Transactions costs are involved in most small-scale activities we engage in. Living in a country, and coping with its institutions, also involves transaction costs.
U.S. bureaucracies seem more flexible than the ones I’ve dealt with in wealthy foreign countries. On the other hand, much less seems to be taken care of for the average citizen in the U.S. than elsewhere-it requires tremendous knowledge and investment of time to get the best deal out of health insurance, Social Security and so many other publicly- or commonly-provided benefits. In wealthy foreign countries, the average citizen is not at much of a disadvantage compared to a knowledgeable, wealthier citizen. In the U.S., I wonder how the average guy can cope with institutions (or if he can). As in so many areas, we Americans have created a system that allows great flexibility, but that also advantages the better-off. Have we made the right choice in this apparent trade-off?
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In America, the prevailing attitude is more choice = more freedom. This is true on it’s face, but usually doesn’t take into account that it includes freedom to be extremely frustrated and confused. More choice does not give you the freedom to NOT be frustrated and confused by your all your possible choices.
I’ll give you health insurance.
I don’t understand the point about Social Security. There’s only one decision: do you apply for benefits early, or at full retirement age? I gather that this decision can have an impact on final outcome, but beyond this choice, I don’t see how knowlege or time gets a better deal in social security. Can you elaborate on this?
What else is there… the IRS code would be an obvious choice, but it’s unmentioned here. I’ve done my own taxes with off-the-shelf software for over a decade, and while I do put in some effort, it’s not too onerous, and every single time I’ve stepped out of the software to look up an IRS publication or instructions for a form, it hasn’t been difficult to understand. Really. If a person can’t be bothered with the chore and cares to hire an accountant or tax preparer, that’s their lookout. I agree that this is a penalty-tax on the lazy; I don’t think this is necessarily a penalty-tax on the poor.
I do think that it’s a travesty that some universities hire for NSF and NIH grant-writing skills. There is something disreputable in there.
I always complain about how hard it is for a smart person to do their taxes. There’s no good reason for our tax code to be as complicated (and with such big penalties for mistakes) as it is.
“U.S. bureaucracies seem more flexible than the ones I’ve dealt with in wealthy foreign countries.”
That’s not true of health care. Dealing with insurance companies in the US can be an incredible, bureaucratic pain in the neck. In contrast, there is minimal medical paperwork in e.g. Canada. Sure FWIW in this instance the bureaucracies in question here in the US are private rather than government, but the bottom line is medical transaction costs are way, way higher in the US.
Ooohh, what a loaded question! To answer, I’ll call into play the studies that show that less choice results in more purchases. The American faith is that more choice is more better. Helping my mother, a woman who has never used a computer, navigate the many Medicare drug plans is a data point in the negative: More choice is not better. But like most faiths, the American faith in the power of choice is not easily shaken by facts. My job is, primarily, to simplify business systems complicated by “choice.” That we’re willing to pay people to come in and simplify the many “choices” made by a business is another negative data point: More choice is not better.
“In America, the prevailing attitude is more choice = more freedom. ”
In practice that usually means that an illusion of choice is provided to create an illusion of freedom.
You’re forgetting about who imposed the complexity on so many aspects of everyday life, including health insurance, that makes the transaction cost so high. It’s the government’s intrusive rules and regulations.
Health insurance companies can’t offer a simple plan, because federal and state laws require them to cover this and that and the other thing, in such and such a way – and those laws are written by lawyers, for lawyers, rather than to be understandable by the common people.
You’re also forgetting another very important transactional cost involved in all of this: personal responsibility.
When you ask the government to take care of something for you, you are abdicating your responsibility to take care of yourself, along with your right to choose for yourself.
When you ask the government to provide schools for your children, you are abdicating your responsibility to provide for your childrens’ education, while at the same time giving up your right to choose what school your children go to, and what will be taught in that school.
When you ask the government to provide for your health care, you are abdicating your responsibility to provide for your own health, and you are giving up the right to choose what doctor you go to, and when.
If you want the right to choose for yourself what doctor you go to, what health insurance coverage you want to have, what school your children will attend and what will be taught there, you must also shoulder the responsibility of educating yourself about what doctors are available and what they have to offer, what health insurance coverage is available and what it covers, what schools there are to send your kids to, and how and what they teach there.
Government mandates about what insurance must cover, what must be taught in schools, what drugs are available to treat your illnesses, and a plethora of other personal choices, while they may be intended to make things easier for the uninformed or the poor, invariably end up making everybody less informed, and life more difficult for the poor.
If you want to be free to live your life as you see fit, you must also be willing to shoulder the burden of obtaining the knowledge you need to do so.
If you do not want to shoulder that burden, then you have no right to complain when some bureaucrat in Washington makes your personal choices for you.
Going outside of politics, I’ve heard the complaint of too much choice brought up with respect to some cars. BMW (I think) has a system in one of their cars that has a half dozen choices each for engine power output, transmission speed, suspension, LSD, etc, giving thousands of possible ways of setting up the system. Other car makers are content with “Comfort”, “Sport”, and “Race” settings, which takes the daunting task of properly setting up the car and streamlining it to three options.
Less choice, but also easier and harder to screw something up.