In Defense of Economists, Capitalists, and Canada

A few days ago, my air conditioning system broke. I called a repairman. He inspected the system and found the problem. A small part had broken. Luckily, he had a replacement in his truck.

“No,” I said.

“I’m sorry?” he said.

“I said no. That’s not the problem.”

He looked at me strangely. “But I just inspected—”

“I know what you did,” I interrupted. “And I’m telling you, the problem is that the system is leaking Freon.”

“But I didn’t see any leak.”

“Doesn’t matter,” I said.

“Excuse me,” he said, “but I’m confused. Are you trained in air conditioning repair?”

“No.”

“Have you ever fixed an air conditioner before?”

“Nope.”

“Then how do you know what’s wrong with it?”

“I’ve lived with the thing for twenty years,” I said. “I think I know my own air conditioner.”

“But you don’t even know how it works,” he said.

“Neither do you,” I said…and sent him on his way. My air conditioner is still broken.

Did I do something wrong? Would you have handled the situation differently?

My guess is, you think I’m an idiot. Rest assured, none of this actually happened. But for a moment there, you thought I made a huge mistake, didn’t you? Yet, if you’re like most people, you do the same thing all the time. No, not with air conditioning. I’m talking about politics.

In politics, there are lots of “repairmen.” There are economists and sociologists, historians and criminologists, political scientists and climate scientists. Yet most Americans form strong opinions about economics and sociology, history and criminal justice, politics and climate change…without ever talking to one of these experts or reading their research.

You’re probably thinking that political systems are different from air conditioning systems. Machines are predictable, often simple, with knowable problems and solutions. The world economy is far more difficult to fix. If economists couldn’t see the giant housing bubble forming before their very eyes, why should we trust them to clean up the aftermath? Besides, economists disagree so often it’s hard to imagine that they’re any closer to the truth than the rest of us.

This was probably what my friend Katie was thinking when she told her friends to boycott Starbucks. Katie has never taken an economics class, but she’s seen the miserable poverty of coffee bean pickers in Guatemala. Every time you buy a Grande Iced Vanilla Latte, she said, you’re supporting a company that’s mistreating these poor workers.

So I donned my economist hat and made the counterargument. First, Starbucks coffee is “Fair Trade Certified,” which means third party watchdogs inspect their working conditions in Guatemala to make sure they’re humane. Second, boycotting Starbucks would probably make Guatemalans poorer.

Guatemalans aren’t stupid. They sign up for the best-paying jobs they can find, just like the rest of us. If they’re picking coffee beans for Starbucks, it’s because they can’t find better jobs elsewhere. Take away Starbucks, and you take away their livelihood.

But Katie doesn’t want Starbucks to leave. She just wants them to pay their workers more. They don’t have to charge $5 for a cup of coffee, she reasons, and it’s immoral to do so, unless they share those profits with the Guatemalans who did the real hard work.

What Katie doesn’t realize is that any executive who starts paying Guatemalans commensurate with Americans will quickly find herself unemployed. The management works for the shareholders, and the shareholders don’t care about Guatemalans. They care about profits.

And for good reason. The biggest shareholders aren’t George Soros or Goldman Sachs. They’re mutual funds and pension funds. They’re your retirement savings. They’re making sure that Starbucks profits as much as possible on your behalf.

If you want to give more money to Guatemalans, you’re free to do so, but if Starbucks does it, they’re giving away a lot of other people’s money, which they don’t have a legal (nor, probably, a moral) right to do.

Besides, it’s not clear that $5 is too high. Yes, Starbucks earns a healthy profit margin, but the capitalist system depends on profits. They encourage investment, which creates jobs. They pay off debt, which reduces susceptibility to bankruptcy. They compensate investors for losses and illiquidity.

Profits can be too high, but that’s usually an industry-wide or economy-wide problem. Boycott Starbucks, and a competitor will just take their place. Whack-A-Mole is hardly the most efficient use of activists’ time and effort.

Okay, Katie said, you win. Buy your $5 latte. But the problem remains: What can we do to help Guatemalans?

Ah, now you’re asking the right question. You have no idea how a multinational corporation operates, nor how international trade affects poverty in developing nations. Why advocate for a solution, only to find that you’re making the problem worse? Call the repairman, and ask him to fix it.

We don’t always like what the repairman has to say. Sometimes the repairs cost thousands of dollars. Sometimes they take all day. Sometimes they have to dig a huge hole in your backyard just to get to the problem.

Repairing political problems is even worse. Not only does it cost us, but the benefits are less clear. Sometimes we won’t see the benefits for several years. Sometimes we don’t enjoy as many of the benefits as other parts of the population. Sometimes we can’t be certain whether the benefits will materialize at all.

So we trust what we know over what the repairman tells us.

That’s how I got into an argument with my friend Vince a few nights ago. At a small gathering of friends, he said:

I rather consistently hear from Canadians or Brits about their lack of timely access to specialists and what we consider normal procedures (MRI, surgical procedures, etc). The horrible first-person stories tell of weeks and months (sometimes in pain) waiting to get to either see specialists or to get a needed procedure or test. These stories scare me.

I bit my tongue. Vince noticed. “Anthony doesn’t want to hear this,” he ribbed, “because he wants socialized medicine in America.”

Thanks, Vince. Not quite accurate, but why get the facts right when you’re trying to provoke a fight?

I don’t know how many Canadians and Brits he’s talked to, but I lived in London for ten months. More to the point, as I’ve written before:

My facts come from foundations and universities who have surveyed between one thousand and ten thousand people for any given statistic. You’ve talked to three people. Who do you think has a more complete story? Anecdotes are useful to put a human face on the problem, but too many people are practicing sample bias, extrapolating too broad conclusions from too few examples.

I won’t bore you with all the ways that the U.S. medical system fails to deliver quality health care. I’ll stick to Vince’s complaint: “lack of timely access.”

Compared to the U.S., waiting times for elective surgery are longer in Britain, but waiting times to see a doctor when sick are shorter. Very few British patients go without the necessary visits, tests, procedures, or drugs, compared to a quarter of the population who make that unfortunate choice in the U.S. It’s just as easy to contact the doctor in both countries. If you have a chronic illness, you’re better off in Britain, where you’ll experience less waiting time to see a doctor (both primary care physicians and specialists) and easier access to immediate care.

Compared to the U.S., waiting times for elective surgery are longer in Canada, and waiting times to see a doctor when sick are also slightly longer. However, very few Canadian patients go without the necessary visits, tests, procedures, or drugs, compared to a quarter of the population in the U.S. It’s just as easy to contact the doctor in both countries. Canadians with a chronic illness report slightly more waiting time to see a doctor but easier access to immediate care.

But Canada’s waiting times have little to do with the system itself. Canada doesn’t have “socialized medicine.” The hospitals are privately owned. Canada has socialized insurance. Do you know what else is socialized insurance? Medicare. Yet Medicare doesn’t have the same waiting times. So it simply can’t be true that socialized insurance causes longer wait times. Health economist Aaron Carroll explains what really causes them:

As a country, they have made a conscious decision to hold down costs. One of the ways they do that is by limiting supply, mostly for elective things, which can create wait times.

Please understand, the wait times could be overcome. They could spend more. They don’t want to. We can choose to dislike wait times in principle, but they are a byproduct of Canada’s choice to be fiscally conservative.

But why focus on Britain and Canada? Why not, say, France or the Netherlands? I’ll tell you why not: Because they contradict Vince’s scare story:

In a 2008 survey of adults with chronic disease conducted by the Commonwealth Fund…60 percent of Dutch patients and 42 percent of French patients could get same-day appointments. The figure in the US was just 26 percent.

The contrast with after-hours care is even more striking. If you live in either Amsterdam or Paris, and get sick after your family physician has gone home, a phone call will typically get you an immediate medical consultation — or even, if necessary, a house call. And if you need the sort of attention available only at a formal medical facility, you can get that, too — without the long waits typical in US emergency rooms.

In a 2007 Commonwealth Fund survey, just 9 percent of Dutch patients reported waiting more than two hours for care in an ER, compared to 31 percent of Americans.

I could recite these statistics until my face is blue, but Vince won’t care because he doesn’t trust statistics. He trusts his friends, and none of his friends have ever complained to him about timely care in the U.S.

Vince should talk to Katie.

A couple weeks before she told me to stop buying $5 lattes, Katie felt pain in her lower abdomen. Severe pain. But she didn’t want to go to the doctor.

Katie has health insurance, but she was afraid she wouldn’t be able to afford the co-pay. She anticipated an ultrasound, probably an MRI, maybe even a CT scan. She was looking at a potential bill of hundreds of dollars.

Katie has a part-time job. It’s the best she could get in this economy, despite a college degree, good references, fluency in Spanish, and an outgoing personality. She makes enough to pay for rent and food, but not much more.

Finally, the pain was too much. She went to the primary care clinic near her house, where she waited two hours before the nurse did an ultrasound and told her she needed an MRI. “Wait here for the doctor,” said the nurse. Katie waited for two more hours, before being told to go home and wait for the doctor to call.

Katie waited all day, but the doctor never called. The next day, a nurse called, and she got the MRI. Already the bill was adding up. Again she waited, and again the doctor never came. After several hours, she went home.

The next day, a nurse called. Katie needed to see a gastrointestinal doctor, but he didn’t have an opening in his schedule for the next four weeks.

Throughout this entire ordeal, Katie never saw a doctor. She was in pain the entire time. She almost gave up on the medical system and tried to self-medicate with her own home remedy — prune juice and apple sauce — until the pain was so severe that she called every doctor in a thirty-mile radius, finally finding someone who diagnosed her illness and prescribed the proper medication.

Katie still has to pay the bills from the first series of nurses who did nothing to help her.

If Katie lived in Britain, she probably wouldn’t have had that problem. Brits report less waiting time to see a doctor and far less discrimination based on income. One out of every four Americans go without the necessary visits, tests, procedures, or drugs, usually because they can’t afford them. That’s 78 million Americans. Just because Vince doesn’t know them, doesn’t mean they don’t exist.

That’s the sort of thing the repairman knows.

I’m the first to admit that economists and other political experts screw up. But you’re less likely to advocate bad ideas and vote for bad candidates and further endanger what’s left of American democracy if you at least listen to what we have to say.

You wouldn’t get upset because an engineer claimed to know more about bridges than you, nor would you be angry if a doctor claimed to know more about the cardiovascular system than you. So don’t ignore an economist because she claims to know more about taxes than you. She’s been studying them for her entire adult life. She only wants to help you make a more informed decision.

And it matters which ones you listen to. Follow their predictions. Hold them accountable. Did they predict the housing bubble? Did they warn against financial deregulation in the 1990s? Did they say that fiscal stimulus wouldn’t cause interest rates to rise? They may be immodest if they say “I told you so” a lot, but they probably know what they’re talking about.

Your vote matters. You can do a lot of good, or you can cause a lot of harm. It’s a heavy moral burden. Don’t enter the public debate unprepared. Listen, learn, and if you’re not an expert, ask for help.