The Logic of Collective Action

Publius at Obsidian Wings on the underlying problem with McCain's health care proposals:

One of my biggest gripes with conservative economic policy is its tendency to ignore disparities in bargaining power.

The romantic myth of individualism is powerful, but it ultimately just doesn’t work in many contexts. Health care is one of them. Look, it would be great to have a world where individuals had the time and expertise to shop around and negotiate for better policies. But they don’t. However rhetorically compelling “individualism” may be, the reality of an individual market is quite different — as Klein notes.

But it’s more than health care policy. The failure to give much weight to bargaining power disparities is at the heart of many a conservative/liberal economic disputes. Take unions for instance, or federal labor protections more generally. The standard conservative argument is that if employers act bad, employees can leave. Or, if they don’t pay enough, employees can just bargain. After all, everyone loves bargaining! (“Bargain” was a semi-erotic word for my old law and econ professors). These romantic visions, however, assume that individual employees have a lot more information, resources, and bargaining power than they actually have.

I definitely agree, although I'd prefer to focus more on the capabilities of collectives than on the incapabilities of individuals. This is why individuals in these contexts, when given the choice, will overwhelmingly choose to unionize and bargain collectively. It's also why they prefer employer-based health care to individually purchased care, despite the tremendous restrictions it imposes on labor mobility. Last, it's why state-run plans like SCHIP and Medicare are so successful.

Because -- get this -- individuals and smaller collectives binding together to produce goods and services that it is costly or impractical to produce individually is the fundamental reason why we have government at all.

I continue to believe this despite my occasional pessimism that government has existed and continues to exist only to provide legitimacy to already existing relationships of domination and to provide support to a parasitic class of clerics.