Outsourcing Governance

I hear it said often these days that our country has become “ungovernable”. We can’t get the serious reforms we need because both parties are so desperately unwilling to make their constituents face up to the costs our long-term problems. What’s the solution? Uwe Reinhardt suggests that with drug reimportation, some politicians are essentially trying to outsource health care policy:

American politicians who support importing drugs from countries with lower, government-controlled prices — including the reimportation of American-made drugs originally exported to these countries — effectively ask the governments of these countries to do for American politicians what the latter are either unwilling or powerless to do at home.

It may be a nifty political expedient; but it is camouflage for a truly bizarre form of health policy.

I don’t think this policy is a good idea. But I am intrigued by the idea of outsourcing tough choices to countries with political systems capable of making them. I once had a micro professor, who does a lot of work in mechanism design, try to convince my class that an optimal policies could be designed where other County A’s policies are decided by popular vote in Country B. I think this scenario is a long way from there, since Country B (Canada) made the policy choice for themself, and we (Country A) are just trying to piggyback on it. But this type of solution, where we can import a policy decision, may be our best option.

Here’s another suggestion. Since we can’t seem to free ourselves from occupational licensing, especially in medicine, we should start making bilateral treaties where we agree to recognize the occupational licensing of other countries. Start small and not scary; like treaties with England and France. This will lead to a competitive advantage for the educational systems in the countries with the least burdrnsome licensing; why spend 8 years getting your degree in Country A, when you can get it in Country B in 6, then practice in Country A.

Of course this would be good at a state level too, but it might be politically easier at the federal level. In either case, it’s time to start thinking creatively about how to govern the ungovernable.

HT: Greg Mankiw