Conservatives Need To Decide If Stigma And Ostracism Are Legitimate Moral Tools

One thing I wanted to discuss in my column for The Week, but didn’t have the room for, was the whole “define bigotry” question. Damon LinkerConor FriedersdorfRod Dreher, and Brandon Ambrosino all argued recently that simply thinking homosexuality is immoral or opposing same sex marriage doesn’t clear the threshold. I.E. to be a bigot, you have to behave in a hateful or spiteful manner towards gay people.

The point of my column was that conservatives are making a sudden and disingenuous attempt to back out of an established social charter. That charter was anti-discrimination law, and in recent decades it certainly seemed like everyone on both sides of the political divide agreed that the reach and framework of the law was appropriate for dealing with discrimination in the workplace and the market. Everyone also seemed to agree that the law’s protection should’t be limited to race, but should be extended to other groups that have faced oppression in American society. So calls for “religious liberty” amount to conservatives saying, “Oh, wait! No, we don’t think its reach and framework are appropriate after all!”

I think the dispute over who is and isn’t a bigot has the same basic problem. If you look at how Americans have used the word “bigot” — especially as it concerns race — I think it’s pretty obvious we haven’t been using it to refer solely to interpersonal behavior. For instance, imagine trying to argue that men like Strom Thurmond or George Wallace — men who leveraged all the political power at their disposal to preserve segregation and Jim Crow — were not bigots because they were perfectly nice and gentlemanly to the black people they met on the street or who worked in their offices. (I have no idea if Thurmond and Wallace were actual nice in that manner. But suppose for the sake of argument.) I don’t think anyone would be willing to go there.*

So the qualifications for being a bigot are not limited to interpersonal behavior. They also include holding to particular worldviews and sticking up for particular social orders. In which case, conservatives’ current attempts to redefine bigotry are, again, opportunistic efforts to duck out of an established social agreement as soon as their own oxe started getting gored.

But there’s also a deeper point here. Go back and consider Rod Dreher’s post specifically. It’s poignant because it discusses people Dreher knows — a successful lawyer and two New York City reporters — who effectively “live in the closet” when it comes to their SSM opposition, and who know they’d face ostracism from their social circles and stigmatization as bigots if they spoke up publicly.**

My initial reaction to this was essentially Andrew Sullivan’s — let me get you the world’s tiniest violin. But! Stepping back, I think any decent and gracious person has to admit there’s something a bit ugly about this. Human beings remain little more than upright apes, and what Dreher’s describing is a textbook case of the lower, lizard-brain functions by which we socially signal, define the borders of the tribe, and expel pollutants from our shared communal life. It’s the kind of thing self-presumed enlightened liberals would decry in other contexts.

But here’s the deeper point: the fact is human beings are social and emotional creatures rather than rational ones. And that means this kind of social policing, as ugly as it may be, is also critical to how our culture advances morally. In fact, given the importance conservatives place on communal moral order and decentralized social organization, you’d think they’d be the first to acknowledge this fact. Does anyone really think racism, for instance, was driven underground by civil and reasoned public discourse? Of course not. Racism was driven underground by collective social efforts to stigmatize and ostracize people who held to it. And it worked really well!

So I think we have two distinct questions to answer here:

1) Is the worldview under discussion actually morally objectionable? This is the “is opposing gay marriage as bad as supporting segregation” question.

2) Regardless of how you answer 1), are social stigma and ostracism appropriate tools for dealing with immoral worldviews?

And the two questions really do need to be disaggregated, because we’re all going to disagree on what constitutes an immoral worldview. I think opposing SSM is as bad as supporting segregation, and I think the belief that homosexuality is immoral is on par with the belief that black people are inferior to white people. I’m sorry, but I do. Dreher does not. And that kind of disagreement is going to crop up again and again across all sorts of different subjects. Which is just life in a free and pluralistic democracy. The question is: what kind of social charter do we all hash out to deal with those disagreements? That’s where 2) comes in, and there really is no right answer.

But we do have to own the consequences of our answer. If we conclude stigma/ostracism are not legitimate tools, then that means we’re going to have to accept the presence of people whose views we abhor at our gatherings and parties and workplaces and churches and dinners and so forth. Conversely, if we conclude stigma/ostracism are legitimate tools, then we have to be prepared for the day when we’re on the receiving ends of those weapons. You never know which way the winds of culture will shift.

Which seems to really be conservatives’ basic problem here. They’re just stunned by the speed with which American society has embraced homosexuality’s moral legitimacy, and by the resulting speed with which ostracism and stigma have been turned against them.

But given how American society dealt with racism and misogyny, for example, it really does seem like we’d all concluded that ostracism and stigma were legitimate tools. Which makes the complaints by Dreher, Friedersdorf, Linker, Ambrosino, et al  opponents of same sex marriage who are upset they’re being tarred as bigots look incredibly unprincipled and opportunistic. (UPDATE: My earlier version of this sentence was sloppy. Friedersdorf, Linker, and Ambrosino are all supporters of SSM, though they’ve argued against naming its opponents bigots. I should’ve made that clear.)

In short, if we’re going to change our minds and say those social tools actually aren’t acceptable, that’s fine — but in that case we all owe George Wallace a big fat apology.

Who wants to go first?

*I’d add that the problem with Michael Joseph Stern’s graceless and vindictive response to Ross Douthat was that he collapsed the bigotry/hatred distinction from the opposite direction. Conservatives are insisting bigotry cannot be present unless personal hatred is also present. Stern insisted that if bigotry is present, then personal hatred must also be present.

**Dreher also brings up the Mormon theater director in California who was driven out of a gig in 2008 when coworkers discovered he’d donated to the Prop 8 campaign. I left it out above because it deals with actual workplace retaliation as opposed to mere social stigma, and as such I think it’s genuinely troubling. There’s probably a strong case that anti-discrimination law should be extended to political and ideological beliefs. My understanding is some states already do so, with the expected carve-outs for firms and institutions with explicitly ideological missions.


Thinking Through “Religious Liberty,” The State, And Anti-Discrimination law

Over at Salon, Matt Bruenig went on a much-deserved scorched earth campaign against the new bill from the Kansas State House, which would’ve effectively legalized widespread anti-gay discrimination in the state’s economy. (And given the Kansas State Senate just nixed it, I guess the campaign worked.) Defenders and pseudo-defenders of the bill rest their argument on versions of Rand Paul’s objection to the Civil Rights act: that who businesses do or don’t serve is a private matter between them and their customers, and government getting involved is a constriction of liberty.

Bruenig’s rebuttal is straightforward: contract and property rights and so forth don’t just emerge out of the aether. They’re written in law — which is to say, they’re a contingent social construct — and they’re enforced by police power — which is to say, the state’s monopoly on legitimate force. As a result, there’s mostly no such thing as “private” economic interactions. The relationship is actually three-way: between businesses, customers, and the state as mediator and enforcer. If a group of black people or an after party from a gay wedding sits down at your counter and you want them to leave, they aren’t just magically expelled by the cosmos. You call the cops and have them come down and force them out.

The upshot is that there’s no objective baseline from which increases or decreases in “liberty” can be measured. The very fact that there are rights of property and association and contract in play at all means coercion has already been engaged in. It’s social constructs all the way down. Before you can decide what these rights and laws are and how they will operate, you have already have a set of moral values in place describing what sort of social order you’d like to have.

Bruenig is obviously correct on all these points. However, I’m not sure they actually score much other than a rhetorical victory. (Granted, rhetorical victories can be important.) Even if we all agree these are just subjectively determined rules by which people can mobilize state violence in their favor, it remains the case that we do need objective rules for that. And they need to be rules that majorities in a pluralistic and highly diverse democracy, with lots of people with lots of different value systems and world views, can all live with. This is basically the “traffic light” theory of property rights — that property rights are good, not because they reflect some inherent moral truth, but because they facilitate human cooperation. Like traffic laws, property laws don’t have to be designed any particular way. So how we design them is a collective social effort based around what we think is the most just and flourishing social order. Anti-discrimination law is just one more aspect of that shared charter determining what the “traffic laws” of property and contract and so forth are.

This is the first clue as to why the conservative freakout over “religious liberty” is so disingenuous. What’s changed recently was not the content of anti-discrimination law’s protections — most everyone on both sides of the aisle (except Rand Paul, I guess) has been fine with those protections for decades — but the addition of sexual orientation to the list of protected characteristics, followed by the partial arrival of legal equality for gay marriages. In other words, if liberty is under threat here, it’s not from changing attitudes about homosexuality. It’s from a set of anti-discrimination laws that were improperly designed all along.

Once this is clarified, it seems to me, the conservative champion of “religious liberty” has three options:

1) Argue that sexual orientation shouldn’t be a protected category.

That’s basically what the Kansas bill would’ve done. The lawmakers tried to hedge by writing the bill as if it only got businesses out of endorsing or participating in gay weddings. But the language was so expansive it would’ve effectively kicked gay Americans out of the protection of anti-discrimination law entirely.

Furthermore, as I said, moral values come before property rights and contract law. So you can’t argue that the law should allow discrimination against gay people without also implying that discrimination against gay people is morally legitimate. (Or that you find that discrimination morally preferable to not allowing people who enjoy class, racial, or heteronormative privilege to leverage state power in defense of their privilege.) The two things are inextricably linked.

So in a certain sense, conservatives are right that they’re under threat from a surrounding society whose mores are changing around them. They just have no standing to complain, because they’re fine with the way our society also changed around people who believed black people are inferior and shouldn’t be allowed to participate in society in the same way as whites.

Conservatives try to get around this point by claiming they don’t want to be able to discriminate against a characteristic (being gay), just a behavior they morally object to (a gay wedding). This is coherent, after a fashion. But let’s clarify where that logic goes. It would also justify discrimination on religious grounds (“I don’t object to Jews, just to selling them products that would be used in a seder”) and in some cases on racial grounds (“I don’t object to black people, just to them marrying white people”). Are conservatives willing to allow those forms of discrimination as well?

2) Argue that moral objections to homosexuality are more legitimate than believing black people are inferior.

This seems to be the default position a lot of centrists and conservatives are sliding into. There are enormous and obvious First Amendment problems with it, as you’re effectively calling on government and the courts to decide what counts as a religion and what does not, or what does and does not count as an infringement of conscience. Judges will have to start explaining why Amish objections to paying social security taxes aren’t deserving of respect, but the Little Sisters Of The Poor’s objection to the birth control mandate is. Or why a southern evangelical’s belief that interracial marriage is against God’s law may be dismissed, but a traditionalist Catholic’s belief that homosexual unions displease the Almighty is of sufficient pedigree to command our deference.

Any principled conservative — hell, any principled American — ought to immediately balk at this scheme on purely constitutional grounds, not to mention the way it would further our unpleasant national habit of treating the Supreme Court like a bevy of philosopher-kings.

3) Tweak the scope of anti-discrimination law and jurisprudence.

Like I said, the law doesn’t have to be any particular way. And I think it’s at least conceptually possible that anti-discrimination law could be tweaked in ways that would answer at least some of the “religious liberty” concerns without running afoul of our recognition that systemic privilege and anti-gay discrimination are moral problems that call for systemic solutions.

For instance, in the case of the New Mexico photographer who refused to shoot a gay wedding, the only reason there was a case was because the courts determined the photographer’s business qualified as a “public accommodation” — the category of businesses subject to anti-discrimination law. I think there’s a reasonable argument to be made that a freelance photographer who’s basically a one-person shop (and any other businesses similarly structured) should not be considered a “public accommodation.” Laws could easily be altered to make the definition a bit less expansive, and in a way the clarifies matters for the courts. But, per the problems with option 2, it would need to be a rollback for all protected categories: religion, race, gender, disability, the works.

But are you willing to allow, say, a self-employed plumber to deny service to a couple just because they’re gay? Or interracial? Or traditionalist Catholic? I’m not. And if you’re not either, do you really think the law can convincingly differentiate a traditional “service” job from something more “artisan” like photography or baking? Do you think it should try?

So I’m deeply skeptical even of option 3, though it does it strikes me as a non-crazy idea offered in good faith.

But here’s the thing: if all we have to do to settle this problem in a way that’s acceptable to all sides is tweak the legislative definition of “public accommodation,” then what we have here is an incredibly banal conflict. It has nothing to do with “religious liberty” or the supposed rise of some pugilistic secularist tribe that intends to crush all divergent world views before it. All we have is an unintended hiccup, easily solved, resulting from a benign aspect of our anti-discrimination law that — up until two or three years ago — no one (other than Rand Paul) had the slightest problem with.

If something so modest will address conservatives’ concerns, then there is no “religious liberty” crisis and never has been. In which case, all the handwringing we’ve been subjected to was merely the product of conservatism’s collective ego and monumental self-pity.

On the other hand, if that option 3 won’t address their concerns, then conservatives’ intentions are far, far more radical than they’re willing to admit in public. Other than the conservatives in Kansas, that is.

Getting People Employed Does Not Equal Getting The Economy Back To Full Capacity

Tim Carney is not happy with the debate over the unemployment insurance (UI) debate. He cites a study finding that UI benefits account for “most of the persistently high unemployment after the Great Recession.” And while the scale of the effect is crazy — I’ll hand it over to Danny Vinnick to explain why — the raw fact that there would be some disincentive effect is perfectly reasonable. UI benefits essentially pay people for not working, so of course they’re going to be a bit more inclined to not work. Tim does a reasonable job of laying out how this happens on the individual level, and to his credit he characterizes it as economic rationality rather than laziness.

But then Tim throws out this at the end:

Liberals dismiss the disincentive effects [of unemployment insurance] today, arguing there just aren’t jobs out there. Maybe the jobs aren’t there because lengthy unemployment insurance is killing these jobs. This is a complex debate. It would be nice if we could have it.

This confuses what we mean when we talk about jobs. “Job creation,” “employment,” or the Bureau of Labor Statistics’ monthly job reports all mean the number of actual hires. That’s what the study Tim cites is referring to as well. But when we liberals talk about how there just aren’t enough jobs “out there,” we’re talking about BLS’ JOLTS data. That measures job openings — the amount of jobs in their untapped potentiality, as opposed to the number of jobs people have actually been hired for. It was one job available for every 2.9 people looking, at last count. The disincentive effects of unemployment insurance can drive down the number of hires, but not the number of raw job openings.

Employers create a job opening for one simple reason: they think it will increase their profits even after the additional expense of putting the new hire on the payroll is accounted for. What creates that circumstance of potential profit is untapped demand, pure and simple. If there’s not enough demand, the new hire won’t result in enough new sales, no matter how virtuous a worker she is. You can’t sell to customers who aren’t buying.

Generating enough demand throughout the economy to create jobs for everyone who wants one is an irreducibly ecological question. You cannot boil it down to the hard work and initiative of one person taking one particular gig. Individual agency is irrelevant here. And while there are lots of ways to boost demand, they all boil down to either increasing inflation or taking money from rich people to give to to poor people — moves Tim and his conservative cohorts are roundly opposed to in nearly all instances.

At any rate, if we didn’t boost demand but kept UI, we’d get more or less get the situation we’re in now. If we didn’t boost demand and didn’t keep UI, then yes, we’d get a slight uptick in people taking the available jobs more quickly. But they’d still be taking those jobs in a terrible economy in which wages are depressed and jobs are scarce. UI benefits have an unusually high mutliplier, and if they’re financed by taxes on the wealthy or by borrowing, the economic drag from the revenue collection will be virtually zero. So in terms of boosting demand, moving from people spending their UI benefits to spending their income from newly acquired shitty jobs would basically be a wash. So the “one job for every 2.9 workers” ratio wouldn’t change. And once that one job was filled, the other 1.9 workers would be left high and dry. Most likely, they’d just drop out of the labor force entirely, leaving the economy as a whole poorer for decades.

We do not want people to simply take what jobs are available in a terrible economy more quickly. We want the economy to be not terrible. Tim’s article and the entire conservative position on UI benefits operate by obfuscating this basic distinction.

Meanwhile, if we boosted demand but got rid of UI, we’d get way more employment than we have now, precisely because there’d be more jobs available for everyone to snatch up. The 1-to-2.9 ratio would even out. But if we boosted demand and kept UI, we’d still get way more employment than now, because the supply of jobs would go up relative to the supply of labor, which would drive up wages, making a job more attractive to the vast majority of workers than staying on benefits. Tim worries this second effect on wages is good for the employed but bad for the unemployed. But that only holds if you assume the terrible economy and the 1-to-2.9 ratio is the new unescapable normal. (Most likely because you’re ideologically opposed to the policies that would prevent them from becoming the new normal.)

In short, how much demand the economy has to work with, and thus how much it can produce, is everything. All the presence or absence of UI does is determine how much human suffering occurs in the interim. With all due respect to Tim, his concern about “tradeoffs” is a giant non sequitur. There’s no legitimate debate to be had here. What Tim actually wants is a circumstance in which conservatives’ deep emotional investment in believing the universe does not work the way it works is nonetheless treated as worthy of respect by people who actually understand the economics of the thing. There are a lot of things I could call that circumstance, but a “debate” isn’t one of them.

The Official Jeff Spross Plan To Fix Obamacare


So it looks like is working — or at least working much better than it was before. Hopefully, this means we can soon set aside our collective national freakout over a really serious substantive threat to Obamacare, and go back to freaking out over the purely optical threats. Those would be “rate shock” and the failure of Obama’s “if you like your plan you can keep it promise” to pan out. Unlike the website’s travails, they’re purely political problems, and actually result from Obamacare operating the way it was designed to. They’re exceedingly unlikely to threaten the macroeconomic stability of the insurance markets, or the soundness of any part of the law’s policy design. Their costs are dwarfed by the benefits going to poor people receiving subsidies and covered by the Medicaid expansion.

But rate shock and the plan cancelations also happen to affect a population that’s upper-middle-class and relatively politically active, so our political system actually cares about their troubles in a way it doesn’t for the truly poor and unfortunate. So we treat inconveniences heaped on the former group as major political scandals, and massive alleviations of suffering for the latter group as non-events. Which is shameful and morally perverse, if you ask me.

However! With that bit of throat-clearing out of the way, let me say I’m sympathetic to complaints that Obamacare’s restrictions on health coverage design hamper consumer choice, and hold back innovation in the packaging and delivery of care. Those restrictions also contribute to rising premiums (not much, but somewhat) because expanded coverage comes with expanded costs. And they’re causing the cancellation of a lot of pre-Obamacare insurance plans.

I don’t obsessively fetishize choice and innovation they way reformist conservatives do. But they’re good values to promote, and shouldn’t be undermined unless it’s necessary to pursue some more foundational moral obligation. I don’t think it’s necessary here. And hey, if we can fix rate shock and plan cancellations while we’re at it, why not?

So, without further ado, here it is:

The Official Jeff Spross Plan To Fix Obamacare

1) Remove all but the gold rating from the exchanges.

Right now insurance plans have to meet one of four ratings to be sold on the exchanges. Bronze plans offer the stingiest and least comprehensive coverage; then it goes up to Silver, Gold, and finally Platinum with the most generous coverage. Catastrophic plans can also be sold under certain conditions. Those four “metal ratings” all include a package of essential health benefits (EHB) — ensuring everyone gets at least a minimum level of reliable coverage. They also require various deductibles and cost-sharing.

My recommendation: clear out the EHB requirements and everything except the gold plans. Then change the law so that as long as an insurer sells a gold plan on the exchange, they can sell any other plan they cook up as well.

That would address conservative complaints regarding choice, innovation, and plan cancellations. But it would also still serve the liberal goal of protecting consumers from “junk insurance.” Gold plans would function as a seal of approval: you can take your chances with the other plans if you like, but the government has checked these out, and they’re solid.

Furthermore — if I understand the economics correctly — requiring all insurers to sell at least a gold plan before they can sell anything else should cut down on any risks of adverse selection.

Practically speaking, this wouldn’t bring back the plans that have already been canceled due to Obamacare’s new rules. But it would satiate conservatives’ principled objections, and would open up the possibility for insurers to resurrect similar plans in the next year or two.

2) Simplify the subsidies.

Right now the subsidies customers can get on the exchanges are calculated to cover the premiums they’d pay for a silver plan. The subsidies are adjusted for income — the more you make, the less of your premium is covered — and they phase out completely if you make over 400 percent of the poverty line. Separate subsidies, also adjusted for income, are provided for out-of-pocket costs.

First off, obviously, my plan would peg the subsidies to the gold plans. The division between premium subsidies and out-of-pocket subsidies is also silly, so I’d just have one lump sum that covers everything. Next, there should be no adjusting for income. Everyone should get the full cost of their premium and out-of-pocket expenses covered, regardless of how much they make. Third, don’t phase it out at 400 percent of the poverty line. Give the subsidies to literally everyone on the exchanges.

Obviously, this will significantly increase Obamacare’s annual spending, which would be a big downside for conservatives. But it would also eliminate the policy and paperwork complexities that come along with means-testing; it would do away with rate shock, since everyone will have the entirety of their premiums covered no matter who they are; it would bring Obamacare’s subsidies closer in form to the universal health care tax credit conservatives advocate; and it would eliminate any latent welfare trap effect from the benefit phase-out.

Finally, this would make a gold plan affordable to everyone. Combine that with the “seal of approval” function mentioned above, and gold plans would become the all-purpose fall back plan. And if a customer decides to go with coverage that costs less than a gold plan, they can just pocket the leftover subsidy. That keeps the incentive for customers to shop for the best deal, and the accompanying competitive market pressure.

3) Get rid of the age bands.

Obamacare also instituted a new rule that premiums for older Americans on the exchanges couldn’t be higher than premiums for younger customers by a factor of more than 3 to 1. Older people tend to be sicker and thus a greater risk for insurers, which drives their premiums higher. The rule was meant to help out the older set with an implicit transfer: drive down their premiums by driving them up for younger customers.

It’s unclear just how much the age restriction contributes to premium hikes and thus to rate shock. Most of the hikes are probably due to the rule that insurers can no longer deny customers based on pre-existing conditions. But the age rule obviously contributes some.

So let’s get rid of it. We’ve already removed all limitations on who can and can’t get a subsidy. So no older American is going to be left out in the cold when their premium goes up. I don’t object to the age rule myself, but it seems to me we can accomplish the same goal through less intrusive tinkering in how insurers design their coverage.

4) Get rid of the coverage requirements for the employer-provided market.

Finally, Obamacare imposes some new requirements on the small and large group markets for employer-provided coverage, which are causing some modest disruptions there. Personally, again, I don’t care about this. If your employer cancels your current plan, the most likely outcome is they’ll just provide you with a better one. If they don’t, then you’ll be getting a bigger paycheck (since none of it’s going to premiums anymore) and you can go shop on the exchanges. Either way, you’ll be fine.

But conservatives seem annoyed by these requirements. And much of the impetus behind Obamacare was the idea that employer-based coverage was already the “good” kind, and we were trying to make the individual market more like it. So I don’t see why the employer requirements are strictly necessary. Why not just get rid of them?

BONUS: Cover everyone who got left out by state refusals to expand Medicaid.

I don’t like describing the expansion of coverage to millions of the least fortunate Americans as a “bonus.” (See my bitching above about whose struggles our political system does and doesn’t value.) But I did frame this post as a response to rate shock and plan cancellations, and expanding Medicaid isn’t strictly relevant to that. Still, as a leftwinger with the attendant moral priorities, this would be a huge “win” for me. So I’m including it.

Right now, to qualify for the exchanges, your income has to be at least 100 percent of the poverty level. That’s because lawmakers figured every state would expand Medicaid, covering everyone below that threshold. But 26 states didn’t, leaving almost 5 million Americans — all of whom are far poorer than those seeing rate shock and plan cancellations — high and dry.

But since we’ve already eliminated the income ceiling on who qualifies for the exchanges’ subsidies, we might as well drop the floor as well. That yields a simpler system: as long as you’re not covered through your job or through some government program (Medicare, Medicaid, Veterans Health Administration, etc.) you’re on the exchanges, end of story.

Yes, again, this would significantly increase the law’s annual expenditures. But it would also serve as a détente of sorts on the Medicaid expansion, and take the political pressure off conservative states that don’t want to participate. Continue reading

If Obama Broke His Health Care Promise, Does That Tell Us Anything Useful About Anything?

Let us stipulate, for the sake of argument, that President Obama has broken his promise that “if you like your health care plan, you can keep your health care plan.” I actually think the accusation is highly contestable on its merits, but whatever. Let’s roll with it. What I want to know is: what, in practical terms, I should take away from this fact?

And I ask in earnest! Because Obama’s critics sure seem to think it’s important. But so far they seem like the dog that caught the proverbial car with this talking point — now that they’ve landed it, they don’t know what to do with it.

"You know what I am? I'm a dog chasing cars. I wouldn't know what to do with one if I caught it! I just do things."

“I’m a dog chasing cars. I wouldn’t know what to do with one if I caught it! I just do things.”

The most obvious implication they’re pushing is that this invalidates the law: as Ben Domenech put it at a recent Wonkblog debate, whether Obamacare succeeds or fails should be judged by whether it lives up to the White House’s promises.

But this is an obviously stupid argument. First off, Obama is not my Dear Leader or anyone else’s. He’s just some dude I voted for. We’re all perfectly capable of forming our own opinions on a policy and coming up with our own metrics. I’m not obligated to adopt his. And as a matter of common-sense, it seems to me most voters will judge the law on whether it makes American lives better off on the whole, not whether it matches up with a few political talking points the vast majority of them weren’t paying attention to anyway.

Tim Carney, however, does a better job with two distinct takeaways:

1) Never trust Obama again.

I can’t really say I disagree, though I don’t share the sentiment. I’m deeply cynical and utilitarian about this stuff — politicians are function algorithms, whose behavior is determined by self-interest and the environment of political forces they encounter. I vote for them accordingly, looking for the one that I think will best advanced my preferred policies and values given their nature and circumstance. I gauge the likelihood they’ll keep their promises by the same measure. (As such, Obama’s done a good job of keeping his promises to me, since I’m a lefty-liberal, and am smack-dab in the middle of the political coalition that most affects Obama’s fortunes.) In short, trust doesn’t really enter into it for me, except at the margins.

Carney’s point is certainly relevant to, say, conservative voters who are curious about immigration reform. If the final bill’s concession to conservatives is increased border security, and that increase is written in the legislation such that it relies heavily on executive discretion, then yeah, they should be worried Obama will welch. But really, that would be just as true before the current Obamacare brouhaha, because that’s the nature of politics. It’s also a good reason to leave the executive as little discretion as possible in a law’s language, which is how we ought to be doing things anyway.

I also think the decisiveness and gravity with which Carney renders this judgment is uncalled for. As I said, the charge is contestable, even from his framework. Obama’s promise has held true for everyone on Medicare, Medicaid, and the vast majority of employer-provided plans. That’s most Americans right there.  The Congressional Budget Office projected that 8 million Americans would lose their current coverage. By my lights, when you make a promise to 300 million-odd people, keeping it for 97 percent of them is doing pretty well. It’s also arguable the White House was honest if cagey at the time that the grandfathered plans wouldn’t last.

The most you could say, I think, is that this is one data point in the case you shouldn’t trust Obama, and a relatively mixed one at that.

2) Loosen the rules that are outlawing insurance plans.

As Carney says, “Why should it be illegal for me to buy a plan that doesn’t cover mental health or contraception? Why should it be illegal for my neighbors to buy a plan that doesn’t cover maternity or prescription drugs? Why should a $5,000-in-network out-of-pocket maximum combined with a $10,000 out-of-network max be outlawed?” Those are all fair questions! And it’s absolutely true that loosening Obamacare’s rules about how coverage can be constructed and what benefits must be included would cut down on the amount of plan cancelations.

But this is a debate over an a priori policy preference. We’d still be having it, in exactly this same form, even if Obama had been totally up front from the beginning that some plans would get nixed. And if you do think tall those practices should be outlawed, then saying the plan cancellations are merely “transitions” is a perfectly valid argument.

It’s worth noting that most conservative health wonks want to equalize the tax treatment of employer-provided plans and individual ones. Now that would lead to some serious upheaval in what coverage is currently available, and who gets to keep what. So the mere fact of changing plans can’t be taken as evidence that a particular policy is bad.

Again, I don’t see how Obama’s failure to keep his promise illuminates anything here. For myself, I’m sympathetic to the idea that Obamacare’s rules on this score shouldn’t be so demanding. But I’m also firmly in agreement with Josh Barro and Austin Frakt that our current health care system is a mess, that changing it into something better will inevitably lead to lots of people losing what they now have, so Obama’s promise is something that shouldn’t be kept because doing so would be bad policy.

We should decide whether the essential health benefit requirements are a good idea or a bad idea, then alter or not alter the law accordingly. Obama’s personal virtue has nothing to do with it. And if those rules are a good idea, we certainly should’t get rid of them anyway just to bring the law into line with the President’s previous sales pitch.

Thoughts On A More Effective And Egalitarian Monetary Policy

Here’s Tim Carney, tracking the genuinely interesting meeting-of-the-minds Wall Street and the Left arrived at in supporting Janet Yellen for Fed Chair.

The reason for the former’s enthusiasm is pretty straight forward: Yellen is a big fan of quantitative easing. That’s the relatively new form of unconventional monetary stimulus the current Fed Chair, Ben Bernanke, and his supporters have used to try to boost the economy. They’ve already cut short-term interest rates to zero through conventional monetary policy, so that can’t go any further — the infamous “zero lower bound.” So with quantitative easing, the Fed creates new money, then injects it into the economy by buying up both U.S. Treasuries and other instruments on the financial markets, like mortgage-backed securities, in an effort to move long-term interest rates and inflation expectations.

“Wall Street loves quantitative easing much more than it dislikes regulation,” wrote Yellen critic John Berlau of the free-market Competitive Enterprise Institute.

Republican investor Stanley Druckenmiller sounded a similar note: “This is fantastic for every rich person,” he said of quantitative easing. The Fed’s buying binge drives up demand for stocks and bonds, thus boosting the price of these financial assets. “Who owns assets?” Druckenmiller continued. “The rich, the billionaires.”

This critique of quantitative easing — that it inordinately benefits the rich — is hardly new. What interests me here is you really only ever see it deployed as an argument for not doing quantitative easing period. But that doesn’t follow! This critique has nothing to do with the basic macroeconomics of the matter, which say we’ve suffered an aggregate demand collapse and are teetering on the edge of a deflationary spiral, and thus the economy needs a big injection of new money. All the “it helps rich” critique implies is that, hey, maybe we should find some way to get the money into the economy other than buying up stocks and bonds.

Which is something I’m genuinely curious about. What are our alternatives? Well, the wonky ideal would be through direct cash giveaways. The Fed should literally just start cutting Americans checks. This would be the proverbial “helicopter drop,” properly understood. Steve Randy Waldman put forward a pretty slick version of how this could work a while back: whenever the Fed wants to inject money into the economy, it could just deposit it into every American’s bank account. When it wants to take money out, it could just coordinate temporary tax hikes with Congress.

Whither the injection of new money?

Whither the injection of new money?

I can see some possible problems with this. For one thing, roughly one quarter of Americans carry out some, or even all of their financial business without a bank account. These are the people who would need those stimulative Fed deposits the most, yet they’re also the hardest to get those deposits to in practical terms. I’d also worry about the political efficacy of tightening monetary policy by hiking taxes. That seems like a quick way to make everyone hate the Fed, and to make tight monetary policy even harder to carry out politically than it already is. (That said, I’m in agreement with Waldman and much of the blogosphere that insufficient monetary tightening has been the least of the Fed’s problems for the last few decades.)

At any rate, it’s certainly the cleanest and simplest proposal I’ve seen. The thing to remember is that the central bank isn’t really a “bank” in the popular sense. It’s more of a ballast chamber for the money supply. Right now it sucks money in and pumps it out in the form of bought and sold financial instruments. But there’s no reason it couldn’t do the same with direct cash transfers.

A less radical proposal, built more on existing policy, could leave conventional monetary policy’s buying and selling of government bonds unchanged, but turn to direct cash transfers whenever the zero lower bound looms. Essentially, replace quantitative easing with temporary boosts in social safety net spending. Congress could write language establishing a menu of programs that rely on giving people cash directly — TANF, unemployment insurance, Social Security, the earned income tax credit, the child tax credit, and so on — and then the Fed just decides how much extra cash it wants to inject and when, and spending levels on those programs would rise accordingly. If we ever established a universal basic income (and I definitely think we should) it could be added onto the menu.

It wouldn’t be perfect — you’d still be choosing Wall Street as the entry point for money creation under conventional operations — but I think it would be a big improvement over the status quo.

Now, contra the “it inordinately benefits the rich” argument, Scott Sumner has argued that where the money gets injected doesn’t have distortionary effects on distribution. But it does seem to me (and I admit we’re at the far outer limits of my policy acumen here) that his argument only works as long as the money actually circulates fully through the economy. Which gets us to Carney’s other point: the Fed has increased the money supply by about $2.7 trillion since the 2008 recession, but there’s been no corresponding increase in inflation, and the economy remains middling. So where’d all that money go?

Here’s one clue: Banks are holding $2.3 trillion in reserves — compared to less than a trillion in 2008. Also, corporations, feeling cautious these days, are sitting on record piles of cash, according to the Bureau of Economic Analysis.

This makes sense, considering the mechanism of QE: The Fed buys Treasuries from banks. But gun-shy banks don’t lend it so it sits on their books instead of entering the real economy, where it could cause job growth, inflation or both.

This is a slightly different problem that what Sumner was responding to. Not that quantitative easing amounts to Wall Street cronyism, but that economically privileged recipients of the new money are the least likely to push it out into the broader economy, precisely because they’re the least likely to feel the pinch in a downturn. Recipients of social safety net spending, on the other hand, are the most likely to feel that pinch. So why not make them the entry point for the new money?

Lastly, Joseph Weisenthal raised another suggestion, that corporate and bank cash hoarding simply shows the Fed hasn’t raised inflation expectations enough. Monetary policy simply remains too tight. Strictly speaking, I think this is correct. As Milton Friedman pointed out, nominal GDP growth and inflation are the two things by which monetary policy should be measured. Both remain quite low, which suggests policy is too tight as opposed to too loose.

There’s a solid case that the Fed’s policies so far, while failing to boost the economy out of its torpor, have effectively put a floor under it and prevented things from getting any worse. I’m also persuaded that a four percent inflation target would be vastly preferable to the Fed’s current target of two percent.

So I do think we could get more economic stimulus if the Fed went even bigger with its money creation. And given the current menu of options and political realities, that’s almost certainly the best course of action.

But I also wonder if we could be getting “looser” monetary policy by changing its structure as well as its size or ostensible targets. If every last dollar the Fed created was immediately getting pushed into circulation by its recipient, as opposed to piling up in corporate books and bank reserves, could we be getting more bang for the buck?

Sorry Conservatives, But ObamaCare IS Market-Based Health Reform

Dude, where's my market?!

Dude, where’s my market?!

Writing on how conservatism could get its act together in the New York Times, Ramesh Ponnuru suggested, among other things, that conservatives focus on changing “the existing tax break for health insurance so that people would be able to pocket the savings if they chose cheaper plans.”

Conservative wonks like Ponnuru have long advocated equalizing the tax treatment of health coverage purchased individually and that purchased through an employer, either by repealing the tax break entirely or extending it to the individual market. This is a very good idea. (Eliminating the tax break more than extending it, but that’s a separate issue.) Unfortunately, over at the Washington Examiner, Ponnuru’s fellow conservative Philip Klein does not see it that way. And his objection is, well, weird:

Changing the tax treatment of employer-based health care has long been the cornerstone of market-based reform, because it would give individuals more choices and more incentive to control their medical spending. But with the new health care law in place, changing the tax treatment could simply mean that many more people get dumped into the  government-run insurance exchanges, helping accelerate the growth of Obamacare.

You see what Klein did there? Equalizing the tax treatment would significantly lower the incentive for employers to provide health benefits, so fewer would do so. With ObamaCare now in place, that would mean more people going into the exchanges. And Klein assumes any act that grows ObamaCare is ipso facto in tension with the goal of market-based health care reform.

That assumption is very common within the Republican Party and conservative wonk circles. And it makes zero sense.

First off, the definition of a market is any system that allows for the trade of goods and services between buyers and sellers. That’s what ObamaCare’s exchanges do: They provide a framework for individuals to purchase health insurance from providers on an individual basis.

Now, if you click through his links, you’ll find that Klein’s complaint with the exchanges is that they regulate the coverage sold on them. This is equally silly. The government regulates trade in everything from food to cars to cigarettes. Now maybe you think it regulates them too much, but that’s a prudential call. No one suggests we don’t have functioning markets in these goods just because the government stepped in with a few rules — much less that they’ve suffered a “government takeover,” as Klein puts. By that standard, the government already runs the vast majority of the economy and we’ve already descended into socialist dystopia.

In fact, oftentimes regulation actually improves a market’s function. Two of ObamaCare’s key regulations are guaranteed issue and community rating; the first prevents insurance providers from denying people based on pre-existing conditions, and the second bars them from charging certain people exorbitant prices based on their age, gender, etc. Absent those regulations, providers would be able to compete based on who can cherry-pick the least costly customers, rather than competing on what actually matters: who can deliver customers the best value. Markets are social creations, so there’s no objective, self-evident criteria for what constitutes a well-functioning market outside of what we as a society decide. But I hope we can at least all agree that lowering prices for healthy people by rendering sick people entirely uninsurable is not the kind of result we’re looking for from our health care markets.

For what it’s worth, Switzerland also regulates the coverage provided by private insurers, while requiring its citizens to purchase coverage and subsidizing them in doing so — a very similar system to ObamaCare. And if you ask a conservative wonk for an example of a market-based universal health care system they approve of, it generally isn’t long before Switzerland gets mentioned. Continue reading