On When the Private Sector Being Smarter than the Government Is a Problem

Link to Sarah Rawlins's CEPR blog post above from which the quotation below is taken:

We have all heard the argument from conservatives about the benefits of relying on the private sector rather than the government. Private companies are fast moving and can respond more quickly to changing conditions and technology. By contrast, the government is slow and bureaucratic. There is more than a bit of truth to this story.

So what happens when we have the slow-moving bureaucratic government making payments to fast moving dynamic insurers in a program like Medicare. Well, all good believers in the superiority of the private sector will expect the insurers to rob the government blind. And this seems to be the case.