"First do no harm"

Greg Mankiw doesn't like Obamacare or the idea of increasing the minimum wage, and in this column he offers up a seemingly common-sense justification of his policy conservatism. Both of these policies, he suggests, entail blocking some voluntary transactions that would otherwise take place. Assuming that people act in their own best interest, these blocked transactions would have made both parties better off. Preventing such transactions, then, necessarily does harm to these parties. And in an uncertain world, he suggests, policy makers, like doctors, should first do no harm:

This principle suggests that when people have voluntarily agreed upon an economic arrangement to their mutual benefit, that arrangement should be respected. (The main exception is when there are adverse effects on third parties — what economists call “negative externalities.”) As a result, when a policy is complex, hard to evaluate and disruptive of private transactions, there is good reason to be skeptical of it.

Mankiw may be a first-rate economist, but judging by this argument he is a terrible philosopher. Consider the minimum wage. The exact consequences of raising the minimum wage are complex, uncertain, and controversial, but one thing every reasonable person can agree on is that raising the minimum wage would make at least some people better off. That is, there is the certainty of some benefit. To deprive someone of a certain benefit is to impose a certain harm. Therefore, it is in fact impossible to do no harm in deciding between raising and not raising the minimum wage once you consider the perspective of both policy regimes, which seems the only evenhanded way to go about such a decision. From the perspective of the status quo policy regime, blocking voluntary transactions does harm. From the perspective of the alternative (higher minimum wage) policy regime, reducing some workers' wages does harm. The do no harm principle favors the status quo policy only if you stack the deck in favor of the status quo!

Now maybe Mankiw has his reasons to privilege the status quo. One of those might be that the status quo equilibrium is already optimal from an efficiency or welfare point of view; I find such a claim untenable, but at any rate Mankiw eschews such grand welfare judgments in the first half of his column. Maybe he thinks the uncertainty attached to raising the minimum wage is so much greater than the uncertainty of maintaining the status quo that risk averse policy makers should not take the risk. But that's an argument from welfare economics too. Or maybe he thinks the status quo was arrived at through a just procedure and is by implication itself just, and that voluntary moves from a just distribution are always just. This is Robert Nozick's famous argument, building on Locke, and Mankiw is no doubt sympathetic to it. But to make this case for the world we live in requires a lot more heavy lifting than Mankiw has done here... don't take my word for it: read Nozick for yourself.

The world is complex, and good policy making is difficult. For most real-world policy decisions, do no harm is really not an option. Do the right thing is a better decision rule. Unfortunately there are no easy shortcuts to figuring out what the right thing is.