Monday, November 24, 2014

Gary Becker's Legacy By Guy Sorman

From City Journal, "Markets Everywhere: How economist Gary Becker changed our lives" by Guy Sorman:
[Gary] Becker not only came up with market-based solutions to public problems; he also debunked government efforts to use extensive regulations and spending to address those problems. This was a critical task, since the regulate-and-spend nanny-state approach, which denies the rationality of individuals and their capacity to take care of themselves, is seductive to many politicians and even to the public, in part because its unintended negative consequences, both moral and fiscal, aren’t always evident at first.

Becker viewed the Bloomberg administration’s 2006 ban on trans fats in restaurants as a classic example of overreaching regulation. The administration presumed that New Yorkers were too ignorant to make decisions in their own health interests. But were they? Yes, the evidence suggested that trans fats contributed to heart disease—though the degree of harm remained unclear. But before the ban, half of the city’s restaurants didn’t use trans fats, so health-conscious consumers could already easily avoid them if they wished. Further, the ban likely raised the cost of eating out in the city. Could such a price increase lead some New Yorkers to eat more at home—and perhaps eat more trans fats, too? Policymakers ignored such a possibility. Some customers, of course, may really love trans fats and want to consume them, even knowing that they could have bad health effects in the future. Defenders of the ban would say that making that choice could increase the incidence of heart disease in the city, which would burden Medicare and hence the taxpayer—a negative externality. If this were true, though, why not just let insurers require individuals who want to eat unhealthily to pay higher premiums? Why should the government impose a new regulation that diminishes freedom?

Public policies that curb personal liberty, Becker argued, too often are based on insufficient data; politicians regularly put them into effect without considering all their potential consequences or exploring alternatives. And such prohibitions are politically hard to remove, he added, meaning that the sphere of freedom continues to shrink.