Tyler Cowen: evaluation

Transcript context

…So do you think that those things are all related? I think you used the phrase “cost disease”when referring to the cost explosion of things like healthcare and education, student debt, and rent. Do you think that’s a different type of problem, or do you think that is fundamentally related to the rate of progress in biomedicine, as an example? I think there are common features to these problems, though each one is different. Restrictions on entry is one, highly bureaucratized institutions. Sometimes a lot of third party payment — which may be required in the case of catastrophic healthcare, but it nonetheless has distorting effects. Areas where people have very strong moral feelings I think we often make worse decisions about. We’re not analytical enough. And you put all of those together. But I would stress, say healthcare — if you go to Singapore, healthcare there, I think it’s about 4% of GDP. They have slightly higher life expectancy than we do. Their system is by no means perfect. But we can see, though comparative analysis, there are ways of doing this better. The NIMBY problem, cost of living, getting an apartment. In Japan, it is mostly solved because building in Japan tends to be regulated at higher levels than the city or the county, so more gets built. Living in Japan is cheaper, the cost of renting an apartment. So often we know the answers. We shy away from really focusing on a concerted effort to get to doing them in this country. Yeah, and agree with all of that, and I would just underscore the entry costs aspect. And the entry costs aren’t always — they take different forms, right? And empirically the entry costs of forming a new university are really high, but that’s not because there’s a kind of formal toll you have to pay. It’s not like zoning where there are deliberate, specific legal restrictions that prohibit you from doing so. But just as a practical matter: sociologically, institutionally, accreditation dynamics, who knows, it’s apparently almost impossibly difficult to create a successful new university today. And so I think answering the cost disease question is one of the most important set of subcomponents in this broader question of what is it that enables our progress. And at an overarching level, it’s just surprising to me that we don’t have more definitive and clear answers there. Alex Tabarrok, a colleague of Tyler —…

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