Monday, June 25, 2012

Now Tyler Cowen Ditches Laissez Faire Economics Completely

In posts over the last coupe of years, I have shown how Tyler Cowen has moved away from Austrian Business Cycle Theory and has become a pretty standard Keynesian, when it comes to macroeconomics and monetary policy.

Now, it appears that Cowen has moved even further into the statist camp, beyond monetary and business cycle theory. He writes this morning in a post (My bold):
If the Supreme Court strikes down ACA in part or as a whole, and you did not like the law in the first place, do not assume you should be happy. It is far from obvious that we will end up with something better. I do hope that today (or later this week) is not simply a big exchange of anger and recrimination. No matter what happens, America still needs health care reform and this will require cooperation across the ideological spectrum.
What the hell does "health care reform" mean? It suggests to me that Cowen is implying that there is a role for government in health care.

Any comment by a free market economist wouldn't come anywhere near talking about "reform", but that the only true solution to efficient health care is for the government to be removed from the sector and health care left to the free markets, where competition and creativity would be allowed to bloom.

That Cowen doesn't come close to saying this is very shocking. It's a refutation by him of basic laissez faire economics. He knows better.


  1. It seems every news report, every editorial comment and every water cooler discussion is deliverd with the assumtion that "government" is at the heart of health care, as if the products and sevices we use to care for our own bodies somehow exists outside the parameters of market economics. It has been like that for so long, someone less involved than Mr. Cowen might be forgiven for having fallen into the Keyensian mindset, but for someone who considered himself aligned with Austrian principals it is quite pathetic.

  2. I'm not so sure, Mr Wenzel. His utilization of "across the ideological spectrum" smells to me like he simply means realpolitiking will be required whatever one's economic persuasion.

  3. He uses a weasel word like "reform" so that it's left to his audience to guess what he means, or so that he can't be pinned down as favoring one path over another. Reform could be removing government from health care entirely, or it could be a health care system completely run by government, or anything in between.

  4. I think you cannot read what his intention for reform is form this post. He may well want to remove all regulation and let the poor and sick depend on handouts from friends and friendly physicians. That would be a very bad idea, but it may be what he means, and I'd suppose you'd applaud it.

    1. You enjoy living under a bridge?

  5. I can't blame him. Keynesian economics is good for his industry while Austrian economics means he and his industry would have to deliver a product worth what is charged for it. That would mean risk and the goal is to eliminate all risk so we can all get rich. Think of it this way, Government is to academia as Oil is to an Oil Company Executive. You would expect an oil company executive to have a biased view on energy, so why wouldn't you expect someone in academia not to have a biased view towards government?