is “understood” that they are the result of “bad incentives”. Human agency itself is tossed away, as, oddly enough, is the very notion of freedom. All behavior becomes nothing more than an unthinking, involuntary response to incentives. No one chooses how they behave. They just respond to incentives. Some people choose well. Many poorly. The difference between “good choosers” and “bad chooser” simply reflects their ability to compute the incentives.

the market isn’t the solution

“Government isn’t the solution to our problems. Government is the problem.”

— Ronald Reagan,
January 20, 1985,
First Inaugural Address

It is tempting to parody Ronald Reagan in light of the events of the past 12 months (and longer) and say: The market isn’t the solution to our problems. It is the problem.” Tempting, but just as illogical and fallacious as Regan’s statement was and remains. Government isn’t the problem because it isn’t the solution to our problems. Indeed, few critical thinkers would ever have claimed that government was the solution to our problems. Government policy and government action to enforce those policies can contribute to the solution of our problems. Government policy may be a necessary part of the solution to our problems, but it is not — by itself — sufficient to solve those problems.

It’s the same with markets. The market is the context, the setting, the ecosystem within which our problems emerge and within which our problems must be solved. If there is any lesson that should be taken from the failure of the Soviet experiment (1919 to 1981) it is that it isn’t possible to simply abolish the market. This is the (sole) truth that should be taken from so-called public choice theory. But the “market” does not exist as some pure, pristine Platonic Form that is corrupted by fallible and flawed human actors. The market is itself created — at least in part and, in some cases, in substantial part — by government policy. With no offence intended to proponents of deregulation, the market doesn’t just emerge from the unconstrained actions of market participants. Or rather, the market that would emerge from the unconstrained actions of market participants would resemble Thomas Hobbes’ description of the State of Nature: “a War of every man against every man” in which life is “solitary, poore, nasty, brutish, and short”.

everything new is old, again

That which was is that which will be, and that which was done is that which will be done, and there is nothing new under the sun.
There is a thing of which one would say, “See this, it is new.” It already has been in the eons that were before us.
                              —Qohelet 1:9-10

We’ll order now what they ordered then
‘Cause everything old is new again
                              —Peter Allen

“Branding” and “re-branding” is often presented as innovation. But as is true of scientific “revolutions”, innovation worthy of the label occurs infrequently and represents a fundament shift in thinking, practice, and institutions.

In the delivery, organization, and financing of medical care there have been only four moments of fundamental innovation since 1900. The first was the invention of “pre-payment” in the 1920’s. The second was the invention of Pre-paid Group Practice by Kaiser-Permanente in the 1940’s. The third was the adoption of “prospective payment systems” by Medicare in the 1990’s to replace systems of payment based on “reasonable costs” and “usual, customary, and reasonable” fees. The fourth was the replacement by Medicare of “prospective payment” with virtual capitation in the 2010’s.

This “fourth wave” of innovation has one fundamental idea that is more of a return to the notion of pre-paid group practice pioneered by Kaiser-Permanente and the Group Health Cooperative of Puget Sound than the invention of something new. That simple, core idea is all too easily obscured by the rococo proliferation of competing “brands” or “flavors” — the Shared Savings Program, the Pioneer Accountable Care Organization Model, the Next Generation Accountable Care Organization Model, and most recently the Direct Contracting Model.

Running alongside this path of fundamental innovation has been a second path of what might be called extractive or expropriative innovation. Such a label could, of course be condemned as excessively cynical. But the primary offense of the most famous of Cynics, Diogenes of Sinope, was to call things by their proper names.

super-majority

Aside

What was the purpose of the three-fifths requirement?
Where did that requirement come from?

What was the purpose of the two-thirds requirement?
Where did that requirement come from?

What was the purpose of the 2-votes-per-state provision?
Where did it come from?

What was the purpose of the electoral college?
Where did it come from?

These really are questions.

Not rhetorical questions.

Answers to follow.