An interesting poll and subsequent article in the Economist this week, looking at how different Britain and the States are, despite the continual remarks by politicians on both sides about our two countries shared values. Now, we could argue about the correct use of 'left' and 'right' in this setting - here, they seem to be used to describe the charachterisitcs of the nominal left and right wing politicians and supporters mainly in the US. For example, there is nothing particularly right or left wing about believing in God or creationism or evolution.

But let's add two more that are striking: the diverging views of the two countries of health care and public pensions. The UK has had, and still predominantly retains, a public and nationalised health care system, free at the point of use and paid for by taxation. The USA has an almost entirely privatised system, where up to 60 million Americans (the entire population of the UK) have no health care coverage or insurance, except for what they could afford themselves at the point-of-use. Britain left, America right.

In Britain, social security provides a safety net to the lowest income pensioners and those that have failed to save. However, the take-up of employer led pensions in the UK is the highest in Europe, and new reforms to introduce private individuals accounts and increase the retirement age have, for all the newspaper bluster it caused, passed through with ease. In the US, George Bush has failed to reform Social Security into a sustainable fund through privatisation, predominantly due to opposition from the Democrats. Government provided pensions are the largest component of a 80% of US pensioners income. Britain right, America left.

Isn't that odd? I'm broadly with the British on this one. Introducing market forces, advocated on the right, can be beneficial where either market failures do not exist, or governments are less able to directly deal with them than private action. There are market failures in both healthcare and pensions policy that would mean that, if untouched, people would not provide themselves with a socially optimal level of either.

With healthcare, the market failure is related to information. People don't know enough about healthcare to make the informed choices that are needed for market forces to be beneficial. The NHS provide full and compulsory health insurance for all people. Doctors and nurses can be paid by the government in such a way as to incentivise the provision of a good service. I'm not crazy about introducing a greater market presence into healthcare or compulsory education, but it's been quite muted really.

With pensions, the market failures related to irrational (or, to use a better word, myopic) decision making, in that people will come to regret their choices later on. Governments can help, by forcing people to save, either through tax and benefit pensions or through mandatory savings accounts. But governments do not know private information about a person's tastes. They may indeed be myopic, or they may have some private information that makes them put a much lower personal value on retirement - if I thought I had poor health, why would I save at all for a retirement I probably won't enjoy? The 'privatisation' of pensions means enabling people to make better savings choices for their own retirement, based on their own personal preferences. Which, with the appropriate safety nets, is better.