Patterico's Pontifications

2/4/2014

CBO: ObamaCare Will Cost 2.5 Million Jobs By 2024

Filed under: General — Patterico @ 10:12 pm

The Hill:

The new healthcare law will cost the nation the equivalent of 2.5 million workers in the next decade, the Congressional Budget Office (CBO) estimated in a report released Tuesday.

The nonpartisan agency found the reform law’s negative effects on employment would be “substantially larger” than what it had previously anticipated.

It said the equivalent of 2.3 million workers would be lost by 2021, compared to its previous estimate of 800,000, and that 2.5 million workers would be lost by 2024. It also projected that labor force compensation would be reduced by 1 percent from 2017 to 2024 — twice its previous estimate.

The White House says it’s OK, because people are choosing not to work. Choosing, you see.

The White House swiftly pushed back against the findings, seeking to dismiss suggestions from Republicans that the Affordable Care Act has contributed to a slower economic recovery or would “kill” jobs.

It pointed out that the CBO concluded the reduction in worker hours was almost entirely because of workers choosing to work less.

“The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in business’ demand for labor,” the CBO report said.

That’s lovely — but it’s ObamaCare that is providing the disincentives to work, which is what leads to all that choosing not to work stuff. As Investor’s Business Daily explained in 2010, in response to a similar comment from CBO about people choosing not to work:

The conclusion isn’t a surprising one; any extra support from the government takes some pressure off of workers to provide for themselves. However, ObamaCare’s progressive subsidies, i.e. more generous for those who earn less, carry more of a disincentive than the flat, universal benefit favored by some Republicans.

As Capital Hill has noted previously, work disincentives will be particularly strong for older workers because both health care premiums and the law’s subsidies grow much bigger with age.

Further, the new health law will give some older households without access to employer care a big incentive not to earn too much. That’s because earning more than 400% of the poverty level would make them ineligible for subsidies that may be well in excess of $10,000 for couples.

Consider this example of a single individual age 62 in a high-cost area and no access to employer care. According to the Kaiser Family Foundation’s Health Reform Subsidy Calculator:

* At 200% of the poverty level, or $23,000 in income in 2014, an individual would get $10,750 in premium subsidies.

* At 400% of the poverty level, or $46,000, an individual would get $7,830 in premium subsidies.

* And at 401% of the poverty level, an individual would get no government support.

Everybody knew this would happen. Don’t pretend it’s not a surprise.

Oh: deficits are projected to be $1 trillion higher than previously thought. To put that number in perspective, one trillion is greater than the number of times Barack Obama will use the word “I” or blame his problems on President Bush in all eight years of his presidency.

A trillion here, a trillion there, and pretty soon you’re talking real numbers economic collapse.

Thanks to gary gulrud.

The Consumer Surplus and Income Inequality

Filed under: General — Patterico @ 8:47 pm

Now there’s a gripping headline! And look how long this post is! Next!

Stay with me anyway.

You know it’s a slow news day when the Hot Air quotes of the day are all about race and Jerry Seinfeld. I’ll pass on that particular controversy, although Noah Rothman does delightfully beat up a moronic Gawker writer about it here. Let’s talk about something else: the consumer surplus. (Woo-hoo!)

Why discuss that economic concept? Because I think the consumer surplus, and a couple of other economic concepts, reveal a lot about our current notions of “income inequality.”

Also, because it’s better than talking about whatever the stupid story of the day is. I listened to the “consumer surplus” concept discussed on a recent Russ Roberts podcast, and sometimes I think it’s fun to change things up on the blog by discussing things I have learned on one of his podcasts.

I’m not sure if you’re familiar with the notion of a “consumer surplus,” but the idea is that consumers often get far more value out of a good or service than they pay for it. Here is (in my view) a comically understated explanation from Forbes in 2012:

But TANSTAAFL [There Ain’t No Such Thing As A Free Lunch] misses an important point: sometimes we can create value, not just move it around. Take the new iPhone 5. Recent reports put the cost of the components at $199 (for the 16 GB model), plus another $8 for assembly. The price to consumers: $649. This is a free lunch. Apple has taken $199 of parts and $8 of assembly effort and created something that consumers value in excess of $649. They have created more than $442 of value with every iPhone sold.

The consumers who buy the phone believe that they are better off with the new iPhone than with $649. Most of them would probably be willing to pay even more, say $659 or $699 to get the phone. This difference we economists call “consumer surplus.” It is the difference between the maximum that a consumer would be willing to pay, and the actual price the consumer has to pay. It’s immeasurable, but certainly a positive number. (If the consumer did not value the phone more than the money, he or she would not buy it.)

I have two completely contradictory reactions to that:

1. There is no way I would ever pay $700 for an iPhone. I just get upgrades, which are either free or cost me $100.

2. If I had to, I would pay waaaaaay more than $700 for an iPhone.

Contradictory? You bet . . . but bear with me. I think there are two principles at work here. I know the name of one of them, so let’s start with that one: the consumer surplus, which says that $649 is a great deal because the phone is worth so much more than that.

I am wedded to my iPhone, and it does all kinds of things for me. I surf the Internet for fun on it. I settle bets by referring to it. I get instant answers to things I wonder about by using it. I listen to podcasts on it. I listen to music on it. I listen to radio on it. I use it to text, take pictures, look at pictures, take videos, look at videos I made, look at videos on YouTube, illuminate objects, figure out the name of a song I hear, learn foreign languages, read books, give me directions to places (including finding my way around traffic), learn when music concerts I want to see will occur, wake me up, remind me of things, make notes, play games, watch live television, learn what the weather will be like tomorrow, make travel plans, time something, as a calculator, and probably a few other things I haven’t thought of.

Oh. And I use it to make calls.

If I had never bought one of these devices before, had never heard of such a device before, and had no idea what a device ought to cost, what might I pay for such a device? Probably thousands of dollars. A device that useful, with so many ways to make life easier, is simply incredible. I once paid well over $100 for a GPS. That’s just one of the many things this phone does. I have paid over $100 for an iPod. This thing can access the cloud and in that manner access far more music than even my 160GB iPod. The individual functions this device is capable of, added together in one small package, is easily worth thousands to someone who could afford it. To some, it might be worth tens of thousands, or more.

That is why the passage above is comical. I might pay more than $649? Maybe even $659?? or $699??????? No, I would probably pay over a thousand, easy. Easy!

That’s your “consumer surplus.”

Except, of course, there’s no way I would pay over a thousand dollars for one of these things. The idea of paying even $700 is ridiculous, but $1000 is unthinkable, for at least three reasons: 1) that’s not the price, and 2) I have never paid remotely close to that, and 3) I don’t know anyone who has paid remotely close to it.

Let’s look at some other things that are absurdly cheap to illustrate the point. I cringe at the idea of paying for an iPhone app. Why? Most are free. But if I do, it had better not be more than two bucks. Even if it’s a great app that will make my life better in countless ways, paying over two bucks is just shelling out too much money. (Excuse me for a moment; I have to pay the Starbucks guy for my coffee. Here you go, two, and there’s fifty cents, and another quarter is $2.75. Cheap for Starbucks, I know, but hey. I’m a simple guy.) So what was I saying? Oh yeah: paying over two bucks for a really super-cool app is ridiculous. Because most apps cost 99 cents or $1.99 at the most.

Similarly, I recently bought a giant mess of classical music, something like 16 hours’ worth, in an .mp3 format, for 99 cents. The quality won’t be high fidelity, and the performances may not be the Vienna Philharmonic, but I don’t know much about Haydn, and this will give me exposure to a lot of his music for less than a penny a track. But that Bach set for $2.99? Outrageous! It’s three times the cost, and it’s still only 15-16 hours of music!

Of course, there was a day when I would have considered $20 to $30 for such a collection of music on CD to be a bargain. And many of these apps are frankly worth way more than 99 cents. Mrs. P. has logged an embarrassing number of hours on some game called Plants vs. Zombies. I think it’s 99 cents, and I guarantee you she has paid less than a penny an hour for the privilege. But if she had been required to pay $5 for it? I don’t know if she would have gotten it.

And I would feel like a sucker if I found out that they had been giving away that Haydn set for a year, and jacked up the price to 99 cents the day I bought it. I got ripped off, man!

A ridiculous notion? Not really. So much of what we have access to is not just very cheap, it’s free. Russ Roberts and his guest pointed out that a fellow named Sebastian Thrun has made his intro class on artificial intelligence at Stanford available online. You can go take it right now. In fact, I might do it myself. It’s free. Through the Gutenberg Project, you have access to a lifetime of classic books, for free. I have paid scads of money in my life for piano music and musical scores, but I challenge you to think of something you can’t get for free here.

All of a sudden that CD Sheet Music set I got for $18.99 seems like an incredible ripoff. All of Schubert’s songs in one place? The equivalent of books I might have paid hundreds for? I can get that free on the Internet!

I sense two things going on here:

1. Our standard of living is greater than it has ever been, and countless conveniences and worlds of information are ours for a pittance. (Consumer surplus.)

2. If someone else seems to be doing better, or is getting their stuff just a little cheaper — or if we paid a little more now than we did in the past — we’re still going to be pissed off. (I don’t know the scientific or economic name for this, but in the Bible I think they call it “envy.”)

That, to me, is our “income inequality” issue in a nutshell.

Who among you would trade his life today, as poor as you may be, for the lifestyle of a king in medieval times? No Internet, no planes, no cars or trains or computers or vaccinations or central heating and air conditioning or running hot water or antibiotics or modern surgical techniques. The poorest person in America reading this Web site on his computer has a lifestyle outstripping those of most monarchs in history. But many of you (mostly lefties) are still bitching that someone else has it better.

That’s my long-winded response to the Barack Obamas who whine about income inequality. Just because someone else has it better doesn’t mean you don’t have it pretty damned good. So shut up and go enjoy something that this amazing world has made available to you for free.

RIP Little Brother – UPDATE

Filed under: General — JD @ 7:05 pm

[guest post by JD]

Tonight, after a year and a half struggle with leukemia, my younger brother passed away. He received spectacular care at the Huntsman Cancer Institute, where he had been hospitalized since August of last year. He will be laid to rest at the Air Force Academy where he was a Cadet.

He was a son, a brother, an uncle, a good friend, a pilot, and as good of a person as I have ever known, or will know. In his professional career, he was literally a rocket scientist, making rockets, missiles, and fuselages for people like the USAF, IDF, etc. he served in Iraq and in Bosnia, then again in Iraq with KBR.

As a person, he was 15 months my junior, the best man in my wedding, the Godfather to my oldest daughter, and despite having a wildly successful career, was as mischievous and carefree of a person as you would ever meet.

Godspeed, little bro. Heaven just got a little more interesting tonight.

Update

This friend of my brother’s did a better job of describing him than I could ever do. These kinds of things we are only now learning about … I am using his words, absent the names. This is who my little brother was.

When I was at USAFA, I struggled mightily internally, horribly depressed with the choice I’d made, in constant struggles with a culture I wasn’t quite able to adapt to as I was transforming into a very different person than the one who had entered. By my second year there, the struggles turned into serious depression on the verge of self-harm. A few friends were my life line, encouraging me, reaffirming my identity, giving love and support. Nobody was more loyal, more loving, more supportive and more consistent in his care and protection of me than Brian. I don’t know if I’ve ever had anybody stick up for me or have my back in the worst of times more than B.A. It is not an exaggeration for me to say that he may have saved my life with his friendship.

When I decided to leave USAFA, he was the one who took me to the airport to say goodbye forever to that life. He was the one reassuring me that I was making the right decision. He was the one who knew, probably even better than I did at the time, that I belonged in a different place and that my future happier, better self was waiting to be born back home in Madison.

The last time I saw him was in Madison. He came to visit and we did the State St. thing, coffee shops, book stores, bars. . . He couldn’t stop smiling at me, seeing how right he’d been, seeing how happy I’d become. “You made it!” he said.

I just found out this morning that BA died of leukemia. I’m so out of touch with that old life that I don’t really have anybody to share my grief with (except for you, Tim,who I thank deeply for your generous time). So, I’ll awkwardly use facebook to eulogize a man who made my life so much better.

B.A. you were a huge mountain of a man, a midwesterner like me (Bears fan if I remember correctly, forgiven bro), simultaneously no-nonsense and full of frivolity. A wicked sense of humor, righteous sense of rage, and a deep, deep well of kindness and compassion for your loved ones. You were the type of guy everybody wants to have around, never a burden, because you worked hard, your played hard, you were never small-minded, and always focused on being a decent human being. You were one hell of a decent human being, my brother.

“Here’s a toast to the host / of those who love the vastness of the sky… ”

To you, Brian. You made a dent, you are deeply loved, you will be sorely missed.

—JD

California Democrats Seek Repeal of Proposition 209, Desire to Restore Government’s Ability to Discriminate Based on Race

Filed under: General — Patterico @ 7:46 am

Democrats, I know your party has a long and storied history of discrimination based on race, but would you just drop it already?

Democrats in the California Senate used their two-thirds supermajority Thursday to pass a measure that would ask voters if they want to repeal the state’s ban on race- and gender-based preferences in government hiring and contracting and university admissions.

With the bare minimum number of votes needed – 27 – the upper house passed and sent to the Assembly Senate Constitutional Amendment 5, which would ask voters if they want to repeal provisions that became law 18 years ago with the passage of Proposition 209.

I oppose the repeal of Proposition 209 for reasons that I have argued at this blog for over ten years: I oppose race-based preferences by the government on principle. As Chief Justice Roberts famously said: “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” For me, this is a matter of principle.

But it’s now also personal for me. I have a daughter entering high school next year, and the issue of college is weighing on our minds. If Democrats succeed in restore race discrimination by government, it will torpedo my childen’s chances to get into a top-notch UC school like UCLA or Berkeley. It is my fondest hope that she goes to UCLA — a great university that is local and (while very costly) is less costly than private universities.

It will already be tough. If this crap passes, forget it. And as bad as my daughter will have it, her Asian friends will get it worse. The admissions folks discriminate against Asians like mad — if allowed to.

Frankly, these people violate Proposition 209 anyway and everybody knows it. But if it’s repealed, they get to go back to being blatant about it.

Democrats, it’s past time that you stopped trying to use government to discriminate against citizens on the basis of race. Yes, you’ve moved from discriminating against blacks to discriminating against Asians, and I understand that you’re very proud of that. But you shouldn’t be. Just stop already.


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