Mankiw points approvingly to David Brook’s latest column, the upshot of which is that we have a coming contest between the wisdom of expertise embodied by Jeremy Bentham and the wisdom of the markets embodied by David Hume.
If you put Mr. Bentham in charge of the government, he’d proceed with confidence. If you told him to solve a complicated issue like the global-warming problem, he’d gather the smartest people in the country and he’d figure out how to expand wind, biomass, solar and geothermal . . .
Mr. Hume, I’m afraid, wouldn’t be so impressive. . . . “I don’t know the best way to generate clean energy,” he’d whine, “and I don’t know how technology will advance in the next 20 years. Why don’t we just raise the price on carbon and let everybody else figure out how to innovate our way toward a solution . . .
The people on Mr. Bentham’s side believe that government can get actively involved in organizing innovation. (I’ve taken his proposals from the Waxman-Markey energy bill and the Baucus health care bill.)
The people on Mr. Hume’s side believe government should actively tilt the playing field to promote social goods and set off decentralized networks of reform, but they don’t think government knows enough to intimately organize dynamic innovation.
So let’s have the debate. But before we do, let’s understand that Mr. Bentham is going to win. The lobbyists love Bentham’s intricacies and his stacks of spending proposals, which they need in order to advance their agendas. If you want to pass anything through Congress, Bentham’s your man.
Mr. Brooks, however, misdiagnoses the condition. Mr. Hume won this debate long ago. Free markets abound. Even the quintessential left wing wonk, Ezra Klein, writes
This is not really a case where the market has failed. It’s a case where the market has succeeded, and we don’t like its judgment. It’s not profitable to provide some of this technology to rural areas. But rural areas, quite understandably, want these technologies anyway.
That is, the complex system of regulations and innovation centers that Mr. Brooks attributes to Benthamism are really the product of negotiations between those who would block Mr. Hume. Not simply lobbyists seeking to protect their preferred industry but citizens who are themselves loss averse. The market produces winners and losers but the winners outweigh the losers.
Townhallers weren’t protesting because they thought their government provided monopoly protection. They were protesting because they thought they would lose their services, and they were right.
The blogosphere left and right sings the praises of Wyden-Bennett. Matt Yglesias and Brad Delong say they would really prefer Health Savings Account. Ezra Klein agrees with Arnold Kling’s basic diagnosis – a crisis of abundance. There isn’t much of a philosophical debate here.
What there is, is a political debate. How do we move the ball forward in a world where everyone has the power to block? How does Mr. Hume survive American democracy?