Friday, January 2, 2015

What Makes Macroeconomics So Hard: Regifting One of the Oldest Ideas As a Basis for Policy

We’ve always done it this way is already a part of my “What Makes Macro So Hard” lectures.

This one is subtly different: presenting the way we’ve always done things as something new. Essentially … regifting.

Here’s Thomas Sowell discussing Obamacare:

… What is older than the idea that some exalted elite know what is good for us better than we know ourselves? Obama uses the rhetoric of going "forward," but he is in fact going backward to an age when despots told everybody what they had better do and better not do.

Around the world, that elite may be determined by different means: age, skin color, wealth, education, social affiliation. And I’m not claiming that they’re not right more of the time. What I am claiming is that there ought to be more than this as a basis for policy.

I like to think I have better sense than most Republicans/conservatives/libertarians/classical-liberals: I freely recognize and admit that Obamacare is essentially Romneycare, which in turn is largely the Republican alternative to Democrat proposals circa 1990.

What bugs me about policymakers, in this case the Democrats and Obama, is the claim that this is something new. It isn’t.

How is Obamacare old? Consider:

  • … When confronted with the fact that millions of Americans stand to lose their existing medical insurance, as a result of ObamaCare, defenders of ObamaCare say that this is true only when those people have "substandard" insurance.

    Who decides what is "substandard"? …
  • … One of the fundamental reasons why private medical insurance has gotten so expensive is that politicians in state after state have mandated what this insurance must cover, regardless of what individuals want.

    Insurance covering everything from baldness treatments to sex-change operations is a lot more expensive than insurance covering only major illnesses that can drain your life's savings. Now these mandates have moved up from the state to the federal level.

    Insurance is an institution for dealing with risks. It is a costly and counterproductive way to pay for things that are not risks -- such as annual checkups, which are known in advance to occur every year.

    Your annual checkup does not cost any less because it is covered by insurance. In fact it costs more, because the person who is insured must pay premiums that cover not only the cost of the checkup itself, but also the costs of insurance company paperwork. ...  [emphasis added]
  • ... Another way in which ObamaCare is an old political story is that it began as supposedly a way to deal with the problem of a segment of the population -- those without health insurance.

    But, instead of directly helping those particular people to get insurance, the "solution" was to expand the government's power over everybody, including people who already had health insurance that they wanted to keep.

Note the pattern in the bold emphasis I added to each quote. It isn’t about hope and change, it’s about old guys in suits and ties and their busybody enablers telling everyone else what to do.

And lest you think that I’m dogmatically opposed to the Democrats and Obamacare, let me point out that the “War on Drugs” and the “War on Terror” — which get far more Republican than Democratic support — are justified with arguments that politicians have been making for centuries.

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