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.