Paul Krugman vs. … um … me. [Updated.]
No, no; of course, I don’t mean that Paul Krugman has expressly disputed something I wrote here on AB. Or that he has ever read a post of mine. Or that he knows that I exist. Those latter two things have happened, but only in my dreams. The first of those has never happened at all.
Well, not directly, anyway.
But on Feb. 6, I posted a piece here that I titled “Republicans and Dana Milbank Solve the Unemployment Problem in Germany, Canada, Taiwan and Australia: Those countries just need to repeal their universal-healthcare laws and tie healthcare insurance to full-time employment at large corporations!” The gist of which was that the claim that it is a bad thing economically for the country that Obamacare ends (to some extent) the U.S.’s overwhelmingly prevalent access-to-healthcare-insurance job-lock, as a practical matter requiring that one member of a family hold a full-time job at a company that provides access to healthcare insurance for full-time employees and their immediate dependent family members, conflicts with the experiences of every single other advanced economy in the world. None of which predicates access to healthcare insurance upon a family member’s full-time employment at a company that provides access to healthcare insurance for its full-time employees. Some of which (I believe) are healthier economies than ours.
And today, Krugman, in a blog post titled “Why Do You Care How Much Other People Work?”, answers that question thusly:
The answer is that it’s a story about pre-tax wages. When someone chooses to work less, he or she imposes a hidden cost on everyone else, because he or she ends up paying less in taxes – or in some cases gets to collect more in means-tested benefits.
To which I say: Well, fine. The nature of a progressive tax system is that people or families that make less money, for whatever reason, end up paying less in taxes – or in some cases get to collect more in means-tested benefits. It’s hardly a secret that large swaths of 30-something, highly-educated, married women voluntarily leave their fast-track jobs in favor of work-from-home or part-time work because their 30-something, highly-educated, husbands have fast-track jobs that enable them financially and benefits-wise to do so. In this country and in other countries. Just as it’s hardly a secret that until about 40 years ago, in this country, the percentage of married women in the workforce whose husbands made a middle-class or upscale living was fairly small.
A key difference between the situation in this country and the other countries with developed modern economies is, y’know, the benefits-wise thing. Specifically, access to healthcare insurance, which in the other countries does not depend upon a family member’s full-time employment with a large or mid-size employer. And the difference between this country now and this country between, say, 1950 and 1980 is that, economically, the country is doing worse now than it was during most of that earlier time period, when labor participation was lower. Right? (They don’t, after all, call this the Great Recession and its aftermath, for nothing.)
Is there any actual evidence that Germany, Canada, Taiwan or South Korea would be better off economically if those countries started predicating access to healthcare insurance upon a family member’s full-time employment in which that is a benefit necessitated by the fact that there no longer is access to it through laws? And is there any evidence that this country’s economy would have been better, pre-1980–or, for that matter, now–if employer-based healthcare insurance access was solely for the individual employee and, maybe the employee’s dependent kids, but not for the employee’s spouse? If there is, then why stop at trying to repeal Obamacare? Why not also impose tax incentives for employers to preclude healthcare benefits for spouses of employees?
Or instead, we could, say, point out that raising the minimum wage substantially also is a story about pre-tax wages, and that when someone makes money per hour, he or she imposes less of a hidden cost on everyone else, because he or she ends up paying more in taxes – or in some cases gets to collect less in means-tested benefits. Same with public employees such as teachers, firefighters, police offices, research scientists and untenured university professors, whose numbers have decreased dramatically in recent years; we could point that out, too.
And we could throw in that hedge fund and private equity folks who benefit from the carried-interest tax break to the tune of zillions of untaxed dollars each year is a story about pre-tax income (albeit not FICA-taxable income). And that apparently some wealthy farmers receive more in farm subsidies than they pay in income taxes.
We could. And really, we should. Why is the issue suddenly whether the uncoupling of access to healthcare insurance from full-time employment by an employer that provides it for full-time but not part-time employees–in the only advanced economy in the world that so couples it–because what matters for the economy is pre-tax wages and means-tested benefits? Why isolate this particular uncoupling, when the coupling itself exists only here in this country?*
My regular readers here at AB–all three of them!–know, first, that I have no background whatsoever in economics, and, second, that I love Paul Krugman, who along with the writers here on AB have taught me almost everything I know about economics. Such as that is. (No, I never attended Princeton; I read Krugman’s NYT columns and blog.) While I’m pretty sure that I could beat out Krugman in a contest of understanding the omnipresent, various and sundry anti-ACA litigation–or of federal habeas petitions filed after state-court criminal convictions; or the Supreme Court-created, separation-of-powers-and-Supremacy-and Fourteenth-Amendment-clauses-violating Rooker-Feldman and Younger-abstention access-to-federal-court doctrines that it narrows once a decade, but only at the behest of a mega-corporation; or, more specifically, who actually has access to the 70 annual available Supreme Court case slots–my readers know that Krugman need not fear me as a rival on economic policy analysis.
Not that Krugman would actually offer opinions on the anti-ACA litigation, or of federal habeas petitions filed after state-court criminal convictions, or the Supreme Court-created Rooker-Feldman and Younger-abstention doctrines, or who actually has access to the Supreme Court. Any more than I would post about IS-LM. Even if I understood his explanation of it. Which, I assure y’all, I don’t.
So obviously, I’m missing something here. But what? What is it that I’m missing, on this narrow Obamacare economic-impact issue?
*Sentence edited for clarity. 2/11.
UPDATE: See conservative Washington Post columnist Charles Lane’s column aptly titled “Will Work for Insurance.”
I have never been a great fan of Krugman… even though he is generally on my side of issues.
The idea that people who are not working are imposing a cost on the rest of us is offensive.
If they are voluntarily not working and collecting welfare, that’s different. But I hate to see the day in America when the work police come to my house and find i think i already made enough and am enjoying a well deserved rest so they haul me off to the government-industrial complex work center, where the sign says Arbeit Macht Frei…
(oh, the original reason i didn’t swoon for Krugman was that he bought the Peterson line on Social Security without doing the arithmetic… something I think Dean Baker finally straightened him out on, but he is still unable to see the point of “worker paid” retirement insurance.)
“Why isolate this particular uncoupling, which exists only here in this country?”
Because Krugman is an academic who instead of saying there is nothing to the whole brouhaha, feels forced to be pedantic about why next to nothing is not the same thing as nothing.
Both Krugman and the CBO know there will be some destruction of potential output, e.g. 0.2% to 0.5% of GDP, as Americans work fewer hours, pay less in (marginal) taxes, and collect more in subsidies.
However, we need to reduce the high cost of health care, driven by over 100,000 pages of regulations.
How to reduce medical costs:
1. Limit medical lawsuits and awards, to lower malpractice insurance premiums and unnecessary medical tests.
2. Lower standards to practice medicine (to increase labor)
3. Allow insurance companies to sell health-care policies across state lines (average health care insurance ranges from a low of $1,254 in Wisconsin to a high of $8,537 in Massachusetts).
4. Allow innovation. Example:
Kaiser Microclinics At 50% of the Cost of a Full-Service Hospital
Two doctors working out of a microclinic at a mall could meet 80% of a typical patient’s needs. With a hi-def video conferencing add-on, members could even link to a nearby hospital for a quick consult with a specialist. Patients would still need to travel to a full-size facility for major trauma, surgery, or access to expensive diagnostic equipment, but those are situations that arise infrequently. The per-member cost at a microclinic is roughly half that of a full Kaiser hospital.
1. Limit medical lawsuits and awards, to lower malpractice insurance premiums and unnecessary medical tests. Baloney, this has been debunked numerous times on both counts.
2. Lower standards to practice medicine (to increase labor). They call it PAs and Nurse Practitioners.
3. Allow insurance companies to sell health-care policies across state lines (average health care insurance ranges from a low of $1,254 in Wisconsin to a high of $8,537 in Massachusetts). Which will make it just like South Dakota and Delaware with Bank Incorporation. The ideal is to do away with healthcare insurance as it adds cost as the middleman.
4. Allow innovation. Example: Kaiser Microclinics At 50% of the Cost of a Full-Service Hospital or like Montana with its state run clinics for its employees.
There is no destruction of potential output as alluded to by you from construing the CBO report. What there is are people potentially working an hour or two less so as to enjoy a better standard of life as given to them by lower healthcare costs. They no longer have to work as long.
So what happens? The work is not lost and neither are the hours destroyed. It just means employers who do not pay insurance (roughly 15% of the businesses out there) have to hire another worker. That might be 1 worker for every 40 hours not worked. Ever read any Sidney Chapman or Tom Walker on Lump of Labor Fallacy?
We need to unleash the health care industry rather than place more burdensome controls.
The real British health care system:
“A quarter of a million people are waiting more than 18 weeks for treatment on the NHS, new figures show…for a range of treatments including oral surgery, rheumatology and geriatric medicine. This means that nearly 10% of patients are not being treated within the government’s waiting list target.
Civitas, the think tank, blames the monolithic nature of the National Health Service for “putting the patient last”.
It argues that the “customer” of the NHS business model introduced by Tony Blair and continued by Gordon Brown is the health secretary rather than the patient.
State control: staff pay is set centrally, capital expenditure is constrained, IT is a top-down programme and availability of drugs, such as expensive cancer treatments, is centrally determined.”
“A study by Deloitte LLP has found that more than 400,000 non-U.S. residents obtained medical care in the U.S. in 2008, and it forecasts an annual increase of 3%.
Some 3.5% of inpatient procedures at U.S. hospitals were performed on international patients, many of them escaping from Canada’s supposedly superior health system.”
Link please Arthur
Whenever you see tort reform and selling insurance across state lines as a way to reduce costs, you know the writer is absolutely clueless about healthcare.
Whenever you see someone do so on a constant basis after being shown proof how silly those thoughts are, you are talking to a kitchen table.
The assumption seems to be that if a worker decides to work 5 less hours, then that work will not be done. In that case the employer must have been allowing the worker to do 5 hours of fantasy work. (Sounds like a fantasy employer!)
It seems more likely that there was 5 hours of real work and the employer will simply allow other part time workers to work more hours in the future. In which case those workers will pay more taxes and in fact tax revenues could actually go up because of the progressive income tax. In the real world, the employee could also quit and get another job with less hours, and the employer would hire a worker willing to work hours which included those 5 hours.
I suppose that the employer could suddenly discover some way to increase productivity but that assumes a previously lazy employer which conservatives do not allow for. (Why the sudden discovery?)
The reservations about this hypothetical worker seem to be that he has captured some of the savings in health insurance premiums for himself. Or to be more precise he has captured some part of the subsidy which was offered in the name of some larger purpose. Boys and girls, can you say “farm subsidies” or “oil company subsidies” or “airline subsidies”.
So what am I missing here?
Here ya go, Run. Here’s the kitchen table’s link(one of them)
Strangely enough, the table made no mention of outbound medical tourism, just inbound.
Course, the outbound would seem to totally destroy whatever point he was making, so I am guessing that is the reason for the sound byte.
I think my favorite thing is Peak’s sound byte from the Deloitte link:
“A study by Deloitte LLP has found that more than 400,000 non-U.S. residents obtained medical care in the U.S. in 2008, and it forecasts an annual increase of 3%.”
He failed to mention outbound was 750,000 and that the expected annual increase was 100%.
It gets worse. The following sites did exactly the same thing our resident kitchen table did; cherry picking a piece of the Deloitte study to make a “point” that the study itself does not make.
(I have seen Peak use this guy Perry before)
The AEI! What a shock!
Just too funny, and too sad.
While I suppose there are some people who would rather live in poverty than work more I think that is a rather small group. Most people actually enjoy doing something productive with their lives and an even larger percentage want more money rather than less money. GOP mythology can not survive with either of these principles because then unemployment would not be the fault of the unemployed, children would not be having more children so they can get more government “handouts”, and Ronald Reagan’s “welfare queens” driving cadillacs would be seen for the total bull it was. Why Krugman gets on board is beyond me unless it is to make the point that raising the minimum wage would benefit the 1% because the 99% would pay more in taxes, demand for the goods and services sold by the 1% would increase and the pressure on margins would only be the part of total cost made up labor and with the increases in productivity even that is an ever decreasing share. Peaktrader not withstanding, there is an even more fundamental issue, which Coberly alludes to–whose life is it anyway in this so called land of the free?
I feel your pain. I think Dr. Krugman started out to write a post about how silly it is to worry about people leaving (bad) jobs because they can now afford private health insurance, then felt obliged to admit that there might be a .2% decrease in GDP as a result, and wound up in the weeds. I think it would have been much better to let the other side bring up the .2% argument if they chose to and let them weed-wander.
Aside from the smallness of the number (which I think was Dr. K’s main point), there are many other good counter-arguments, as illustrated above. Among them: GDP isn’t everything. For example, economists have calculated that the theoretical (and theological) GDP of Heaven is zero.
I’m not sure exactly why you feel that you don’t agree with Krugman, Beverly; yes, he points out that fewer hours worked means a bit less in taxable wages, but he goes out of his way to point out how modest this amount is and how all the commentary about the CBO report is wrong. Doesn’t seem like much of a distance, really. And why couldn’t you then argue that all of those people who are looking for jobs will make up most of even that small amount.
I have to admit I’m finding PeakTraders recitations of right wing economic talking points more than a little annoying at this point, especially since he won’t document them or argue them, therefore not even leading to a decent discussion or argument. What’s the point?
Well,y’all, there is just something about PT’s comments that sounds so much like a Heritage or an AEI intern knocking out yet another boiler plate comment to another blog.
Whenever I see the old “put a limit on malpractice awards” line, I wonder if the writer thinks we’ve never seen that one before. Here he is, wandering alone in the fulgey woods, when he comes upon the jabberwock entertaining a group of woodland creatures with amazing tales of what a wonderful thing it would be if only frivolous malpractice lawsuits were illegal and insurance rates went down!
Great!, he says. Gotta rush back to the office to fire another one off to ABBlog. Spare us, Peak Trader. It may seem revelatory to you, but it’s the same old crappola to us. NancyO
I couldn’t respond to some of the ridiculous comments earlier, because I was too busy providing goods & services, and taxes for the non-working population, which increased substantially under Obama.
And, Obamacare will make it even worse, before the last of the Baby-Boomers (born between 1946-64) reach 65 in 2029.
Unfortunately, there are political hacks here too, just like the wacko libertarians at the Perry blog, who relentlessly drove every moderate out of that blog.
And, it seems, some people here believe Americans are going to Canada or the UK to put their names on a waiting list for health care.
Maybe, instead, they’re going to countries with cheaper health care, rather than try to consume non-existent health care in Canada or the UK.
Moreover, some people here seem to believe more competition and less regulation will somehow raise costs or prices.
Could this be the same Deloitte report?
“According to Deloitte consulting services, 875,000 Americans like my parents were medical tourists in 2010, traveling outside U.S. borders to receive health care: dental work, elective hip replacements, even bypass surgery.” http://www.washingtonpost.com/national/health/medical-tourism-draws-growing-numbers-of-americans-to-seek-health-care-abroad/2011/02/09/AFkbobeC_story.html
You couldn’t respond to comments other than more innuendo, supposition and conjecture just does not work here PK. The PPACA did not cause anyone to lose there jobs or have their hours cut. This is just another Repub talking point espoused by you. It has no basis unless you construe the fact.
Oh yea, sorry I couldn’t respond. I was on my way to Thailand and got stuck in Narita due to 2 inches of snow (yeah 2 inches of snow) while going to one of my plants to work on cost reduction. I think I subsidize your stock trading venture with lower tax rates, don’t I? Are you part of that capital gains group getting preferential treatment?
if you want to influence people it’s a good idea to try to find some common ground upon which you can base an agreement.
i can’t see that you have anything in common with what i call reality.
Coberly, it’s too bad you’re blind to reality.
Maybe, you believe goods & services and taxes will just materialize without workers.
The reality is Americans will need to work harder and longer rather than work fewer hours, be forced into early retirement, go on disability, unemployment, or some other type of welfare, because there won’t be enough workers to provide the goods & services and taxes to support a huge non-working population, particularly when the last of the Baby-Boomers reach 65 in 2029.
This depression is a huge setback, and Obamacare makes it worse. Younger Americans will not work that hard to support a huge unemployed and retired population. So, we can expect a general decline in living standards, which has already begun, over the next few decades.
See, it’s just the same old Fox News/Nation talking points: “Obama made it worse”. No one who isn’t completely partisan (or really really ignorant) believes that. How do you start a discussion with something like that? If you had some numbers, it would at least be interesting to refute them.
Batmensch, where did I say ““Obama made it worse.””
If you disagree with me, prove why it’s wrong, rather than create a statement I didn’t make.
And, you’re the one who keeps bringing and clinging to politics.
You do realize Obamacare is not Obama. I agree with Obama on raising the minimum wage, along with many issues.
I refer to your comment at 6:58:
February 11, 2014 6:58 pm
This depression is a huge setback, and Obamacare makes it worse.”
Sorry, you’re right, I said Obama, where you said Obamcare. My point stands.
” So, we can expect a general decline in living standards, which has already begun, over the next few decades.”
Yes. Ever since we started following the low tax on job creators policy coupled with low regulations on those same people.
It is not coincidence.
Meanwhile, I noticed not one single complaint registered regarding your outrageously slanted comments which proved imbecilic.
Are you really all that Heritage can afford?
Here is a neat link on the topic of going outside of the country for medical:
“This very particular form of outsourcing is growing steadily, predicted by some to become a $100 billion business by 2012. CNN reports millions of people worldwide are traveling outside their countries for medical treatment and that 2010 will see upwards of six million American patients seeking care across borders. A Gallup Poll found that 29% of Americans would consider traveling abroad, not just for plastic surgery or alternative treatments, but for life-changing procedures like heart bypass surgery, hip and knee replacement, and cancer diagnosis and care, even though all of these are routinely available at home.” http://www.passportmagazine.com/departments/MedicalTourism871.php
Not withstanding Groucho Marx:
“I refuse to join any club that would have me as a member.”
I am proud to be one of the three.
EMichael, I see you’re another extremist political hack, who says a lot, but doesn’t really say much.
So, you want to blame too little taxes and regulation on “job creators” for the decline in living standards, since the economy peaked in 2007.
I’ve shown evidence, there was too much micromanagement in the economy by greedy politicians – an economy they don’t understand – which created undesirable effects, and basically made it harder for geese to lay the golden eggs.
Small businesses are the job creators, and it has become increasingly harder for them to succeed to become big businesses.
You have shown nothing.
All you have done is spit out the usual RWDW talking points, then run away from actual facts that disprove your mantra.
i think i could show examples from my own small life where taxes and excessive regulation have stopped me from contributing to my own economic growth, if not the country’s. So there is an argument to be made in support of what I take to be your basic complaint.
But you are not making it. You jump from “some problems” to a universal rejection of taxes and regulation at least insofar as the non-thinking that we call “philosophy” or “ideology” that leads voters to support the politicians who help the Very Big Criminals destroy the economy as well as any meaningful democracy.
Don’t take this too personally. It is practically a description of human behavior, something that politicians have known how to manipulate for thousands of years. But the fact remains that you are not helping the problem. You are not helping ANY problem. You are not even helping your own problem. You are part of the problem.
PT: you have to keep in mind that this blog is “Slightly left of center economic commentary”, which means that postulates that people on the right think are inarguable are here, at least, arguable 😉 (most of them are, in fact, debunked, many times over). You can’t make blanket statements like “1. Limit medical lawsuits and awards, to lower malpractice insurance premiums and unnecessary medical tests.
2. Lower standards to practice medicine (to increase labor)”
etc. and just expect them to be accepted here. Those things are not obvious solutions if you are not someone who just blindly accepts right-wing economic thinking. As far as I’m concerned, the Chicago economic school of thought has mostly been proven wrong at this point, and Von Mises thinking is just kind of insanely stupid.
Coberly & Batmensch, you’re jumping to conclusions that aren’t based on my statements.
For example, where did I say, to make you assume, I believe in “a universal rejection of taxes and regulation.”
Also, for example, “Limit medical lawsuits and awards, to lower malpractice insurance premiums and unnecessary medical tests” is not a “blanket statement.”
Neither of you have disproven anything I stated.
We’re not trying to disprove anything you’ve said, PT. Time has already done that. We’re telling you that stating right wing economic boilerplate makes you no friends here and is not interesting. If you are going to post that stuff, you need to back it up with numbers, because no one is going to take it for granted for you, and it just makes you look like a troll. I’ve taken too much thread time with this, I’m done.
jumping to conclusions is what everyone does. it may be that i have misunderstood what you were trying to say. but you have some responsibility to try to say what you are saying so that the rest of us will not misunderstand it. i have not been trying to insult you or even to “disprove” you. i am saying that you aren’t helping your own case. i’ll leave it to you to look through your own words to see why that might be so.
Batmensch & Coberly, unbiased or positive economics (explaining the way things are) is not “right wing” economics, and disagreeing with what I didn’t say is “jumping to conclusions.”
If you want to talk about how economic variables interrelate (in mathematical models) and interact (in empirical models) that would be a much more worthy topic than playing politics.
it would be if you even tried to read what i actually said.
run75441, your links support my statement above that Americans find U.S. health care a luxury good, while Canadians and the British find a waiting list.
UK health care:
“…not uncommon for people to wait 18 months or more for their operation – with some people dying on the waiting list.”
Only a serious right-winger would say that their opinions about economics are “the way things are”.
I shovel horse manure too, BUT that’s because I deal in horses.