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Cost Disease Socialism

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Cost Disease Socialism

How Subsidizing Costs While Restricting Supply Drives America’s Fiscal Imbalance

Niskanen Center,

5 min read
3 take-aways
Text available

What's inside?

America is facing “cost disease” in labor-intensive social services.

Editorial Rating

7

Qualities

  • Analytical
  • Concrete Examples
  • For Experts

Recommendation

Researchers Steven M. Teles, Samuel Hammond and Daniel Takash examine America’s fiscal health from the perspective of “cost disease socialism.” They posit that government spending on core necessities like health care, education and housing in supply-restricted markets creates an unsustainable upward spiral in costs without any offsetting economic growth. They suggest that focusing instead on stimulating the supply of these goods and services will lead to long-run prosperity and viable state finances. Executives and concerned citizens will find this a thought-provoking commentary.

Summary

Bringing essential services onto public budgets fuels unsustainable costs and debt.

Mounting costs for essential life services are challenging American households. Diverse constituencies are increasingly calling for socializing these expenses – guaranteeing people adequate housing, health care and education through government subsidies.

But socializing these expenditures increases the demand – and the prices – for these services and adds to the national debt. In addition, measures to contain the costs, such as benefit cuts or price controls, create supply restrictions on the very goods and services people demand. This “cost disease socialism” has a sclerotic...

About the Authors

Steven M. Teles is a professor at Johns Hopkins University and a senior fellow at the Niskanen Center, where Samuel Hammond is the director of poverty and welfare policy, and Daniel Takash is a regulatory policy fellow.

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