22
Feb
2014
Summarizing David R. Henderson’s Point About ObamaCare and Jobs
Some people in the comments were wishing we could boil down David’s excellent analysis into a pithy statement, and in the comments of a later post one guy got the point backwards, so let me repeat here what I said to clarify. The point David made was (in my words)
(1) just because workers might be better off by choosing to work less under ObamaCare than by continuing to work the same amount under ObamaCare,
(2) doesn’t mean that they are better off under ObamaCare than without it.
That’s a very obvious point, but it requires you to think of three things at once. The people saying the ACA “obviously” benefits the workers who are choosing to reduce work hours are only looking at the two things contained in point (1).
Someone with a nail gun to his head is better off doing what he is told. That doesn’t mean he is better off as a result of doing the thing he is told to do.
A contrived hypothetical scenario, to be sure, but a great analogy nonetheless. Bravo! (WordPress didn’t even send this to Spam.)
“Someone with a nail gun to his head is better off doing what he is told. That doesn’t mean he is better off as a result of doing the thing he is told to do…”
…as compared to doing what he can do without having the nail gun to his head.
I think that is an important addition, because the way you said it could potentially be viewed as self-contradictory, because in your first sentence you say he’s “better off” doing what he’s told. But then in the second sentence, you say him doing what he’s told doesn’t mean he is better off.
Yes, you know, I know, and Bob knows, and those who can hold more than two factors in their minds at once know, that in the second sentence the “doesn’t mean he is better off” you mean absolutely, by taking into account the unstated scenario of not having a nail gun to his head. But I think it has to be made explicit, to minimize misinterpretation for those whose pro-state emotions prevent them from thinking as logical as this requires.
Well put, Ken B. A nail gun, a forced purchase of a Trabant. Either works.
Elsewhere “they” think long-term unemployment at elevated reservation wages is soul-crushing and human capital destroying.
How about just “if you’re only making a claim about a part of a program, that is not actually the same as making a claim about the whole program”. I thought David and you were both very clear, which is why I didn’t really poke around the comment section of that post much. Not to be a jackass, but I find it a little disconcerting that some people had trouble with it.
DK wrote:
Not to be a jackass, but I find it a little disconcerting that some people had trouble with it.
Oh boy, you’re not going to like it if I suggest that certain famous bloggers are relying precisely on this kind of confusion to suggest to their readers that we should be glad the ACA is causing workers to…
Nah I will stop. Your laptop is messed up, you’ve suffered enough.
I believe “sloppy” is an adjective I’ve occasionally applied to certain bloggers I otherwise like before 🙂
I’d have to check the lingo on this particular case, but I do seem to recall a reference to the ACA and not just the subsidies in the ACA.
I’ve probably been sloppy on that distinction too (talking about the ACA when I’m really talking about parts of it) – if one does use shorthand like that they should at least understand what a more carefully expressed claim would look like.
The other option of course is that he’s just making both claims at once but leaving the other implicit (clearly he thinks the ACA overall is good too, even if he doesn’t think the labor supply effects are sufficient for demonstrating that). But now I’m just speculating.
Sure, Daniel, and obviously you are not personally responsible for what Krugman writes. But you’re acting like this is a pedantic point that “everybody serious knows.” The CBO report came out, and a bunch of critics of the ACA were freaking out. Their point wasn’t, “Let’s repeal just the subsidies so that it stops hurting low-income workers.” No, their point was, “Let’s repeal the ACA outright, because look it’s causing a big reduction in labor supply and that’s bad.”
So if Krugman et al. then respond by saying, “Well it’s clearly good for *the workers* involved since they’re cutting back voluntarily,” the only way that’s a good response is if he means “workers under ACA once they re-optimize” compared to “workers pre-ACA.”
No, not pedantic – very important. I don’t think anyone thinks that the subsidies are the only thing in the ACA. I do think discussion of the ACA for a week there got really really focused on the MTR associated with the subsidies. David deserves credit for bringing us back to the big picture, even if not for telling us something we didn’t know about there being a bigger picture.
David provided a reality check.
Anyone know a good nail gun supplier ?
Someone help this man.
Okay. The Home Depot is generally a good bet.
Here you go:
http://www.harborfreight.com/catalogsearch/result?q=nail+gun
Disclaimer: I do not own stock in this company.
I think whether you would be better or worse off as a result of ACA comes down to whether you would have bought a subsidized healthcare package even if it wasn’t mandatory to do so.
If you would have bought one anyway then you may well end up working less hours and will be at least as well off as before..
If you would not have bought one anyway you will be worse off irrespective of if you work more less hours as a result of the mandate. Whether you work more or less will depend upon a number of factors, including how much utility loss ACA gives you, and how the subsidy-tapering works. In any case adjusting your work hours will only allow you minimize your loss , never reverse it.
“I think whether you would be better or worse off as a result of ACA comes down to whether you would have bought a subsidized healthcare package even if it wasn’t mandatory to do so.
If you would have bought one anyway then you may well end up working less hours and will be at least as well off as before..”
Of course, this also assumes that Obamacare didn’t cause your employer to eliminate, or reduce the hours, on your job, or prevent you from getting one int he first place.
Someone might have fully intended to buy a subsidized plan, even if it wasn’t mandatory, but Obamcare’s general effect on the economy as a whole has now made them poorer than they otherwise would have been, which affects their decision as to whether or not they want to buy such a plan at all.
“Of course, this also assumes that Obamacare didn’t cause your employer to eliminate, or reduce the hours, on your job, or prevent you from getting one int he first place.”
agreed.
Dr. Murphy,
This is just the classic Food Stamps vs. Cash Subsidy analysis in most micro books using indifference curves. The cash subsidy is preferred, of course, by the recipient. In the same way, the income from a job is preferred, but the public policy makes the “best choice” to accept healthcare insurance subsidies and work less.
Brent,
Spell out for me why it’s the same thing. I understand what David is saying, and I understand the Food Stamp vs Cash analysis, but I’m not sure they’re the same thing.
Sure, I emailed you.
Correct, Bob. Thanks.
Subsidies are good to receive. Working less is a direct benefit, if you don’t value the extra income more than your work effort. Really, what do I care if other people are working less hours or receiving more income than before, or campared to me?
Obama is correct that working fewer hours due to a subsidy is a benefit voluntarily accepted by the recipients and not the same as removing the availability of work through regulation. Other parts of OCare may decrease the availability of work, but not this part.
The COST of the subsidy is the problem. The subsidy is transferred from other people against their will. The results of the subsidy are good. The imposition of the costs on others is immoral theft. There are other bad effects which follow from that hidden tax.
We accept the common theme that less work is bad, when we really mean that less opportunity for income is bad. Less work at the same or slightly less income is usually good.
One can’t fight the Broken Window fallacy by saying that the workmen don’t benefit from the destruction. Clearly they do benefit as far ahead as they can imagine, until the baker runs out of savings or goes out of business.
Obama is pushing the Benevolent Embezzler fallacy. The embezzler improves incomes in the town as he spends and gives away his loot, as long as the town doesn’t know it is being robbed.
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