When Policy Becomes a Battleground for Lifestyles

The WSJ quotes a section of Richard Wagner ’s “Economic Policy in a Liberal Democracy” (1996):

Suppose medical care is financed through state budgets, or, equivalently, through private insurance that is constrained by government to charge common pricing. Once this happens, a new network of interests is created. People who make relatively low use of a service form a natural interest group in opposition to those who might make relatively high use. What was once a matter of a simple toleration of different choices of life-styles under conditions where the choosers bear the costs associated with their choices, becomes a matter of political concern. In the presence of collective provision or common pricing, activities that entail above-average costs, actuarially speaking, will be shifted partially on to those whose activities entail below-average costs.

The state necessarily becomes involved as a battleground for the adjudication of disputes over personal life-styles. When economic activity was organized according to the principles of property, contract, and liability, a society could tolerate peaceably a variety of such life-styles because those who conducted more costly patterns of life would pay for them. But once the market principle of personal responsibility is abridged for some principle of collective responsibility, interest groups are automatically established that will bring personal life-styles on to the political agenda.

First published Dec 2, 2014