Tuesday, March 23, 2010

This Is Not What ObamaCare Is About

Harvard economist Greg Mankiw comes out against ObamaCare in this way. He writes
Well, it appears certain that the healthcare reform bill will become law. One thing I have been struck by in watching this debate is how strident it has been, among both proponents and opponents of the legislation. As a weak-willed eclectic, I can see arguments on both sides. Life is full of tradeoffs, and so most issues strike me as involving shades of grey rather than being black and white. As a result, I find it hard to envision the people I disagree with as demons.

Arthur Okun said the big tradeoff in economics is between equality and efficiency. The health reform bill offers more equality (expanded insurance, more redistribution) and less efficiency (higher marginal tax rates). Whether you think this is a good or bad choice to make, it should not be hard to see the other point of view.

I like to think of the big tradeoff as being between community and liberty. From this perspective, the health reform bill offers more community (all Americans get health insurance, regulated by a centralized authority) and less liberty (insurance mandates, higher taxes). Once again, regardless of whether you are more communitarian or libertarian, a reasonable person should be able to understand the opposite vantagepoint.

In the end, while I understood the arguments in favor of the bill, I could not support it. In part, that is because I am generally more of a libertarian than a communitarian. In addition, I could not help but fear that the legislation will add to the fiscal burden we are leaving to future generations. Some economists (such as my Harvard colleague David Cutler) think there are great cost savings in the bill. I hope he is right, but I am skeptical. Some people say the Congressional Budget Office gave the legislation a clean bill of health regarding its fiscal impact. I believe that is completely wrong, for several reasons (click here, here, and here). My judgment is that this health bill adds significantly to our long-term fiscal problems.

The Obama administration's political philosophy is more egalitarian and more communitarian than mine. Their spending programs require much higher taxes than we have now and, indeed, much higher taxes than they have had the temerity to propose. Here is the question I have been wondering about: How long can the President wait before he comes clean with the American people and explains how high taxes needs to rise to pay for his vision of government?
Mankiw throws in the words libertarian versus communitarian, but couches most of his critique in terms of the fiscal problems. True enough, the fiscal problems will be gigantic, but what exactly Mankiw "understands" from proponents of the bill is a little hard to see.

This is far more than a fiscal problem. It is about creating disincentives for innovation in medicine. It is about price controls that will limit service. It is about government decision making on diagnosis and treatments--influenced by lobbyists. It  will limit quality care, create unwanted care. It will eat away at life expectancy. This is basic stuff that Mankiw, as an economist, should understand.

There is really something disturbingly wrong with an economist such as Mnakiw couching it in terms of simply a debate on the budget consequences of the bill, and to soft pedal the other major problems. 


  1. This demonstrates that Mankiw doesn't understand "community" and the fact that true community is something that occurs spontaneously over time, not instantaneously through central planning and authoritarianism.

    Or would Mankiw call the former Yugoslavia a "community"? Would Mankiw sit around in Moscow on the eve of the USSR contemplating the "tradeoffs" being made between what little personal liberty existed and this newly-arriving "community"?

  2. There is really something disturbingly wrong with an economist such as Mnakiw couching it in terms of simply a debate on the budget consequences of the bill, and to soft pedal the other major problems.

    Robert, Mankiw is a Keynesian (see quote below). Hence, he is a socialist at heart. Communitarianism is a primitive communism--it mandates the reduction of the capital structure and opposes individualism in favor a village-based economy and society that is supposedly an improvement over "materialistic" free market capitalism. The university economics departments are infested with such as Mankiw. For Keynes' views on socialism and capitalism see his essay National Self-sufficiency.


    Mankiw quote

    "IF you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes. Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics. His insights go a long way toward explaining the challenges we now confront."