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Externalizing Internalities

Here’s a letter to the Washington Post:

Charles Krauthammer accurately describes the heart of Obamacare: “Toss millions of the insured off their plans and onto the Obamacare ‘exchanges,’ where they would be forced into more expensive insurance packed with coverage they don’t want and don’t need – so that the overcharge can be used to subsidize others” (“Why liberals are panicked about Obamacare,” Nov. 15).

How ironic.  A popular justification for the FDA’s just-announced ban on trans fats is that it will prevent people prone to eat unhealthy foods from running up health-care costs – costs that would be shifted onto innocent others.  The idea is that it’s wrong to allow Jones to act in ways that unilaterally impose costs on Smith.  Yet at the same time that the FDA is ostensibly trying to save Smith from having to pay Jones’s medical expenses, Smith is forced to do so by Obamacare.

If it’s wrong for people to be burdened by other people’s medical expenses – so wrong that government meddling in our diets is justified – how can it be right for government to create a scheme that forces people to be burdened by other people’s medical expenses?

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

In a genuinely free market for medical care, Jones’s ability to impose the costs of his life-style, his diet, his medical care onto Smith would be no greater than is Jones’s ability today to impose the costs of his shoe-style or hair-style choices onto Smith.