I was thinking some more about yesterday’s post on the UK Conservative Party’s paen to government-run health care, and it brought to mind an interesting general distinction. If you look at the American conservative movement, the Republican Party, and politics in the United States of America it’s clear that there are vast swathes of “big government” that nobody is going to espouse dismantling. For all the post hoc whining about “bailouts,” nobody who wants to wield power is going to dismantle the FDIC. Nor is anyone talking about eliminating Medicare or establishing a real free market in health care where poor people die of easily treatable ailments. Even at the height of his powers in 2005, Bush didn’t propose eliminating food stamps.

And in this, the American right basically resembles the British right. Some things just aren’t practical or politically feasible, so they’re off the table. But one key difference is that you almost never see anyone on the American right actively affirm belief in even a bare-bones welfare state or basic regulation. Conservative governance doesn’t evince an actual desire to fully dismantle this stuff. But when conservatives get abstract, or out of power, you get a lot of stuff from Glenn Beck and Jonah Goldberg and some of the Cato people and so forth all about The Road to Serfdom or the totalitarian implications of the school lunch program.

So it was good to read this in David Frum’s review of Mark Levin’s new book:

Some conservatives say, “No more bailouts.” That’s a fine principle, up to a point. Only – if it had been applied in the fall of 2008, the world economy would very probably have tumbled into a true depression. And it has to be recognized too (as Milton Friedman no less acknowledged in his lifetime) that it is to some degree the existence of those maligned government programs that protects modern America from economic depressions like those of 1929-1941 (or 1919-21, or 1893-96, or 1857, or 1837). The stock market may crash, factories may close – but Social Security checks continue to flow to seniors, doctors collect their fees from Medicare, faculty at state universities earn wages, and depositors at failed banks can still withdraw their funds from cash machines. Conservatives “know” this, but we tend not to emphasize it. Yet it too is part of the story of our times, and as we regroup for the political struggles of the next era, we ought to keep this knowledge somewhere in mind.

Some recognition of this point would hardly end political debate in the United States, any more than the basic abandonment of central planning as a guiding economic principle of the mainstream left has ended it. But it would, I think, give us a more constructive politics that was more centered around real controversies about real issues rather than vague assertions about “government” and tax proposals that are totally detached from reality.

When you get a Blu-Ray player or an HDTV receiver, if you want to get maximum performance you need to hook it up to your television using an HDMI cable. Meanwhile, HDMI cables come in a huge assortment of prices. Here’s a short one for $3.49 whereas Radio Shack is selling a longer Monster brand cable for over $120. Fortunately for me, my high school physics teachers one day went on an extended tirade about the evils of Monster cables and illustrated the non-superiority between the expensive and cheap version of AV cables.

Alex Tabarrok’s puzzled by the phenomenon:

The second puzzle is, Why don’t any stores stock cheap HDMI cable? I knew cables were a ripoff yet I could not find reasonably priced cables at Best Buy, Radio Shack, Target or even Wal-Mart. Ordinarily, we would expect competition to push prices down but in this case it seem as if the mere existence of Monster is anchoring high prices everywhere but online.

My best guess is that this is an unusually strong version of the hidden fee model of Laibson and Gabaix. In that model, firms overprice one aspect of service–such as a hotel charging exorbitant rates for telephone service–as an idiot tax. Crucially, the idiot tax is matched by an IQ-subsidy; the price of the hotel room is lower than it would be without the idiot tax–so the idiots don’t know to shop elsewhere and the high-IQ types are, in fact, drawn to stores with an idiot tax. Thus, buy your blu-ray player at places such as Best Buy which sell a lot of expensive cable as well as massively overpriced extended warranties.

I think that’s probably an unduly pejorative terminology. He says “ordinarily, we would expect competition to push prices down.” But what that really means is “assuming perfect information we would expect competition to push prices down.” And it’s pretty clear that insofar as accurate information about the relative quality and available price points of HDMI cables spreads, competition will push prices down. But not surprisingly, most people don’t seem to actually have much information about this. So the tax on low-information consumers works. But I don’t think I want to call them “idiots” just for not knowing about this. It happens to be the case that I’m a pretty informed consumer about electronics, but I think it stands to reason that there’s some other field of purchasing endeavor in which I’m regularly getting hosed.

The other really egregious example of this is the prices Apple charges for RAM. Identical RAM upgrades can be purchased online for substantially less and installed in the comfort of your own home.