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Reich's False Prescription

Shikha Dalmia
June 24, 2009, 10:55am

Robert Reich, the Labor Secretary under Clinton, makes a case for a government-run health insurance plan - the so-called public option - in today's Wall Street Journal that tries to be forceful but ends up just being fallacious. Completely Reich's op-ed is intended to stiffen the back of wavering Blue Dog Democrats who are getting nervous both about the cost of providing universal coverage ($1.6 trillion according to the latest CBO estimate) and growing concerns that a public option will be a Trojan Horse for socialized medicine. These concerns are completely justified, as I argued here.

But Reich insists that giving people a choice between a public and private plan is essential to "encourage private plans to do better -- offering more value at less cost." Really? Then why stop with health care? If forcing the private sector to compete with the government can lower costs in health care, why not float a "public option" in food, housing, clothing, computers, plumbing, landscaping services (I really could use a cheaper landscaper) you name it?

Why not just tear up the Constitution - forget about a government of limited and enumerated powers - and turn America into USA Inc.?

Oh wait! Isn't that what Fabian Socialism tried to do in countries like India, where I grew up? Didn't it create government companies in steel, iron and other industries allegedly too vital to be left entirely in private hands? I recall that it didn't work out too well. India was the economic basket-case of the world for half a century, thanks to a corrupt and inefficient public sector and a moribund private sector. It only began to lose this distinction two decades ago after it began extricating its economy from government tentacles.

Some bad ideas just never die!


Shikha Dalmia is Senior Analyst


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