Tag Archives: economics

Blinder Strikes Again

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Professor Alan Blinder (Economics and Public Affairs, Princeton University) opened his Wall Street Journal op-ed, this time, with a correct statement.

But a badly designed website doesn’t signify a badly designed policy.  The goals, principles and major design features of the ACA are barely affected by the government’s health-exchange website catastrophe.  If you liked the basic ideas before, you still should.  If you didn’t, you still shouldn’t.

True enough, the ObamaMart Web site is just the front end of Obamacare (it’s also the back end, handling all of your personal financial and medical history and doing so in an enormously error-prone fashion and so far with no security at all—security has never been seriously tested), it is not Obamacare itself.

But from here, as is usual with Blinder, it’s all downhill.  First is his typically Progressive dishonesty in his characterization of those who oppose Obamacare:

…the enemies of health-care reform are telling [Americans] that ObamaCare is a failure.

Of course, because Obamacare is the only way to reform the health insurance industry (which Blinder also dishonestly conflates with health care).  It couldn’t possibly be that there are other ways to achieve reform, like the half-dozen, or so, House offerings that reform through patient-centric—that is to say, individual American-centric—market solutions.  No, Progressives know that Americans are too stupid to make their own decisions.

Then he gets to his point:

The three central elements of ObamaCare are insurance reform, getting (most of) the uninsured covered, and containing the upward spiral in medical-care costs.  Each remains in place.

He sees this as a plus, not the failure that it is.  Sad.  In turn:

There is no insurance reform, only the destruction (leaving aside its nationalization) of the insurance industry.  The price of an “insurance” policy now is completely divorced form the risk being “insured.”  The young are being required to pay inflated prices for policies they do not need, generally do not want, and cannot afford solely and explicitly to pay for the depressed prices the old otherwise would pay.  Single men and empty nesters are being required to purchase prenatal and maternity coverage, children’s dental coverage, even contraceptive coverage (as if this commodity wants “insurance” coverage at all) so that women, in particular, and families generally, who might actually…benefit…from such policies can pay lower rates for them.  The list goes on.  This isn’t insurance, it’s naked wealth redistribution.  Even when there’s no wealth to redistribute.

“Getting most of the uninsured covered?”  That wasn’t the original promise; that started out being “all of the uninsured.”  Whether we wanted the insurance or not.  Aside from that, it’s not even coming close to getting all covered, because of Blinder’s third point:

Costs, of this health welfare program, anyway, are spiraling rapidly out of control.  The premiums available already are well documented to be in the two- and three-digit per centages higher—and that’s just for the premiums.  Deductibles are skyrocketing.  These are costs that have to be paid by the “insuree” before his coverage kicks in.  And it resets every year, while those premiums and the costs of being sick just keep on keepin’ on.

And there’s Blinder’s cynical non sequitur:

Millions of people under the age of 26 are already benefiting by being kept on their parents’ policies.

Yet,

To make universal coverage work, the government needs to bring [young people] into the insurance pool as counterweights to the high-risk people.

Meaning that millions of the young folks Obamacare so desperately needs to buy “insurance” so as to fund artificially low premiums for the rest aren’t buying “insurance;” they’re just jacking up the cost of their parents’ “insurance.”  How does that work, exactly, Alan?  How are these “millions of people under the age of 26” being brought “into the insurance pool as counterweights?”

And his bodice-rending closer:

[T]he status quo ante was so unacceptable.  America cannot be a humane society if we leave 15% of our population uninsured.  America cannot be an efficient society if we spend 50% to 100% more of our incomes on health care than other countries, and yet don’t get better health outcomes.  We can’t let a botched website get in the way of goals that big.

Unfortunately, Progressives like Blinder remain in the way, actively blocking market solutions and individual choice (we’re too stupid to be trusted with our own choices, remember) that actually would bring down the costs of true insurance on the one hand and the costs of health care on the other.  And leave a significant per centage of us without health insurance because that’s our choice.

Government’s Existence and the Economy

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The jobs and GDP reports last week had a couple of interesting tidbits in it, aside from reflecting the continued anemic, below trend recovery in which our economy is mired, courtesy of this administration’s policies.  These reports covered October and the third quarter, respectively.  Now, what momentous things happened that month?  Yes, yes, the ObamaMart rollout, but that’s not what I’m talking about here.  The Democrats’ shutdown of the Federal government happened that month.  Also, the sequester cap on Federal spending continued that month.  Here are some of those tidbits:

  • BLM said private employers added 212,000 jobs on the month
  • [T]he economy grew by 2.8% in the third quarter
  • [G]overnment spending contributed all of 0.04% to that third-quarter GDP

All of this despite that pernicious shutdown and the evil cap on spending.

Government needs to get out of the way.

Obamacare and the Sequester

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Sequester—that invention of President Barack Obama, with which he intended to extort Republicans and Conservatives into acceding to his taxing, spending, and borrowing economic policy—is starting to cause trouble for Obamacare, now.  The sequester is blocking a set of subsidies that were supposed to help pay deductibles and co-pays under Obamacare.

Amy Payne, writing for The Foundry, quoted Chris Jacobs in The Wall Street Journal on impacts:

There are two possible outcomes.  The first is that individuals who have managed to enroll in subsidized health insurance will find they’ve been misled about their copays and deductibles.  Families who currently think their plan will charge a $20 copayment for doctor visits may instead face a $25 charge when the sequester kicks in.  Individuals who now believe they face maximum out-of-pocket costs of $2,000 may end up paying hundreds more.

Wonderful performance by a President who’s a better policy wonk than his policy staff.

And So It Begins Anew

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Senate Majority Leader Harry Reid (D, NV) is at it again.  Interrupting his Nevada NPR host, he demanding that all talk of cutting taxes be stopped.  This Progressive does not approve of such speech, and so we have no right to hear it.  He also

said Republicans would have to agree on tax-revenue increases for Congress to achieve a large-scale agreement, but they instead have their mind set on “nothing more on revenue.”

“And until they get off that kick, there’s not going to be a grand bargain.  There’s not going to be a small bargain.

Straight from the horse’s mouth.  Never mind the $600 billion in tax rate increases he got earlier this year.  He wants more, with no spending cuts (that’s just “happy talk,” he says), or he’s perfectly willing to, once again, blow up negotiations and to threaten the viability of our economy.

All for Progressive ego.

Unemployment Payments as Stimulus

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It has been claimed—Congresswoman Nancy Pelosi (D, CA) is the most famous proponent of the theory—that unemployment payments to the unemployed are inherently stimulative: the recipients promptly spend the money.  The stimulus is assumed to come from what’s called the velocity of money.

The velocity of money is a concept in economics that looks at how many times a dollar gets turned over in a local economy: a man buys groceries and pays rent, the grocer pays his clerk, who buys…, and the landlord hires maintenance workers, who then spend on….  The velocity aspect comes from measures of how many times that dollar gets turned over before it disappears from—has been consumed by—the local economy.

There are holes in the premise that unemployment payments are stimulative; here are some.

Unemployment payments are from tax money taken out of the private sector—which means it’s money not turning over in the private sector until it’s returned as those unemployment payments.  Moreover, those unemployment payments are less than what was originally collected for the purpose—the difference is lost to the friction of government.  The amount of money that can be turned over is lessened.

Further, the unemployed don’t buy the more expensive things with their unemployment payments; they buy the low cost items in the grocery store.  These are low-margin items for the grocer, though, and so they lower, a little, the overall margins of the store.  The grocer thus has a little less money with which to do his own purchasing (and perhaps hiring).  Turnover is slowed.

On the other hand, money (left) in the private sector gets spent on a variety of things (60%-70% of our economy is consumer spending), including on more expensive items in that grocery store—which helps expand, a little, that store’s overall margin.  Turnover is greater.

Money left in the private sector, rather than returned to it as unemployment payments, also gets saved, to an extent (a large part of the remaining 40%-30% after consumer spending), or used to pay down existing debt (another significant fraction of those 40%-30%).  Saved, or returned to a financial institution as debt payment, these funds improve the credit-supporting aspect of our economy: they’re funds financial institutions can lend out to support credit card-supported purchases or to support the purchase of big ticket items like cars and houses.  More money is available to be turned over.

Savings and debt repayments also are funds financial institutions can lend to businesses for capital improvement and/or expansion and to startups to support their gutsing up or subsequent growth.  Here are jobs in the making, and an expansion of the money in the private sector—in the hands of individuals.    Here, also, is a reduction in unemployment and so of the need for unemployment payments.  More money is available to be turned over.

This is not to say that unemployment payments must never be made under any circumstances.  However, a more accurate understanding their real effect on our economy will enable us to make more efficient use of such payments.