Today, Congress takes up a bill to prevent the use of genetic testing by businesses and insurance companies in hiring and insuring decisions. I can understand why fellow free-market conservatives would oppose such a bill, but in the end, I believe it's a wise move.
Some conservatives argue that the decision to use such information is a private matter, and to a large degree, they're right. Private insurance is private, and after all, why shouldn't employers and insurers have access to the best information available concerning the likely trajectory of their prospective employees' careers and health?
But the implications, given the world that we live in, of mandatory genetic testing - and make no mistake, it would soon become mandatory - for hiring and insurance are too troubling.
1) Basic fairness
As one caller to Bill Bennett's show put it this morning, I can choose whether or not I smoke, but I can't choose my parents. As conservatives, we believe in effort and measuring outputs. The widespread use of genetic testing measures inputs, and creates the possibility of another victim class, something we surely don't need. It also gives HR people another irrelevant piece of data to screen by, which appears to be the thing they're best at.
2) The Black Swan effect.
In his tremendous book, The Black Swan, Nassim Taleb notes the tendency of people to overrate the risks they can define, and to underrate the risks that are more diffuse. For example, when asked whether they'd rather pay for life insurance against their plane going down in a terrorist attack, or pay the same amount for insurance against the plane going down for any reason, people routinely pick the first more often than the second. This choice is clearly irrational, but it's how the mind works.
The same caller noted that you can have all the tests you want for cancer, but still can't account for someone getting hit by a truck. "Well, there's no test for that," barked the host, apparently not comprehending that that was the point.
What may work in large numbers for actuaries is unlikely to matter much in a hiring decision between two candidates, and focusing on information that we have, without understanding that it's swamped by all the information we don't have, may lead to worse, rather than better decisions. It's in many ways analagous to Modern Portfolio Theory, which makes all sorts of nonsensical assumptions about price movements, in order to reach beautiful and dangerously misleading mathematics.
3) Refusal to enter clinical trials for fear the information will end up in the hands of insurers;
Some will argue that insurers, aware that better drugs are to their benefit, will not misuse such information. But of course, better druges aren't necessarily to the companies' benefit. Whatever the actuarial results, competition will tend to force premiums down over time, regardless of conditions.
More importantly, there's Bastiat's Seen-and-Unseen. The insurance companies can, for the benefit of their boards and shareholders, point to concrete benefits from specific individuals they've denied coverage or increased premiums for. The benefits to them from better treatments are diffuse and distant.
Of course, one might also argue that this danger would lead the drug companies to guard genetic testing results like classified information, which might be comforting if the government didn't leak like a sieve.
MORE THOUGHTS: In theory, government would be well out of all of these arenas. It wouldn't regulate insurance as heavily as it does. It wouldn't distort the health insurance industry the way it does. It certainly wouldn't go around telling private individuals whom they could and couldn't hire.
And there's always the risk of frivolous class-action lawsuits lawyer-driven shakedowns, possibly on the basis of the very statistical anomalies the law is trying to read out of the system. For instance, it might happen that a plant shuts down in a part of the country where a certain gene, by virture of early settlement by a particular ethnic group, is prevalent. "Disparate Impact" might well be brought spuriously into play in such a case. I have to admit, I haven't studied the legislation closely enough to know what the legal standards will be for bringing suit.
Still, I think these things make it close, rather than tipping the scales the other way.