The Tyranny of Big Ideas

Tyler Cowen takes on free parking in the NYT

IN our society, cars receive considerable attention and study . . .  But we haven’t devoted nearly enough thought to how cars are usually deployed — namely, by sitting in parking spaces.

Is this a serious economic issue? In fact, it’s a classic tale of how subsidies, use restrictions, and price controls can steer an economy in wrong directions.

Now, free parking is a favorite bugaboo of a certain strain of microeconomists and economically minded commentators. Nonetheless, little has been done about it. Equally little attention is paid to smaller and even more ubiquitous constraints on free exchange. For example, in most jurisdictions cutting hair at home can legally be done with a vacuum cleaner but cutting it for pay requires schooling, examination and a licensing fee.

On the other hand barrels of ink and the fates of political parties are determined over debates about the taxation of labor. Its a generally accepted principle of Public Economics that taxes are less damaging than regulation and in either case the broader and more uniform the restriction the less damage it does.

As such its not immediately obvious that whether we tax labor at a high marginal rate of 35% or 39.6% has larger supply side effect than whether a young entrepreneur faces a gauntlet of unnecessary classes and fees. In fact I am being too coy. I would be shocked if the taxes mattered more.

In that same vein we just went through a knockdown brawl on the expansion of health care. Yet, it would surprise me if anything short of single payer health care did as much to expand access to the poor as allowing pharmacists to sell any non-addictive drug they see fit.

If there is one part of the medical industry that clearly improves health, its the medicine part. Yet, that’s the one that we through our own choices restrict the poor’s access to the most. We restrict which drugs can be sold, we restrict who can do the selling and restrict who can authorize the sale. Surely, two levels of restriction is enough.

We don’t seem to feel doctors can be trusted to know whether or not a medicine should be prescribed at all, hence the need for the FDA. We don’t think that merely having a prescription in hand is enough to ensure that consumers will get the right drug or that they will be aware of side effects and interactions, hence the requirement for licensed pharmacists.

Yet even still, we require a third level of verification to ensure that consumers, in their apparently infinite foolishness, do not try to buy a drug they don’t need. I am not suggesting that their aren’t many cases in which a consumer might want the advice of a medical professional. However, many trips to the physician aren’t for advice, they are for permission.

These trips, these fees, these wait times are endured not because people want to know what is wrong, but because they want to be allowed to do something about it. Moreover, its precisely here that the shoe pinches for many lower income Americans.

Despite the massive regulatory apparatus surrounding pharmaceuticals many older, yet still quite useful drugs can be obtained for a few dollars. Nonetheless, the sick are forced to pay in time and money for one our most scarce resources, a doctor’s time, in cases where, if given a choice, they wouldn’t even bother to get it for free.

This is the tyranny of big ideas. Reworking America’s health care system, raising or lowering taxes on millions of Americans, fighting the deficit, securing our children’s financial future, etc. These are grand ideas, complicated ideas worth the time and effort of the most serious people in America.

Letting Mary Wilson cut hair if she wants, letting Mark Sanchez buy an asthma inhaler for his kid if he wants or letting Sam Jones open a little grocery store without buying a quarter-acre of parking spots for customers who are more likely to take the bus, these are small ideas. Yet, they are ideas that could directly and immediately affect the lives of the most vulnerable Americans.

They are ideas that could go a little ways towards easing everyday pain and long way towards improving the total welfare of our society.