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Political Economy
The main problem with democracy, I keep arguing, is that harmful policies reliably win by popular demand. But there are exceptions. Take Obamacare. It appears to be genuinely unpopular. But not only did Obama pass it; it’s now very likely that his Republican opponent will be Mitt Romney, who brought the prototype of Obamacare to Massachusetts.
For once a majority of the public wants to repeal a genuinely unpopular harmful policy. And what options does American democracy give them? A choice between the Obamacare’s Jesus and Obamacare’s John the Baptist. What gives?
READER COMMENTS
tim
Jan 5 2012 at 9:41pm
What evidence do you have that Obamacare is “unpopular”? I’m truly interested in this – because every non-biased poll on this shows that it isn’t unpopular. That doesn’t mean its good policy but you are basing your argument on its unpopularity and I want to see the evidence.
Chris
Jan 5 2012 at 9:47pm
Congress will do the repealing. A GOP-led House and a GOP-led Senate using reconciliation. Romney will be a rubber-stamp if he doesn’t want to lose in the primary for reelection in 2016.
happyjuggler0
Jan 5 2012 at 10:12pm
I predict that the Supreme Court will repeal it this summer. There is simply no way that the “individual mandate” is constitutional.
If it is ruled constitutional, then the Feds could mandate (under threat of imprisonment) that you buy broccoli once a week, and subscribe to the NY Times, and watch Michael Moore’s latest propaganda film, and force you to buy anything else that they want you to buy. The US government simply doesn’t have that authority anywhere in the constitution.
Andreas Moser
Jan 5 2012 at 10:25pm
[This comment has been removed from public view per email discussion with the commenter.–Econlib Ed.]
roo
Jan 5 2012 at 10:25pm
The counter would be that unpopular policies are emblematic of bad democracy rather than democracy itself and can be reformed out of the system – perhaps through campaign finance, proportional representation, or lobbying restrictions. They’re bugs, rather than features.
Andreas Moser
Jan 5 2012 at 10:27pm
Who decides what is “harmful”? Not you, not me, not the NYT, not the Supreme Court. The voters do.
President Obama ran on a platform that had universal healthcare at its core. He won.
Kevin
Jan 5 2012 at 10:29pm
I don’t think the ACA is that unpopular. Pollster puts it at favorable to 37% (and unfavorable to 49.7%) overall. When Kaiser broke down the components of the law, only 4/15 had less than 60% support (‘very favorable’ or ‘somewhat favorable). Only one is supported by less than a majority – the individual mandate, and even that gets 35% favor-ability.
The ACA is unpopular in the same way that liberty is popular – in the abstract. When you delve into specifics, the ACA is actually pretty popular. Maybe the title of the post should be Democracy: Exactly as Bad as I Thought.
ezra abrams
Jan 5 2012 at 11:19pm
I have lived in MA since 1990
My impression – I didn’t follow closely – during the period that healthcare reform was passed in MA is that the governer (Romney) as not, at least at the end, all that relevant; my memory is serving up the idea that there was a veto proof majority in both chambers of the legislature, and Romney bowed to the inevitable
Yancey Ward
Jan 6 2012 at 2:09am
Happyjuggler is correct- if the federal government has the power to compel you to buy a private product for the simple reason of your existence, then there is no effective limit to the power of the government. I, too, think a 5 to 4 vote is coming to declare that part unconstitutional, and Andreas Moser can tell you why that would be a terrible ruling since he is a lawyer.
Jody
Jan 6 2012 at 6:13am
RE Andrew Moser:
“President Obama ran on a platform that had universal healthcare at its core. He won.”
He also ran explicitly against the individual mandate. http://www.youtube.com/watch?v=7AOJBiklP1Q
“I hope you are not a lawyer. Because if you are, you wasted a lot of time and money on law school.” in response to “force you to buy anything else that they want you to buy”:
Since this is little more than a weak appeal to authority, I’ll respond with a stronger appeal to authority – the 11th Circuit Court opinion: (http://www.ca11.uscourts.gov/opinions/ops/201111021.pdf) (emphasis added)
“Further, the individual mandate exceeds Congress’s enumerated commerce power and is unconstitutional. This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives.
In the least, holding HappyJuggler0’s legal opinion is not prima facie of a wasted education.
[N.B. some of this comment quotes from a comment that has since been removed/retracted.–Econlib Ed.]
UnlearningEcon
Jan 6 2012 at 6:29am
Of course, if Capitalism weren’t so poor at allocating healthcare then this problem wouldn’t have arisen.
/hides
Mrs. Davis
Jan 6 2012 at 9:22am
Of course, if Capitalism weren’t so poor at allocating healthcare then this problem wouldn’t have arisen.
Capitalism hasn’t been involved in the provision of health care for 70 years. This problem arose after we took Capitalism out of healthcare allocation. Maybe it should be tried as a solution.
RPLong
Jan 6 2012 at 10:10am
The problem is that people want maximum benefit at minimum personal cost. That means if they can get “free” health care at the expense of literally everyone else in the entire country, they will try.
The problem isn’t lack of good policies, nor is the problem democracy, per se.
The problem is that, among previous generations, discussions of democracy were inextricably linked to discussions of personal ideological virtue. The Framers wrote about it, Plato wrote about it, Hayek wrote about it. It’s not “just democracy,” it’s “democracy + ethics.”
Not surprisingly, when you take ethics out of democracy you end up with an insatiable, fickle mob that demands expensive solutions to everything they perceive to be a problem while simultaneously refusing to pay for any of them.
The solution is ETHICS.
UnlearningEcon
Jan 6 2012 at 11:31am
‘Capitalism hasn’t been involved in the provision of health care for 70 years. This problem arose after we took Capitalism out of healthcare allocation. Maybe it should be tried as a solution.’
Yes, once the state is involved it is no longer capitalism. Poor libertarians with their ‘governments versus markets’ mentality.
Anyway, do you really think this is the case? Strikes me that the reason every developed country has some state apparatus wrt healthcare (and comparably little wrt, say, children’s toys) is that ‘pure’ capitalism was failing to allocate it properly.
Charlie
Jan 6 2012 at 11:36am
I agree with previous commenters. Everything is sourced, but the actual claim the whole argument rests on.
“It appears to be genuinely unpopular.”
Glen Smith
Jan 6 2012 at 2:48pm
Capitalism has been involved in allocating health care resources and were it is least corrupted by the State, it does a very good job. Where it is most corrupted by the State, it does a worse job.
Arthur_500
Jan 6 2012 at 4:32pm
The more people learn about Obamacare they more they dislike the program. However, people are sheep – one of the dumbest animals on earth.
Robert Reich, an individual who disparages the community of economists by claiming to be one, wrote a book, “Why Liberals Will win the Battle for America.” In this tome he clearly states, albeit in politically correct terms, that people will vote everything for themselves. Similarly the Chinese refuse to grant voting rights to all their citizens for the same reason.
People do not think about the consequences of their actions. They will vote to remove their own freedom and liberty in return for security. We see how well that turned out in Germany, Argentenia and Peru to name a few places. However, now the American politicians have enacted a law that takes away the freedoms guaranteed by the Constitution!
The reason liberals always win is that they never retreat. They will tweak IObamacare for a century, if the country lasts that long, but they will never get rid of it. That is why government continues to grow like a cancer.
Why is Romney even considered a viable candidate? Because he will never repeal anything. He will work to tweak programs but never do the real leadership of cutting waste. As a result you will have Obama running against the guy who lost to the guy who lost to Obama the last time. Do you really see a positive future for reigning in government waste?
Robert Fellner
Jan 6 2012 at 5:45pm
I would think regulatory capture and self-interest of govt agents has much more to do with why the govt intervenes into a sector of the economy, as opposed to your hypothesis that “capitalism was failing to allocate it properly”.
UnlearningEcon
Jan 7 2012 at 7:04am
Well as I pointed out they intervene in health more than toys and other sectors, so that suggests there was some form of market failure going on, rather than some vaguely defined rant about government bureaucrats that must accompany all libertarian ‘economic’ analysis.
Anyone who wasn’t ideologically blinded would look at the history of healthcare and conclude that capitalism does a poor job of allocating it, due to information asymmetries and the inefficiency of filtering people based on ability to pay. Government eliminates the price system, which, as Akerlof’s paper suggests, fails when it comes to health insurance.
‘Capitalism has been involved in allocating health care resources and were it is least corrupted by the State, it does a very good job. Where it is most corrupted by the State, it does a worse job.’
This makes no sense. Capitalism corrupts the state, not the other way around.
shecky
Jan 7 2012 at 6:51pm
I’m not sure I see why this is so puzzling. As far as I can tell, it’s a matter of the main proponent having a D next to his name, and the Rs doing perhaps a better job of criticizing than the Ds have done defending. The big mistake here is to assume opposition to the workings of Obamacare involves anything other than partisan political posturing.
Paul Rain
Jan 7 2012 at 9:16pm
UnlearningEcon: Absurd. All government does to the healthcare system is remove incentives for individuals to take care of their health, as in the provision of unlimited government funding for the treatment of those who contract HIV.
UnlearningEcon
Jan 8 2012 at 5:33am
Paul: that is possibly a negative side effect of government healthcare, of course, if you assume that people are willing to get ill just because they have free healthcare.
However, saying that ‘that’s all’ they do ignores my point about eliminating the price mechanism, which fails with health insurance.
As with everything, there are advantages and disadvantages. Saying that one thing is ‘all’ of the effect of government provision is absurd.
Mark Crankshaw
Jan 10 2012 at 10:32pm
UnlearningEcon:
“Strikes me that the reason every developed country has some state apparatus wrt healthcare (and comparably little wrt, say, children’s toys) is that ‘pure’ capitalism was failing to allocate it properly.”
This is only plausible if you assume that governments are concerned with the proper allocation of healthcare. That may be plausible to you. Not to me– governments are primarily concerned with the maintenance of power. Control of healthcare helps maintain that power. “Provision” of public goods buys votes and helps to “justify” the predation of the State of its’ subjects wealth. In totalitarian governments–which “allocate” healthcare even more often than “developed” countries do– government allocation allows the State to subsidize health services to favorites and withhold health services from those they consider enemies. In short, even if the market “properly” allocated healthcare, there would be a powerful incentive for the government to allocate health care for its’ own benefit and and for maintenance of power. Therefore, the fact that most (or all) governments allocate healthcare is no proof that government allocation is necessary, or that government allocation is anyway superior to that of the market.
Mark Crankshaw
Jan 10 2012 at 10:56pm
“This makes no sense. Capitalism corrupts the state, not the other way around.”
How so? The State is an inherently corrupt, exploitative and predatory institution. In the words of Franz Oppenheimer, the State is the organization of the political means. To quote Oppenheimer:
““There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery, one’s own labor and the forcible appropriation of the labor of others…I propose in the following discussion to call one’s own labor and the equivalent exchange of one’s own labor for the labor of others, the “economic means” for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the “political means…The state is an organization of the political means.”
The view that the State is organized crime is echoed by Albert Jay Nock:
Taking the State wherever found, striking into its history at any point, one sees no way to differentiate the activities of its founders, administrators and beneficiaries from those of a professional-criminal class.
In contrast, the economic means are not inherently a corrupt or corrupting force (though the political class can and often does corrupt it). I find the views of Oppenheimer and Nock much more compelling than your own.
Jon
Jan 25 2012 at 4:28pm
Opponents of democracy are usually people on the far right wing of the political spectrum and that makes sense because if you look at the opinions of Americans they are well to the left of both political parties.
Americans want health insurance for all, opposed the invasion of Iraq prior to the invasion, want out of Afghanistan now, generally support union activity, support trade with Cuba, oppose Israel’s settlement construction (see here for sources). Americans think the UN should take the lead in international crises (see here). The public supports legalization of marijuana (see here).
Regarding Obama Care, there was serious liberal opposition because it wasn’t single payer and didn’t include a public option. It is regarded by liberals as a sell out to insurance companies and pharmaceutical companies.
Economists do differ with the public. Economists also have incentives to differ with the public and side with money and power, as was illustrated in the movie “Inside Job”.
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