Subsidies for La-Z-Boy

by Don Boudreaux on August 13, 2009

in Health, Myths and Fallacies, Nanny State, Regulation, Taxes

My good friend Lyle Albaugh and I were recently discussing the argument that goes like this:

“- Government today pays for many medical procedures; therefore

– Anyone who indulges in risky behaviors — such as smoking or riding a motorcycle while not wearing a helmet or eating fatty foods — ‘externalizes’ some of the costs of his or her riskiness on society at large (or at least on taxpayers); therefore

– Government has an obligation to regulate and tax such behaviors in order to reduce their incidence (even though we might all agree that, in the absence of government standing ready to pay for many medical procedures, such behaviors would be purely private and, hence, should then, but only then, be off-limits to government regulations and taxes imposed to modify behavior).”

I pointed out that this argument proves too much, for it can also be used to justify policies that few of its proponents would endorse — for example, government prohibiting people from having more than X number of children, or government requiring a permit to have a child: persons who are tested and prove to have genes that predispose their offspring to suffer cancer or bipolar disorder or acne would be denied permits.

Lyle, though, made a better and more interesting point.  “Dude, that argument [the one above in block-quotes] could very well be backwards,” he said.  “If the idea is to minimize the amount of money that government spends on medical care, a solid case can be made for government to subsidize risky behaviors and to tax those behaviors that promote longer live spans!”

Lyle’s correct understanding is that the total cost that each American imposes upon other Americans by being the recipient of government-subsidized medical care might very well fall if, for example, more motorcycle riders rode bareheaded.  A motorcyclist killed upon impact will drain away fewer medical resources than one who survives a crash but with several broken bones and a punctured lung.

So why not impose a hefty tax on motorcycle helmets – one to discourage those motorcyclists who want to enhance their prospects of surviving crashes from selfishly exploiting innocent taxpayers?

And why not subsidize motorcycles themselves (which are more dangerous than cars) — and subsidize also soda pop (especially the non-diet varieties), and lard, and cigarettes, and rock-climbing, and big fluffy comfortable couches?  And why not tax running shoes, and gym memberships, and tofu, and seat belts, and safety harnesses, and blueberries, and yogurt?

Encouraging people to die earlier would prevent them, out of their pure private selfish wish not to die, from reaching old age, which is where most debilitating diseases wreak most havoc.  (Even a perfectly healthy person is more likely, for example, to contract cancer the older he or she becomes.)


Of course, neither Lyle nor I would ever actually endorse such taxes and subsidies.  But the point is that we too easily asume that more healthy behaviors reduce the total amount of the cost that those who practice such behaviors impose on the rest of us as taxpayers who foot whatever part of the medical-care bill that government picks up.  The validity of that assumption is not at all clear.


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