But it did precisely the opposite. What ended up happening, as we all would expect knowing what we know today, was a great cost shift. Indeed, the 80s seems to be a time when the rate of increase in US health spending moved out of line with other countries’ experiences. In this case, hospitals began charging more to patients with private insurance, which in turn put more pressure on private insurers to raise premiums but also to pursue unpopular cost-cutting strategies in response. Of course, think of how the voting population responds to this. “Look at the exorbitantly large increases in private insurance premiums!” Look at how evil insurers are! And of course, this greases the wheels even further for a discussion of both single-payer health care and perhaps even single-provider health care.

Now, there are forces that push us away from both single-payer and single-provider in health care, but it is clear to me that starving the beast (even if unintentional) has resulted in precisely the opposite of what its proponents would suggest. Maybe the better option would be to allow the beast to continue eating until the tax payments required to keep it alive would have spurred the population to wield a pitchfork. Is there a better test case for this theory out there?

I got to thinking about this the other day when I went through another round of working papers from the NBER – and predicted with 100% accuracy the conclusions of the papers by looking only at the name(s) of the author(s) on the papers (at least for the authors I knew, for those I did not, institutional affiliation was a pretty good indicator of the conclusion). Now, I don’t believe economics is a science, but surely the idea that any of us are dispassionately uncovering absolute economic truths with our research is farcical. By saying this I am actually not suggesting that it ought to be any different – I am of the school of thought that we should simply stop deluding ourselves and outsiders that we are actually dispassionate truth seekers. It might be the case that our discipline will advance better if the strongest partisan spin is put to all research – I cannot say, but it is moderately discomforting.

I suppose I am being a little smug. Maybe I earned it. My entire dissertation looks like it was written by my evil alter ego – and honestly I am not very proud of the work, which is some small reason why I have never written about it here. The issue is germane to current discussions in economics about “codes of ethics” that we are all supposed to follow. For example, if I write a paper arguing that the US is not polluted at all, I must reveal that my funding came from the paper manufacturing association of America, for example. That’s fine, I’m not going to delve into that topic for now. But if so much ink is being spilled over that Code of Ethics, I am utterly astonished that we have not addressed the far more problematic issue of our normative/political code of ethics.

My students know very clearly from early on that I am classically liberal, though I do not lecture directly on the idea and the reasons. And I do my very best to tell them when my mental view of the world is entering into our discussion. Of course, for doing this I am called crazy and all kinds of other things. But in my view, if we are going to spell out in gory detail all of the material that we are going to cover in our courses, it seems odd that political orientation is not openly advertised either (the students have a decent idea anyway). After all, taking an Intro Econ course from a Marxist is going to be very different than taking it from me. And professors should be honest about how and where these biases are likely to enter. For example, whether you are a Marxist or not, the supply and demand process works the same way, and prices play an informational and incentivizing role. However, the way we cover economic history may differ, and the importance that we place on particular market failure arguments may differ, and the confidence that we place in collective action may differ. Most important, the ethical aspects of economics will be presented entirely differently depending on one’s political biases. It is essential that this be made clear to students. And I am sure it rarely happens. I’ll provide particular examples over the coming months.

I remain perplexed at why there is not a stronger push for such “truth in advertising.” After all, the current situation leaves political impressions to students who cannot actually articulate what it is their professors are actually saying and to other professors who like to make their intellectual adversaries the subject of ridicule in their classes. This is not to say that I think there should be more intellectual diversity on campuses – I cannot even imagine how awful the policies would have to be in order to assure it nor do I think that getting more intellectual diversity would be a stable equilibrium. But that’s also a discussion for another day.

The point, in case it is not obvious, is that most of us are delusional about why we hold the particular views we do. In my mental model, we hold particular policy views because it helps us affiliate with groups and other ideas that we want to affiliate with. Is there an empirical test to run to verify that this is how we come to hold our worldviews? And do those of us who have changed at least some of our views over time stand out as anomalies or something else (for example, as recently as a decade ago, I was a vehement anti-free-trader, ask my wife if you don’t believe me).

We like to think of ourselves as an innovation nation but our government is a warfare-welfare state. To build an economy for the 21st century we need to increase the rate of innovation and to do that we need to put innovation at the center of our national vision. Innovation, however, is not a priority of our massive federal government.

Nearly two-thirds of the U.S. federal budget, $2.2 trillion annually, is spent on just the four biggest warfare and welfare programs, Medicaid, Medicare, Defense and Social Security. In contrast the National Institutes of Health, which funds medical research, spends $31 billion annually, and the National Science Foundation spends just $7 billion.

That’s me writing at The Atlantic drawing on Launching the Innovation Renaissance. Here is one more bit:

Our ancestors were bold and industrious–they built a significant portion of our energy and road infrastructure more than half a century ago. It would be almost impossible to build that system today. Could we build the Hoover Dam today? We have the technology but do we have the will? Unfortunately, we cannot rely on the infrastructure of our past to travel to our future. Airports, an electricity smart grid that doesn’t throw millions into the dark every few years, ubiquitous Wi-Fi — these are among the important infrastructures of the 21st century, and they are caught in the regulatory thicket.

Putting innovation at the center of the national vision is not simply about spending more, it’s about how we approach all problems. Read the whole thing for more discussion of regulation and other issues.

Here is the link to his book on Amazon. Now, if we are going to have a government, I certainly would advocate one that is more in line with what Tabarrok implies. I would strongly, and I mean strongly, caution everyone that the most likely scenario that will come out of the work of Tabarrok is that the big tall bars on the right side of that chart will remain the same, and political and interest group pressure will be to ramp up the bars on the left – with no true reforms of the tax code, welfare state, or the educational or health systems. I put my odds at any meaningful increase in innovation funding at 10%, and I put my odds at doing it right at 0.1%.

(1) President Obama made some pretty generous claims about how good for the energy economy he has been, particularly when it came to oil and gas production. I cannot believe he actually tried to take credit for this boom, and right on the heels of the Keystone fiasco. Here is the relevant detail. Note to my students: the IER will be coming to campus for an event in March.

(2) Governor Daniels used a term I am mad at myself for not adopting years ago: “trickle-down government.” I couldn’t imagine a more apt ridicule.

The donor registry said its experience is that “a donor system that relies on the human desire to help others is far superior to one that focuses on self-gain.”

Of course, some of us disagree on what the term “superior” means.