Ignorance and Efficiency

I picked up John Rawls' A Theory of Justice last Friday and digested segments through the weekend. This evening I caught up with 3 Quarks Daily and was connected to a Libertarian critique of both Rawls and other Libertarian efforts to appropriate Rawls for their own devices.

Rawls' core principle is that given a "veil of ignorance" about the capacities, needs and external facts surrounding a decision-making event about resources, an individual will choose a fair distribution of resources since they can't be certain how the resources will ultimately be distributed. By being fair, the decision maker will maximize their own chance of a fair outcome.

This is a game theoretic resolution that parallels ideas like tit-for-tat and reciprocal altruism. It is also used to further justify a model of economic interventionism that assigns fair distribution of resources in a society. Hence the concern of Libertarians, though I see David Gordon's roll-up as an incremental and technical fight within the Libertarian community and about which I have little comment.

Instead, I find it interesting that if we acknowledge the implications of limited knowledge we arrive at inherently specialized models for decision making: in this case implications about the fairness of government policies concerning welfare or health care policy. This closely parallels the veil of ignorance expressed in Quine's notion of "gavagai" where we have to accept the limitations of strong notions of meaning and instead rely on decision procedures to achieve a tentative understanding of the immediate epistemological landscape.

One aspect that the purely philosophical treatment of this problem does not address, however, is how to handle the problem of procedural inefficiency. What do I mean by that? Well, we can take the standard critique of command economies as interfering with efficient allocation of goods and services. We can also take the apparent administrative inefficiencies of modern American health delivery. Both reflect differences in economic theories and have strong historical exemplars, but are polar opposites in delivery and informational mechanisms. If these are inefficient models compared to other examples, is there a principle of ignorance that can guide us in how to apportion resources in the face of these failures? For example, let's say that equality of health care is a good because if we could divide-up health care resources evenly and equitably it would result in that equality. Yet, if the mechanism of achieving equality also costs enough that it compromises other aspects of quality, what is the cost/benefit inflection point that recommends one approach versus another? We could seek to maximize some measure of person health outcomes/dollar using a basket of measures like those measured by the Commonwealth Fund's analyses of the United States' problematic health delivery system, but at what point do we agree that government is the best mechanism for delivery?

I tend to think that a principle of ignorance must remain in effect. Given uncertainty about efficiency in allocation, it is best to create a basket of solutions that try to achieve the same outcome. So, given the massive administrative costs of US health care delivery, we can create mandates for integrated billing and informatics for some domains while supporting tax incentives to improve delivery for other domains. There is then competition among outcomes in the basket of solutions and our ignorance is reduced through small, evolutionary outcomes.