Chris Hayes has an interesting article out that got me thinking about the problems with free-market primacy. Hayes reviews a provacative book by economist Bryan Caplan that proposes that voters are irrational, and hence choose irrational economic policy that generate inefficient market outcomes. Here's the summary of the argument: The idea is this: People are rational when they pay for the consequences of their decisions. But in elections, the odds of your vote determining a given election are so slim that the price of voting your irrational whims is nil. This gives people the freedom to indulge delusional notions about the economy. And that results in a populace who are capitalists in the market place and socialists in the voting booth. The review goes on to play up the arrogance, amorality, and wrong-headedness of the thesis; Kevin Drum also makes the point that not at all economic policy is meant to promote efficiency. I'd push it a little further- in many of the subjects I've been trying to bring to light on the blog lately, market incentives are not only insufficient to promote efficiency- they would seem to work against efficient outcomes. Market values- profit-seeking, single-minded concern for the bottom line, ruthlessness- are at the root of problems regarding privatization and health care costs. Doctors and drug companies being paid on commission, hospitals that cut corners to raise profits, insurers that weed out the sick, military contractors that take on impossible projects- all are examples of the market rewarding behavior that does not generate efficient outcomes. People are not "paying for the consequences of their decisions." Indeed, a more public-centered model could promote greater efficiency, with fewer losers and more winners. For instance, government could punish doctors when they administer wasteful procedures. It could reward hospitals for offering preventative care. It could maintain databases of patient information that private health care providers can't. It could ensure that government work is transparent and accountable. The private sector has none of these tools. Caplan might not disagree about the possibility of government doing these things, but rather the probability of it occurring, voters and politicians being irrational and all that. He doubts the capacity of the state to make decisions benefiting as many people as possible- arguably a fundamental purpose of government. But Medicare and Social Security -the two largest government programs- are some of the most efficient forms of insurance available. Even Veterans Administration has mastered efficient health care provision. Our military is probably the most advanced in the world. What Caplan probably doesn't understand about government (he's an economist, after all) is that public servants of all types do pay for the "consequences of their decisions," and that voters do care about whether government is efficient. What's needed is the proper level of transparency, accountability, as well as institutional recourses and an empowered civil society, etc.- no easy task, but it happens all the time. So, to sum up, Drum and Hayes make valid and necessary points, but they fail to undercut the central premise of free-market primacy- that government is touchy-feely but inefficient and the private sector is cold-hearted but efficient and good for everyone. Rather, it is a virtue that government is not guided by market values and forces, and not just because it can set limits on the market. Voters can motivate it to act in the public interest, where the private sector has failed to promote efficiency.