Monday, November 23, 2009

Brooks on health care and institutions

There are at least two things to appreciate about David Brooks's column today. One is that it discusses the efficiency/equity tradeoff implicit in social safety nets. Nothing's for free, but that's not to say that costly things have no value.

The second point is that he argues that "over the years, Americans decided they wanted a little more safety and security. This is what happens as nations grow wealthier; they use money to buy civilization."

Political scientists and economists see this connection between economic growth and institutions in completely opposite ways. Economists think institutions precede and create growth; political scientists believe the reverse. As Gary King once said, what you think is exogenous curiously tends to depend on your discipline. In fact it should depend on inherent statistical properties!