Hint: It’s the same thing that’s wrong with his views on reforming health care. Answer below the fold.
As regular readers of this blog know, we view health care and education as being similarly dysfunctional. In both fields, the beneficiary of the service is separate from the entity that pays the bills and the entity that receives the payment. In both fields, we have systematically suppressed normal market forces, insuring that the producers do not compete for customers on price or quality. In both fields, we have islands of excellence, punctuating a sea of mediocrity. In both fields, excellence is penalized and mediocrity rewarded under the conventional payment system.
In both fields, President Obama and his administration propose to ignore what is working and start all over again. In particular, the President proposes “experiments” (pilot projects) to determine what works and what can therefore be copied by everyone else. This assumes that:
- What works can be copied.
- That what works in one place will work in another.
- That producers will want to copy what works in the absence of normal market incentives.
All three assumptions are likely to be wrong.