The new left
By Scott Sumner
If you have been paying attention to the debate over public policy, you may have noticed that the GOP has moved even further to the right in recent decades, and the (formerly more moderate) Democrats have moved even more dramatically to the left. For example, in a recent Slate post, Jordan Weissmann discusses a fascinating new paper on Obamacare:
In a working paper released earlier this month, economists Gregory Colman and Dhaval Dave conclude that thanks to Obamacare’s coverage rules, young adults are now less likely to work but a bit more personally content, as they spend more time with friends, in school, and searching for (presumably) fulfilling employment. They might be a little lazier. But that’s not necessarily such a bad thing.
So we supply-siders are right. In the past, progressives used to vehemently deny that social programs made people lazy. How do progressives like Weissmann react to this new study confirming supply-side claims?
Which is more important? The answer is going to hinge on what you think the point of public policy is. If you believe the government’s one and only goal should be to encourage GDP growth for the sake of GDP growth, then any change that encourages fewer people to work is probably going to rub you the wrong way. But if you think the most important aim of government is to help people lead happy, healthy, satisfied lives, then giving them the option to laze around or figure out their lives without having to worry about a devastating hospital bill is probably the way to go.
Oh, so that’s what’s at stake. Which do you support, more GDP or happier people? Yes, it’s possible that the policy may be beneficial; almost anything is possible. But what market failure is causing young people to want to work too hard? What market failure requires taxes or subsidies to reduce work effort? I imagine that the beneficiaries of government largess are made better off by the program, but is that now the criterion for success? Nothing about secondary effects on taxpayers?
I can think of many market failures that currently encourage young people to work too little, such as taxes on labor. There are also huge subsidies to college education, which leads to lots of individually beneficial but socially wasteful schooling. My daughter had to give up a part time job she enjoyed because of the absurd amount of homework in obscure trivia that was given to her by her (public) high school. In contrast, I can’t think of many market failures causing people to want to work too much, although the tax bias favoring employer-provided health care might be one.
And does Weissmann plan to be consistent in this market failure argument? If people work too hard, and would be happier to have more time in non-market activities, does that count against programs like government funded child-care, which will promote work among young mothers, leaving them less time to spend with their children? How about the Earned Income Tax Credit? Or do progressives now support any and all programs that benefit sympathetic groups, regardless of whether they reduce or exacerbate hypothetical market failures?
In one sense the new “liberalism” is an improvement. The old argument that social programs didn’t make people lazier really insulted our intelligence. So I salute the intellectual honesty of researchers like Colman and Dave.
Full disclosure: Dhaval Dave is my colleague, and probably the smartest professor at Bentley University. I hope it goes without saying that this post is criticizing the second quoted paragraph of Weissmann, not the Colman/Dave paper. I agree with their claim that recipients of subsidies are probably better off.