The Hubris of Policymakers Often Harms the Poor

Most people in public policy do not understand complex systems. They really don’t understand social science models either. As a result, the idea that a policy based on good intentions could actually make things worse is beyond their comprehension.

Take health policies designed for low-income patients. Through our insistence on pushing low-income families into free public programs and regulating private alternatives out of their reach, the poor often must rely on bureaucratic medical care that is not very responsive to their needs. (For details, please see my Independent Institute book, Pricless: Curing the Healthcare Crisis.)

This problem is not unique to healthcare. I think it is fair to say that virtually everything we do to try to help low-income families meet essential needs is deeply flawed.[1]

• The cheapest form of housing, for example, is prefabricated housing. Yet zoning regulations outlaw this low-cost form of shelter in almost every large city. Through unwise regulation, we have literally priced many low-income families out of the market for private housing and forced them to turn to public housing instead.

• Through taxi/jitney regulations, we have eliminated private, low-cost transportation alternatives and forced low-income families to turn to public transportation instead (in most places, a bus system that may or may not take people where they most need to go). When they do turn to the private sector (low-income families take more cab rides than the middle class!), they probably pay two or three times the free-market rate.

• In education, government has established a (frequently inadequate) monopoly, paid for in part by taxes borne by the poor. As a result, very few low-income children are able to take advantage of private-sector alternatives.

• Healthcare fits the same pattern. Through our insistence on pushing low-income families into free public programs and regulating private alternatives out of their reach, the poor often must rely on unresponsive, bureaucratic care.

In general, the middle class tends to have access to the benefits of capitalism. The poor must rely on government. The middle class exercises choice. The poor have no alternative to what they are offered. The middle class gets the benefits of competition. The poor are left with public sector monopoly. If middle-class patients are unsatisfied with a doctor or a facility, they can take their dollars and patronize another. The poor tend to be left with whatever doctor or facility is given to them.

No one ever planned for the poor to have services that were inferior, bureaucratic, and unresponsive. These outcomes are the unintended consequences of policies that were often designed to help them.

Note:

1. Roger Koppl, Editor; Wendell Cox, Jennifer Dirmeyer, Devon M. Herrick, Kai Jaeger, Edward P. Stringham, Shirley Svorny, Diana W. Thomas and Michael D. Thomas, “Enterprise Programs: Freeing Entrepreneurs to Provide Essential Services to the Poor,” National Center for Policy Analysis, Special Publication, August 2011.