Thursday, February 06, 2014

What Homer Called Stealing in the Mind

There really isn’t a debate going on about the meaning of the Congressional Budget Office’s report on the economic effects of the ACA. There’s a spinning contest, though a one-sided one so far. For right wing types, the strategy is to ignore the bulk of the report, which basically concludes that Obamacare won’t hurt the budget and is succeeding in insuring millions of the formerly insured, in order to claim that it will cost a couple of million jobs.  The report doesn’t actually say that. It projects that Obamacare will reduce the number of hours that people will chose to work. To quote the report itself:   

The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses' demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).

When called on their misrepresentation of the facts, the Conservatives switch to a slightly different line. One of them argued to me “in the macro fewer folks choosing to work means lower output and living standards.” Ignoring the obvious dishonesty involved in changing your story when you get caught in a lie, this argument, which sounds like it comes from the 40s—the 1840s—has an interesting implication. Any universal health care system whatsoever has the effect of reducing the need for some people to work and thus the number of hours worked. Of course, the eight-hour working day, restrictions on child labor, and social security have exactly the same tendency, except to a vastly greater extent, which no doubt explains why the U.S. experienced a marked decline in output and living standards in the years after the introduction of these well-meaning but economically na├»ve measures. They all have the effect of reducing the desperation that is the only effective means of getting the slackers to move off their ass, at least in the view of the latest generation of Manchester mill owners.

One of the ironies here is that the probable net effect of measures like Obamacare is to increase employment because we’re obviously in a period of depressed demand and the ACA transfers wealth to people who will spend it—the Congressional Budget Office report makes that point, too, not that we’ll be able to read about it in the Wall Street Journal. That we don’t have a problem of lower output caused by insufficient factors of supply is pretty obvious when you consider the piles of cash that so many corporations are currently sitting on and the armies of people clamoring for work. The genuine objection to the ACA is not that it reduces living standards but that it doesn't increase the living standards of the right kind of people, that, and it doesn’t properly chastise the slackers.

Well, what’s going on here is not really a debate about economic theories but much more a matter of values or rather, what’s going on in economics is a debate about values. Behind the Neo-Scroogian economics of the plutocrats is a sort of upside down version of an argument of John Rawls. For liberals, inequality is defensible if a system with different rewards leads to an improvement in everyone’s condition of life. For conservatives, a lower level of general prosperity is defensible if that’s what’s required to maintain an appropriate level of inequality. The problem with measures to reduce inequality is that they reduce inequality, not that they harm the economy.

Monday, January 27, 2014

Not Merely a Theoretical Deduction

Libertarians wish to limit the role of the state to specific, sharply circumscribed tasks, among which the protection of property rights is by far the most important. It is therefore not correct to assume that libertarians are calling for a smaller state since the imperative need to protect property calls for any means necessary and that often includes a much larger state. No doubt Libertarians would prefer a tiny state, indeed one small enough to drown in the bathtub, but that’s a utopian goal impractical for the foreseeable future for existing Libertarianism, aka Libertarianism in one country. In fact, under contemporary circumstances, the Libertarian program is a recipe for a greatly enlarged state. That’s because the greater the degree of inequality in a society, the more pressing the need for a powerful government to protect the possessors of great wealth by maintaining an enormous military, by hiring additional police and giving them a freer hand, by making the justice system more punitive and arbitrary, by building more prisons and filling them up, by instituting comprehensive surveillance systems, and by infiltrating possible dissident groups with spies and provocateurs. Of course, one could hope—one could have hoped—that inequality would not grow to the point that all this would be necessary; but here’s the problem. While libertarianism is keen on the state’s police power, it insists that government has no business doing anything that would effectively lessen inequality. Unfortunately, the existing economic system has a built-in tendency to increase disparities of wealth and income if only because the best way to acquire money is to already possess it. This built-in positive feedback loop has profoundly destabilizing effects, which is why all the developed nations have developed mechanisms of income and wealth redistribution, not to destroy capitalism, but precisely to allow it to continue. Libertarianism maintains that all of these mechanisms—progressive income and inheritance taxes, welfare, public education, social insurance schemes, universal health insurance—are illegitimate. In the absence of effective redistribution, the only option is greater state power to protect the haves from the have nots. Libertarianism, for all its advertised hostility to government, promotes a larger state much as the Bolsheviks created a totalitarian state in the name of a philosophy that called for the withering away of the state.

Friday, December 27, 2013

Because I Say So

Religions commonly make obviously false assertions—resurrection, transubstantiation, personal immortality—because it wouldn't be enough of a test of loyalty to ask believers to believe in something that was likely or even possible. I think the tenacity with which police and courts cling to outlawing pot has a similar rationale. How would it demonstrate the unquestionable power of the state to outlaw behavior that everybody, including criminals, knows to be wrong? You might as well have a plausible religion. What fun would that be? Which is why the more evidence accumulates for the relative harmlessness or even medical value of marijuana, the more the authorities will resist legalizing it. Of course they may eventually lose that fight. If so, I predict they’ll find some other practice of equivalent triviality and outlaw that, particularly if it is associated with minorities since the other great function of unreasonable laws is to provide a pretext for keeping the nigras down.

Tuesday, December 24, 2013


Though a musty venue for embrace
The tomb’s just not a private place.
To be alone, there can’t be many,
But it doesn’t count if there aren’t any.
We’re all like Christ, at least in this,
Although less likely to be missed
And we have to harrow hell before
The hour when we are no more:
Whether we sin or we behave,
We’ll leave behind an empty grave.

Friday, December 13, 2013

Looking for the Right Problem

It's interesting to compare our experience with the Soviet Union's. Like us, the Soviets were handicapped because their leaders bought into a disfunctional ideology and tried to make up for its shortcomings through education. For a while, that worked reasonably well for the Reds because literacy and technical training compensated for the inefficiency of the demand economy—the Soviet economy grew enormously before the 60s. Even in a lousy system, people who could read and write are vastly more productive than illiterate peasants. Our problem is that we already have mass literacy and a fairly high level of technical education. Incremental improvements are unlikely to have more than incremental benefits. Better education probably can't bail out Neoliberalism the way it bailed out Communism, even assuming that the current war on teachers and test mania are actually going to improve schools, a dubious supposition.

Getting back to a sensible mixed economy with lower levels of wealth and income inequality is a better bet than the endless pursuit of some magic formula for wonderful schools. Education isn't the right problem.

Thursday, December 05, 2013

Destructive Interference

Health care reform is complicated enough without getting confused about the reasons we need to change things:

1.     We ought to care about ensuring adequate health care for everybody because we’re decent human beings.  
2.     We ought to lower the cost of health care to everyone because it’s in our self interest to do so and we’re not damned fools.

Either motive should be sufficient in itself to motivate reform, but appealing to both of them at the same time in the usual muddled way weakens what should be an irresistible case.

Wednesday, December 04, 2013

He Who Wills the End

Since even the CNN talking heads are coming around to the realization that the current level of inequality is politically and socially intolerable, it's kinda odd that so many people still get upset about "redistribution" as if it were a dirty word. If you think we should do something about inequality, you've already opted for redistribution of some kind, though I'm not denying it makes a big difference how it is accomplished.* Changing the tax laws in incremental ways, raising the minimum wage, and actually enforcing existing labor laws are better than a frontal assault on the gated communities, though, admittedly, they don’t make for exciting television. The central fact is that however you do it, you are going to have make certain people less rich and they are going to object to that. So will the talking heads, for that matter, when they finally realize the implications of the new meme for entertainers with seven figure incomes. That may take a while, since for these folks, it’s a long, long way from premises to conclusion. They will end up objecting to each and every concrete step towards improving the distribution of wealth while at the same time repeating that something must be done.

* I'm reminded of the punch line of an old joke: "We've already settled that. Now we're haggling about the price."