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Where Everybody Has a Veto



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My piece on diversity, trust, and cooperation today already touches on a great many things, but there is one thing I left out: The market is a very different sort of place from the legislature. Whereas people who are unalike may be relatively resistant to political cooperation, people from diverse groups — including traditionally hostile groups — find themselves able to cooperate efficiently in the realm of trade. Consider the endless history of bad blood between the Japanese, the Chinese, and the Koreans, and then consider the enormous volume of trade between their consumers and producers. This is not without exceptions: Employment discrimination exists, and there is evidence that some consumer discrimination exists, too. But, generally speaking, cooperation is far easier in the realm of free exchange than it is in the realm of winner-calls-the-shots politics. 

Part of that is self-interest. As Thomas Sowell put it, there may be racial and ethnic bias in the world, but very few people hate any group as much as they love themselves, and, where there are gains to be had, people tend to put their own bottom line first.

There is specific mechanism at work there, one that gets insufficient attention: the mutual veto. In a voluntary-exchange context, nobody is obliged to accept any deal that is not to his liking. Mankind has never invented a better instrument for the prevention of resentment in interactions between rival groups. AT&T may be a large, powerful corporation, but if you prefer another provider, AT&T cannot override your veto. In that context, you have more power than does the president. 

Even within individual polities, this has some potential for mitigating conflicts. Imagine, for the sake of experiment, that the federal government could create something like Obamacare with one important difference: It is in effect hermetically sealed, absolutely economically walled off from the rest of the economy, i.e. only those who voluntarily opt in to the system are obliged to pay taxes to support it, and its benefits (and mandates) only apply to those who choose to participate. Would it be such a controversial program in that case? It seems to me that it probably would not. 

That’s one reason why national licensure, rather than state-by-state licensure, would be a key improvement for health insurance. A dozen or so competing health-insurance operators, including nonprofits, operating on a national scale could achieve the same efficiencies hoped for under the ACA regime, without forcing anybody into the system. (Which is to say, if you liked your policy, you could keep it. Somebody should put that in a speech.) That would still leave us with the not-insignificant problem of preexisting conditions and difficult-to-insure people, but that’s a smaller problem to solve than remaking the entire health-insurance industry from the ground up under political discipline. 



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