Michael Barone: When government offers to help, it often makes a mess

BY MICHAEL BARONE Published: January 2, 2013
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There's a natural human impulse to help people who need a hand. In the political world, that often translates to an impulse to have government help people who need a hand. Who wants to argue with that?

But experience tells us that it's not always easy to help. Individuals' good intentions go awry. Government programs sometimes produce unintended consequences that make things worse for the intended beneficiaries.

Consider what could be called the three H's: health care, housing and higher education.

Over the last generation and more, government has stepped in to help ordinary individuals and those with special problems on all three issues. The results have been, well, not as good as intended.

Take health care. Just about every health care expert from right to left believes that government's first real foray into the field has been counterproductive.

That was the decision, made during World War II, when defense contractors were looking desperately for workers but were barred from raising wages, that the cost of health insurance policies would be deductible for employers and not taxable to employees.

Seven decades later, that's still the law. People whose employers provide health insurance effectively pay less for it than people whose employers don't. And those with employer-provided health insurance tend to be insulated from knowledge of the costs of treatment. That's one of the things pushing health care costs up more rapidly than inflation.

In contrast, prices of health care procedures not covered by insurance — Lasik eye surgery, cosmetic surgery — have been falling because of technological advance and free-market competition.

Then there's housing. For more than two decades, government policies have tried to make it easier for modest-income people to get mortgages to buy houses. The Clinton and Bush administrations pushed this hard.

They were aided and abetted by the government-sponsored entities Fannie Mae and Freddie Mac, whose willingness to buy up such mortgages and sell them to investors pushed literally trillions of dollars into the housing market.

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