The architects of Obamacare could have foreseen today's crisis, says NYU Law Professor Richard Epstein, except they were intellectual "super jocks" with a "superior Ivy-League sneer," who knew so much better than anyone else "how to run this Rube Goldberg contraption" designed to "defeat the law of gravity."
Epstein speaks as an insider to elite circles. A graduate of Columbia, Oxford, and Yale Law School, he's the Laurence A. Tisch Professor of Law at New York University, a senior fellow at the Hoover Institute, and a professor emeritus at the University of Chicago. A towering figure in his field, Epstein has had a profound impact on libertarian legal theory, especially with his 1985 book, Takings: Private Property and the Power of Eminent Domain.
Throughout his career, Epstein says, he's been surrounded by "people cleverer than myself putting up schemes that are dumber than you can imagine."
Reason's Nick Gillespie sat down with Epstein for an extended discussion about the collapse of the Obamacare exchanges (0:43); why cigarette companies don't owe smokers a dime (15:49); the recent legal campaign against Exxon Mobile related to global warming (27:00); Obama's dismal record (35:23); where the U.S. went wrong in Iraq (45:00); why he thinks Gary Johnson is a weak candidate (57:00); Hillary Clinton's criminal offenses (58:26); whether he favors Hillary or Trump (1:04:51); and why he's planning to sit out this election (1:05:34).
A transcript of the conversation is below.
Camera by Jim Epstein and Kevin Alexander; edited by Epstein.
This is a rush transcript that has not been checked for accuracy and punctuation. Check any quotes against the video.
Nick Gillespie: You were among the people who predicted that Obamacare would fail not simply because it was a bad idea but the implementation would be virtually impossible to do. In the Obamacare exchanges, now we are seeing basically some sort of death spiral or some kind of predictable outcome. Talk a little about that and what is happening and why didn't more people see it come
Richard Epstein: Well, I think we start the second question first. Why didn't more people see it coming? I think the explanation really is that these were all the kinds of Ivy League super jocks. And what they always believe is that they can defeat the law of gravity by the ingenious schemes that they could put into place in order to keep things under control. So when this thing was actively debated in 2008 and 2009 there were two approaches to the problem. People like myself said look you know health care insurance is not really special. What you have to understand about all insurance schemes is the greatest chance of conniving is typically with the insured and not with the insurer. And I said the way in which we kind of know this is you go back to the history of marine insurance and you start to see that the insurance companies were always given the options to pull out because they understood that the concealment of information by the insured would have very adverse effects on what they did and it was also clear that the people who would come for insurance were those who had private information which made it more likely than average that they would be the ones who would need the stuff
Nick Gillespie: You know you are at NYU and Chicago, not at an Ivy League school. We fixed that because you have to buy insurance.
Richard Epstein: Well we didn't fix it because of that. First of all what we do is we say you have to buy it but the mandates were extremely unpopular and the idea that you were going to run a social program with very popular acceptance which says you have to pay if you don't take something that you don't want to buy really sticks in the craw of just about everybody, because this is sort of libertarian moment that is respected by all people, because it's not dealing with what large business and industry does, its dealing with what you have to do in your particular life. So what you have to do is to tell people we want you to go into these plans and you're going to be damned if you do and you're damned if you don't. Well you're damned if you do because as it turns out many of the people going to be forced in are those who will be forced to pay premiums higher than the actual value of the policy because the implicit assumption in all systems of social insurance is that you have cross subsidies against different groups. So that the one guys that will be running for the exit and then there is another group which is going to be diving to get into the program because they will be paying average rates of insurance for a superior level of coverage.