Externality is in one place defined as a “consequence of production ignored in pricing.” Also see the following description - “a factor such as environmental damage that results from the way something is produced but is not taken into account in establishing the market price of the goods or materials concerned.”
This article speaks of the many CONSEQUENCES and ‘hidden’ COSTS of Obamacare. http://online.wsj.com/article/SB10001424052748704548604575097602436388116.html?mod=wsj_share_facebook
But under the above definition, the topic at hand seems only to meet a few of the requirements of an externality. PRICING is not the direct issue. Nothing is truly PRODUCED. Yet DAMAGE will result and consequences are being IGNORED by many of those in favor of socialistic health care.
Even if this may not qualify as externality, economic theory definitely applies, even in as simple a way as stating the question, “Is the cost of the risk worth paying for the perceived benefit?”
Since it is not a potential risk but a guaranteed power grab debt loving monster, I am utterly opposed.
March 8th, 2010 at 7:41 pm
I would have to respond to the title of this post with a “no”. Considering this plan would be a government provision I don’t think that it could be, by definition, an externality as externalities arise from a good’s social cost being unequal to its social benefit. But I do understand where the author is trying to take the discussion. The Healthcare reform act has been described as a lot of different things: a government takeover, socialism at its finest, and even a disappointment for those on the left hoping for a single-payer. And much has been made of the damage it would cause to the free insurance market. But I’ve heard little about the positive affects a government-run (socialistic if you must) would have on small bisnesses struggling to compete with larger corporations (who are able to arrange health insurance policy’s with better coverage for cheaper) skilled workers in the job market. I guess this just leads us down the logical path of how health insurance became a function of the workplace anyway, an interesting little tale of how governmental controls on the marketplace led to a new (and long lasting) order.