DRI-161 for week of 11-30-14: The Enemy Within: The Move to Strangle Welfare-State Reform In Its Crib

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The Enemy Within: The Move to Strangle Welfare-State Reform In Its Crib

The resurgence of the Republican Party after the overwhelming victory of Barack Obama and the Democrats in the 2008 elections was led by the Tea Party. This grassroots political movement began as a popular uprising and only gradually acquired formal organizational trappings. As yet, its ideological roots are so thin and shallow that they provide no support for the movement.

This contrasts sharply with the conservative movement, in which the order of development was reversed. Ideology came first, with roots implanted firmly by opposition to the New Deal and a foreign policy led by Sen. Robert Taft. The intellectual foundation laid by William F. Buckley, Jr. in National Review Magazine educated a generation of young Republicans and paved the way for the candidacy of Barry Goldwater in 1964. Goldwater’s landslide defeat nevertheless introduced Ronald Reagan to national politics. By the time Reagan became President in 1980, conservatism had become the dominant political paradigm.

Nowhere is a vacuum more abhorrent than in political ideology. Today’s victorious Republicans may purport to search for a mode of governance, but what they are really doing is belatedly deciding what they stand for. (The hapless domestic and foreign policies of the Obama administration gave them the luxury of winning the elections merely by signaling their lack of congruence with President Obama et al.) They enjoy a surfeit of advice from all quarters.

Nowhere is this advice more pointed than in its economic dimension.

 

Should Republicans “Take ‘Yes’ For an Answer?”

 

Although Buckley died in 2006, National Review still retains some of the intellectual momentum he generated. Its “Roving Correspondent,” Kevin Williamson, devoted a recent essay to an advisory for the Republican Party on post-victory strategy. Williamson sees the solid victory in the 2014 mid-term elections as “a chance to meet voters where they are.” To do that, Republicans need to “take ‘yes’ for an answer.”

Exactly how should we interpret these glib formulations? Williamson insists that Republicans should not treat electoral good fortune as the opportunity to create change. Instead, the Party should reverse the normal order of precedence and cater to popular disposition – “meet the voters where they are” instead of persuading the voters of the desirability or necessity of change. Don’t continue the campaign, Williamson pleads. The votes have already been counted; just “take ‘yes’ for an answer” and get on with the business of crafting a governing compromise that everybody can live with.

So much for the revolutionary stance of the Tea Party; the EPA won’t have to test BostonHarbor for caffeine contamination.

The reader’s instinctive reaction to Williamson’s essay is to flip the magazine over and re-check the cover. Can this really be National Review, legendary incubator of conservative thought, renowned for taking no prisoners in the ideological wars? We have just suffered six years under the lash of a Democrat regime whose marching order was “elections have consequences.” Now the flagship of American conservatism is preaching a gospel of preemptive surrender?

Williamson’s mood is apparently the product of disillusionment. The birth of NR, he reminds his readers, was a reaction to Eisenhower Republicanism. Instead of rolling back the welfare state installed by Roosevelt and Truman, Ike accepted it – thereby setting the tone for Republican policy thereafter. The magazine fulminated, but to no avail. Goldwaterism produced Reagan… “a self-described New Deal Democrat,” pouts Williamson, “who famously proclaimed that he hadn’t left eh Democratic Party but the party had left him.”

Reagan revisionism is part of a new NR realpolitik, it seems. “At the end of the Reagan years, the Soviet Union was dead on its feet, the United States was a resurgent force in the world… and spending and deficits both were up, thanks to the White House’s inability or unwillingness to put a leash on Tip O’Neill and congressional Democrats. The public sector was larger and more arrogant, there were more rather than fewer bureaucrats and bureaucracies, and nobody had made so much as a head fake in the direction of reforming such New Deal legacies as Social Security or even Great Society boondoggles such as Medicaid.”

The author’s psychological defeatism apparently so overwhelmed him that he lost touch with reality. The Soviet Union is “dead on its feet” but the singular responsibility of President Ronald Reagan for this fact is unmentioned. (One cannot help wondering whether this is an oversight or a deliberate omission.) But Reagan is held liable for the actions of the Democrat Speaker of the House and Congressional Democrats! Has anybody blamed Barack Obama for not “putting a leash on House Republicans” to achieve more of his agenda? Has Williamson published his Canine Theory of Congressional Fiscal Restraint in a peer-reviewed journal of political science?

One might have thought that winning the Cold War, taming hyperinflation and reviving moribund economic growth (also left unmentioned by Williamson) constituted sufficient labor unto a Presidential tenure. Various authors, ranging from Paul Craig Roberts to David Stockman, have chronicled the internecine warfare attending the Reagan administration’s efforts to cut the federal budget. Apparently Williamson has forgotten, if he ever knew, that Reagan enjoyed the reputation of a ferocious budget-cutter while in office. This dovetailed with his famous declaration that “government isn’t the solution – it’s the problem.” If, three decades after the fact, Reagan’s efforts seem puny, this may be because we hold him responsible for failing to effect a counterrevolution to match the permanency of FDR’s New Deal. One would think, though, that the only President since FDR to actually reduce the size of the Federal Register deserved better at Williamson’s hands.

Obviously, Williamson paints a false portrait of the Reagan years to justify the counsel of despair he gives today. “We did not undo the New Deal in the 1980s. We are not going to undo the New Deal before 2017 either… the fact remains that the American people are not as conservative as conservatives would like them to be, nor are they always conservative in the way conservatives would like them to be.” It seems that there is a “disconnect between the numbers of Americans who describe themselves as ‘conservative’ or ‘liberal’ and the policy preferences those Americans express.” Americans think of themselves as conservative but favor liberal policies. So, Williamson concludes, the only sensible thing to do is humor them.

“Americans …are, by and large, conservative in the same sense that Ronald Reagan was, not in the sense that Robert Taft was, or… Barry Goldwater was. They intuit that the federal government is overly large and intrusive, they resent the slackers and idlers who exploit that situation, and they worry that our long-term finances are upside down, but they do not wish to repeal the New Deal.”

“Example: A majority of voters believe that something must be done to rectify Social Security’s finances, and a plurality of voters believe that a combination of benefit cuts and tax increases should be adopted to achieve that… [but] strong majorities … of 56 percent… oppose Social Security benefit cuts and Social Security tax increases, according to Gallup. No doubt many of these voters think of themselves as conservatives… it is likely that the great majority of self-described conservatives would support continuing current Social Security policies indefinitely – if they believed it fiscally possible. The current Left-Right divide on Social Security is not a question of what we ought to do, but of what we can do.” Williamson cites Robert Taft’s eventual concession on Social Security as an example of the Right bending its principles to his form of pragmatism. After all, “populist measures are, to the surprise of nobody except scholars of political science, popular, hence the support among a majority of registered Republicans for raising the minimum wage.”

Instead of fighting among themselves on principle, Williamson contends, Republicans should be scanning the polls to find out where their base stands – and adjusting their stance accordingly. They should be meeting the voters where the voters are rather than persuading voters to see the light of sweet reason. They should take “yes” for an answer when they hear it from the networks on election night.

Rebutting Williamson’s “Populism”

 

No full-blooded Tea Party member will swallow Kevin Williamson’s argument, despite the author’s insistence that he is really enunciating their position. They didn’t overcome the twin obstacles of the Democrat Party and the Republican establishment only to be lectured on their extremism in the pages of National Review, for crying out loud. But we must go beyond visceral rejection of Williamson’s moral and psychological defeatism. Straightforward analysis indicts it.

Since the venue is National Review, it is fitting to recall Bill Buckley’s distinction between politics and economics: “The politician says: ‘What do you want? The economist says: What do you want the most?'” For many decades, voters have been offered big government as if it were a consumer product with zero price. That is the context in which to contemplate the poll responses that Williamson treats as commandments graven in stone. In the beginning, there was the word. And conservatives believed the word. But when the world around them changed and God neither smote the unbeliever nor struck down the evil Antichrist, conservatives eventually shrugged and went with the flow. After a while they began singing the same hymns to Baal as the liberals. They couldn’t very well go to jail for non-participation in the Social Security system and they discovered that the government checks always cashed – so why not go along? It was the only way they could get their money out.

In due course, conservatives found out along with the rest of society that they had been lied to and flimflammed by the pay-as-you-go status of Social Security. It was not a system of insurance, after all; the word “social” in the terms “social insurance” and “Social Security” should be taken to mean “not,” just as it does in terms like “social justice,” “social democracy” and “social responsibility.” By then, though, everybody was so thoroughly habituated to the system that it would have required something close to a revolution to change it. Something like what the colonists originally did when they revolted against the British and dumped tea in Boston harbor, for example.

When Williamson implies that conservatives are entirely comfortable with Social Security today, he is being disingenuous. (That either means “lacking in candor” or “naïve;” he is either lying to us or he is plain stupid.) In fact, conservatives (and just about everybody else) below the age of 50 no longer expect even to receive Social Security benefits – they expect the system to go bankrupt long before they collect. They are not comfortable with the system but resigned to it; there is a world of difference between the two. And considering that Williamson himself just published an article on “Generation Vexed” and its growing dissatisfaction with the Obama regime in the previous issue of NR, he cannot claim indifference to their electoral attitudes in this context.

But this attitude of resignation is wildly optimistic compared to the fiscal reality facing America and the rest of Western industrial society today. The welfare state is collapsing around our ears. Central bankers are in extremis; they are reduced to printing money to finance operations. The Eurozone staggers from crisis to crisis. Japan is now working on its third “lost decade.” Demography is a disaster; birth rates will not bail us out. Worse – they are falling like leaden raindrops, reducing the number of workers paying in per welfare-benefit recipient. The crisis is not in the far-off future but today – if the U.S. had to finance upcoming deficits at normal rates of interest rather than the “zero interest rates” of the last five years, the interest charges alone would eat up most of the federal budget. And the entitlement programs that Williamson views as sacred are now eating up most of that budget.

Williamson acts as if Social Security finance were a Starbucks menu. He treats longstanding conservative doctrine on Social Security as if it were excerpted from fundamentalist Scripture out of Inherit the Wind. But he is no Clarence Drummond; Social Security is exactly the Ponzi scheme that conservatives have always fulminated against. In fact, it is worse, because the Day of Judgment is arriving even sooner than prophesied.

True, it isn’t just Social Security – it’s also Medicare and Medicaid and the welfare system. (Welfare reform didn’t come close to reforming the whole system, just one of the six components of it.) The point is that we have passed the elective stage and have now entered the stage of imminent collapse. In that stage, monetary chaos and an uncertain fate for democracy await.

And what is Williamson’s reaction? When Americans protest, “I can be overdrawn; I still have checks,” Williamson nods, “Right you are.” But we’re not just overdrawn – we’re completely bankrupt.

Under these conditions, what are our choices? Suppose we remain in Obamaville. That will result in collapse. Suppose we go Williamson’s route, a route of picking and choosing a few pieces of low-hanging fruitful reform. That will also result in collapse.

We have nothing to lose and everything to gain by telling voters the truth and opting for revolutionary reform. If they reject us, we will be hung for offering a full-bodied sheep – limited government, free markets and freedom – rather than a bleating lamb of meekly pandering populism.

Popunomics

 

Williamson isn’t just selectively bad on economics – he has renounced economic logic entirely in favor of populist emotion. Take the minimum wage – Williamson’s shining example of popular Populism. The minimum wage is one of three or four most heavily researched measures in economics, having attracted empirical studies consistently since the late 1940s. Until the notorious Card-Krueger study in 1993, these found that the minimum wage adversely affected employment of low-skilled labor. These findings jibed with a priori theory, which predicted that a minimum wage would produce a surplus of labor (unemployment), increase the scope for discrimination by buyers of labor against sellers of labor, reduce the quality of labor and/or jobs, encourage businesses to offer fewer benefits and more part-time jobs and encourage businesses to substitute machinery and high-skilled labor for low-skilled labor. All these effects have been observed in conjunction with the minimum wage since its imposition. Card and Krueger offered no rebuttal to the eloquent testimony of the research record and were notably silent on the theory underpinning their own research result, which purported to find an increase in comparative employment in one state after an increase in the minimum wage. Both the validity of their data and the econometric soundness of their results were later challenged.

Having carefully chosen one of the most economically untenable of all Populist positions on which to “meet voters where they are,” Williamson next ups the ante. From the debased coin of the minimum wage, he turns to the fool’s gold of restrictionist anti-immigrationism. The late Richard Nadler painstakingly showed – and in NR to boot, in 2009’s “Great Immigration Shoot-Out” – that restrictionists were big and consistent electoral losers in Republican primaries and general elections. But Williamson is back at the same old stand, hawking “stronger border controls… mandatory use of E-verify… and like measures” because “voters are solidly on the conservatives’ side on this issue.”

Oh really? Just in time – net immigration has been roughly zero for the last few years. Market forces, not government quotas, control international migration; the quotas merely serve to criminalize violators. Immigration benefits America

on net balance, regardless of its legal dimension. Along with free trade and opposition to the minimum wage, place support of free international migration among the issues upon which economists strongly agree.

Wait a minute – Williamson has gone from supporting brain-dead economics because it is generally popular (the minimum wage) to supporting it because it is popular with NR’s constituency. Just as Buckley had to rescue the Right from the anti-Semitism of the American Mercury and the conspiratorial John Birch Society, we are now faced with the task of rehabilitating the right wing from the crank nativism and restrictionism that has asserted squatter’s rights at National Review. Calling Williamson’s version of expedience Populism gives ideology a bad name. The 19th-century Populism of Pitchfork Ben Tillman, et al, featured cheap money and fashionably bad economics but it was more consistent than Williamson’s proposal.

Borrowing the argot of the digital generation, Williamson is expounding not Populism but rather PLR – the “path of least resistance.” Put your finger to the wind and sense what we can get the voters to sign off on. See how many fundamental principles and how much government money we’ll have to sacrifice to win the next election. Williamson purports to be lecturing us on why Republicans fail – because they are too ideologically scrupulous, insisting on free markets, free trade, open borders, flexible prices, deregulation. But the encroachment of big government and the welfare state proceeded mostly unabated throughout the 20th century despite periods of Republican ascendancy. How could this have happened? Because Republicans were really heeding Williamson’s doctrine all along; PLR ruled, not ideological constancy. Goldwater never led the Republican Party, even when he won the nomination. Reagan was detested by the Party establishment and his philosophy was ditched the minute Air Force One lifted off the runway to return him to California. PLR was always the de facto rule of thumb – and forefinger, ring finger and all other digits. How else could a Party ostensibly supporting limited government have countenanced the transition to unlimited government?

Williamson treats the rise of the Tea Party as America’s version of China’s Cultural Revolution. Whew! We must cease all this senseless bloodletting and wild-eyed revolutionary fervor; return to our senses and settle for what we can get rather than striving for Utopia. Back to normalcy, back to pragmatism and compromise and half-a-loaf … well, maybe a quarter-loaf… or even a slice… hell, maybe even a few crumbs, just so its bread.

It is fitting that Keynesian economics has come home to roost in this time of Quantitative Easing and central-banking hegemony and liquidity everywhere with not a loan to drink. “In the long run, we are all dead” was Keynes’ most famous quip. Well, we can’t live in the short run forever. The procession of short runs eventually produces a long run. And the long run is here.

It’s time to pay up. The voters have given Republicans a gift – the chance to tell the truth and turn the ship around before we reach the falls. PLR is no longer sufficient. It’s time – no, it’s long past time to start doing all the things that Williamson says Republicans can’t do and mustn’t do.

The Anti-Economics Party of the Party of Sound Economics?

 

“The American public is in many ways conservative, but in many ways it is not, and its conservatism often is not the conservatism of Milton Friedman or Phil Gramm but that of somebody who fears the national debt and dreads bureaucracy but rather likes his Social Security check.” The Republican Party’s glory days of the post-World War II period came during the Great Moderation ushered in by the Reagan Presidency, beginning in late 1980 and continuing into the present millennium. This success and victory in the Cold War were the only departures from PLR. This period of prosperity was driven by an economic policy whose positive features were disinflation, sound money, low taxes and low inflation. This is a combination that Keynesian economics finds contradictory and now repudiates utterly. Williamson repudiates it, too, hence his explicit rejection of Milton Friedman and Phil Gramm as exponents of conservatism. (Once again, his use of Friedman, a libertarian rather than a conservative, is disingenuous.) He is still living in the past, the days when we could have our conservatism and our Social Security checks, too. Sorry, we have bigger problems now than how to buy votes from our own voter base to win the next election.

For years, Republicans have been able to win occasional elections the easy way, by adopting PLR. Those days are over. From now on, the Republicans will have to earn their money as a party of limited government by actually practicing the principles they profess. That is the bad news. But the good news is that they cannot lose by doing this. The very economics that Kevin Williamson looks down on tells us that.

Economics defines “cost” as the alternative foregone. If telling the truth will cause you to lose the election, you may well decide to lie; the cost of truth-telling will seem too high. But if winning the election and losing the election are reduced to equivalence by the consequences of economic collapse, then telling the truth suddenly becomes costly no longer. Now avoiding collapse becomes the only matter of consequence and the election outcome fades into insignificance.

Ironically, that is not only sound economics; it is also supremely pragmatic.

DRI-267 for week of 10-27-13: ObamaCare and the Point of No Return

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ObamaCare and the Point of No Return

The rollout of ObamaCare – long-awaited by its friends, long-dreaded by its foes – took place last week. In this case, the term “rollout” is apropos, since the program is not exactly up on its feet. Tuesday, Oct. 22, 2013 marked the debut of HealthCare.gov, the ObamaCare website, where prospective customers of the program’s health-insurance exchanges go to apply for coverage. By comparison, Facebook’s IPO was a rip-roaring success.

A diary of highlights seems like the best way to do justice to this fiasco. We are indebted to the Heritage Foundation for the chronology and many of the specific details that follow.

Tuesday, Oct. 22, 2013: This is ribbon-cutting day for the website, through which ObamaCare’s state health-insurance exchangesexpect to do most of their business. One of the most fundamental reforms sought by free-market economists is the geographic market integration of health care in the U.S. Historically, each state has its own state laws and regulatory apparatus governing insurance. This hamstrings competition. It requires companies to deal with 50 different bureaucracies in order to compete nationally and limits consumers solely to companies offering policies in their state. But ObamaCare is dedicated to the proposition that health care of, by and for government shall not perish from the earth, so it not only perpetuates but complicates this setup by interposing the artificial creation of a health-care exchange for each state, operating under a federal aegis.

Only 36 of those state exchanges open for business on time today, however. Last-minute rehearsals have warned of impending chaos, and frantic responses have produced lateness. Sure enough, as the day wears on 47 states eventually report applicant complaints of “frequent error messages.” Despite massive volume on the ObamaCare site, there is almost no evidence of actual completed applications.

Wednesday, Oct. 23, 2013: The Los Angeles Times revises yesterday’s report of 5 million “hits” on HealthCare.gov from applicants in California downward just a wee bit, to 645,000. But there is still no definitive word on actual completed applications, leading some observers to wonder whether there are any.

Thursday, Oct. 24, 2013: The scarcity of actual purchasers of health insurance on the ObamaCare exchanges leads a Washington Post reporter to compare them in print to unicorns.  More serious, though, are the growing reports of thousands of policy cancellations suffered by Americans across the nation. The culprit is ObamaCare itself; victims’ current coverage doesn’t meet new ObamaCare guidelines on matters such as openness to pre-existing conditions. Ordinarily, a significant pre-existing health condition would preclude coverage or rate a high premium. In other words, writing policies that ignore pre-existing conditions is not insurance in the true, classical sense; insurance substitutes cost for risk and the former must be an increasing function of the latter in order for the process to make any sense. ObamaCare is not really about insurance, despite its protestations to the contrary.

Friday, Oct. 25, 2013: CNBC estimates that only 1% of website applicants can proceed fully to completion and obtain a policy online because the system cannot generate sufficient valid information to process the others. A few states – notably Kentucky – have reported thousands of successful policies issued, but the vast bulk of these now appear to be Medicaid enrollees rather than health-insurance policyholders. Meanwhile, the Department of Health and Human Services (HHS) announces that its website will be offline for repairs and upgrading.

Saturday, Oct. 26, 2013: In an interview with Fox News, Treasury Secretary Jack Lew refuses to cite a figure for completed applications on the HealthCare.gov website. Among those few that have successfully braved the process, premiums seem dramatically higher than those previously paid. One example was a current policyholder whose monthly premium of $228 ballooned to $1,208 on the new ObamaCare health-care exchange policy.

Monday, Oct.28, 2013: Dissatisfaction with the process of website enrollment is now so general that application via filling out paper forms has become the method of choice. It is highly ironic that well into the 21st century, a political administration touting its technological progressivity has fallen back on the tools of the 19th century to advance its signature legislative achievement.

Official Reaction

This diary of the reception to ObamaCare conveys the impression of a public that is more than sullen in its initial reaction to the program – it is downright mutinous. It was hardly surprising, then, that President Obama chose to respond to public complaints by holding a press conference in the White House Rose Garden a few days after rollout.

Mr. Obama’s attitude can best be described as “What’s the problem?” His tone combined the unique Obama blend of hauteur and familiarity. The Affordable Care Act, he insisted, was “not just a website.” If people were having trouble accessing the website or completing the application process or making contact with an insurance company to discuss an actual plan – why, then, they could just call the government on the phone and “talk to somebody directly and they can walk you through the application process.” (How many of the President’s listeners hearkened back at this point to their previous soul-satisfying experiences on the phone with, let’s say, the IRS?) This would take about 25 minutes for an individual, Mr. Obama assured his viewers, and about 45 minutes for a family. He gave out a 1-800 number for his viewers to call. Reviews of the President’s performance noted his striking resemblance to infomercial pitchmen.

Sean Hannity was so inspired by the President’s call to action that he resolved to heed it. He called the toll-free number on-air during his AM-radio show. He spoke with a call-center employee who admitted that “we’re having a lot of glitches in the system.” She read the script that she had been given to use in dealing with disgruntled callers. Hannity thanked her and complimented her on her courtesy and honesty. She was fired the next day. Hannity declared he would compensate her for one year’s lost salary and vowed to set up a fund for callers who wanted to contribute in her behalf.

Health and Human Services Secretary Kathleen Sebelius was next up on the firing line. Cabinet officials were touring eight cities and selected regional sites to promote the program and at Sebelius’s first stop at a community center in Austin, TX, she held a press conference to respond to public outrage with the glitches in the program.

On October 26, 2013, the Fox News website sported the headline: “Sebelius Suggests Republicans to Blame for ObamaCare Website Woes.” Had the Republican Party chosen the IT contractor responsible for setting up HealthCare.gov‘s website?

No. “Sebelius suggest[ed] that Republican efforts to delay and defund the law contributed to HealthCare.gov‘s glitch-ridden debut.” Really. How? Sebelius “conceded that there wasn’t enough testing done on the website, but added that her department had little flexibility to postpone the launch against the backdrop of Washington’s unforgiving politics. ‘In an ideal world, there would have been a lot more testing, but we did not have the luxury of that. And the law said the go-time was Oct. 1. And frankly, a political atmosphere where the majority party, at least in the House, was determined to stop this any way they possibly could…was not an ideal atmosphere.”

It takes the listener a minute or so to catch breath in the face of such effrontery. The Obama Administration had three years in which to prepare for launch of the program. True, there were numerous changes to the law and to administrative procedures, but these were all made by the administration itself for policy reasons. The Democrat Party, not the Republican Party, is the majority party. The Republican Party – no, make that the Tea Party wing of the Republican Party – proposed a debt-limit settlement in which the individual mandate for insurance-policy ownership would be delayed. It was rejected by the Obama Administration. Ms. Sebelius is blaming the Republican Party for the fact that Democrats were rushed when the Republicans in fact offered the Democrats a delay that the Democrats refused.

Were Ms. Sebelius a high-level executive in charge of rolling out a new product, her performance to date would result in her dismissal. But when queried about the possibility of stepping down, she responded “The majority of people calling for me to resign, I would say, are people I don’t work for and who did not want this program to work in the first place.” Parsing this statement yields some very uncomfortable conclusions. Ms. Sebelius’s employer is not President Obama or his administration; it is the American people. Anybody calling for her resignation is also an American. But clearly she does not see it that way. Obviously, the people calling for her resignation are Republicans. And she does not see herself as working for Republicans. The question is: Who is she working for?

Two possibilities stand out. Possibility number one is that she is working for the Democrat Party. In other words, she sees the executive branch as a spoils system belonging to the political party in power. Her allegiance is owed to the source of her employment; namely, her party. Possibility number two is that she sees her allegiance as owed to President Obama, her nominal boss. This might be referred to as the corporatist (as opposed to corporate) view of government, in which government plays the role of corporation and there are no shareholders.

Neither one of these possible conceptions is compatible with republican democracy, in which ultimate authority resides with the voters. In this case, the voters are expressing vocal dissatisfaction and Ms. Sebelius is telling them to take a hike. In a free-market corporation, Ms. Sebelius would be the one unfolding her walking papers and map.

Whose Back is Against the Wall?

It is tempting to conclude that ObamaCare is the Waterloo that the right wing has been predicting and planning for President Obama ever since Election Day, 2008. And this does have a certain superficial plausibility. ObamaCare is this Administration’s signature policy achievement – indeed, practically its only one. There is no doubt that the Administration looks bad, even by the relaxed standards of performance it set during the last five years.

Unfortunately, this view of President Obama with his back against the wall, despairing and fearful, contemplating resignation or impeachment, simply won’t survive close scrutiny. It is shattered by a sober review of Barack Obama’s past utterances on the subject of health care.

As a dedicated man of the Left, Barack Obama’s progressive vision of health care in America follows one guiding star: the single-payer system. That single payer is the federal government. Barack Obama and the progressive Left are irrevocably wedded to the concept of government ownership and control of health care, a la Great Britain’s National Health Care system. In speeches and interviews going back to the beginning of his career, Obama has pledged allegiance to this flag and to the collective for which it stands, one organic unity under government, indivisible, with totalitarianism and social justice for all.

The fact that ObamaCare is now collapsing around our ears may be temporarily uncomfortable for the Obama Administration, but it is in no way incompatible with this overarching goal. Just the opposite, in fact. In order to get from where we are now to a health-care system completely owned and operated by the federal government, our private system of doctors, hospitals and insurance companies must be either subjugated, occupied or destroyed, respectively. That process has now started in earnest.

Oh, the Administration would rather that private medicine went gentle into that good night. It would have preferred killing private health insurance via euthanasia rather than brutal murder, for example. But the end is what matters, not the means.

Certainly the Administration would have preferred to maintain its hypnotic grip on the loyalty of the mainstream news media. Instead, the members of the broadcast corps are reacting to ObamaCare’s meltdown as they did upon first learning that they were not the product of immaculate conception. But this is merely a temporary dislocation, not a permanent loss. What will the news media do when the uproar dies down – change party affiliation?

For anybody still unconvinced about the long-run direction events will take, the Wednesday, October 30, 2013 lead editorial in The Wall Street Journal is the clincher.

“Americans are Losing Their Coverage by Political Design”

“For all of the Affordable Care Act’s technical problems,” the editors observe, “at least one part is working on schedule. The law is systematically dismantling the private insurance market, as its architects intended from the start.”

It took a little foresight to see this back when the law was up for passage. The original legislation included a passage insisting that it should not “be construed to require than an individual terminate coverage that existed as of March 23, 2010.” This “Preservation of Right to Maintain Existing Coverage” was the fig leaf shielding President Obama’s now-infamous declaration that “if you like your existing policy, you can keep it.” Yeah, right.

Beginning in June, 2010, HHS started generating new regulations that chipped away at this “promise.” Every change in policy, no matter how minor, became an excuse for terminating existing coverage at renewal time. This explains the fact that some 2 million Americans have received cancellation notices from their current insurers. Of course, the Obama Administration has adopted the unified stance that these cancellations are the “fault” of the insurance companies – which is a little like blaming your broken back on your neighbor because he jumped out of the way when you fell off your roof instead of standing under you to cushion your fall. Stray callers to AM radio can be heard maintaining that at least half of these cancellations will be reinstated with new policies at lower cost in the ObamaCare exchanges. If only those hot-headed Tea Partiers would stop dumping boxes of tea and behaving like pirates! Alas, a Rube Goldberg imitation of a market cannot replace the genuine article – with apologies to Mr. Goldberg, whose roundabout contraptions actually worked.

ObamaCare creates 10 types of legally defined medical benefits. They include general categories like hospitalization and prescription drugs. No policy that fails to meet the exact standards defined within the law can survive the ObamaCare review. It is widely estimated that about 80% of all individual plans, which cover 7% of the U.S. population under age 65, will fall victim to the ObamaCare scythe.

The law is replete with Orwellian rhetoric of progressive liberalism. HHS defines its purpose as the “offer [of] a small number of meaningful choices.” Uh…what about allowing individuals to gauge the tradeoff between price and quality of care that best suits their own preferences, incomes and particular medical circumstances? No, that would have “allowed extremely wide variation across plans in the benefits offered “and thus “would not have assured consumers that they would have coverage for basic benefits.” This is doublespeak for “we are restricting your range of choice for your own good, dummy.”

Liberals typically respond with a mixture of outrage and indignation when exposed as totalitarians. It is certainly true that they are not eradicating freedom of choice merely for the pure fun of it. They must create a fictitious product called “insurance” to serve a comparatively small population of people who cannot be served by true insurance – people with pre-existing conditions that make them uninsurable or ratable at very high premiums or coverage exclusions. The exorbitant costs of serving this market through government require that the tail wag the dog – that the large number of young, healthy people pay ridiculously high premiums for a product they don’t want or need in order to balance the books on this absurd enterprise. (Formerly, governments simply borrowed the money to pay for such pay-as-you-go boondoggles, but the financial price tag on this modus operandi is now threatening to bring down European welfare states around the ears of their citizens – so this expedient is no longer viable.) In order to justify enrolling everybody and his brother-in-law in coverage, government has to standardize coverage by including just about every conceivable benefit and excluding practically nothing. After all, we’re forcing people to sign up so we can’t very well turn around and deny them coverage for something the way a real, live insurance company would, can we?

It is well known that the bulk of all medical costs arise from treating the elderly. In a rational system, this would be no problem because people would save for their own old age and generate the real resources necessary to fund it. But the wrong turn in our system began in World War II, when the tax-free status of employer-provided health benefits encouraged the substitution of job-related health insurance for the wage increases that were proscribed by wartime government wage and price controls. The gradual dominance of third-party payment for health care meant that demand went through the roof, dragging health-care prices upward with it.

Now Generation X finds itself stuck with the mother of all tabs by the President whom it elected. The Gen X’ers are paying Social Security taxes to support their feckless parents and grandparents, who sat still for a Ponzi scheme and now want their children to make good. To add injury to injury, the kids are also stuck with gigantic prices for involuntary “insurance” they don’t want and can’t afford to support their elders, the uninsurables – and the incredibly costly government machinery to administer it all.

It’s just as the old-time leftist revolutionaries used to say: you can’t make an omelette without breaking eggs. Across the nation, we have heard the sound of eggs cracking for the last week.

The Point of No Return

The “point of no return” is a familiar principle in international aviation. It is the point beyond which is it closer to the final destination than to the point of origination, or the point beyond which it makes no sense to turn back. This is particularly applicable to trans-oceanic travel, where engine trouble or some other unexpected problem might make the fastest possible landing necessary.

In our case, the Obama Administration has kept this concept firmly in mind. By embroiling as many Americans as deeply as possible in the tentacles of government, President Obama intends to create a state of affairs in which – no matter how bad the current operation of ObamaCare may be – it will seem preferable to most Americans to go forward to a completely government-run system rather than “turn back the clock” to a free-market system.

A free-market system works because competition works. On the supply side of the market, eliminating state regulation of insurance would enable companies to expand across state borders and compete with each other. But this involves relying upon companies to serve consumers. And companies are the entities that just got through issuing all those cancellation notices. For millions of Americans today, the only disciplinary mechanism affecting companies is something called “government regulation” that forces them to do “the right thing” by bludgeoning them into submission. That is what regulatory agencies are doing right now – beating up on Wall Street firms and banks for causing the financial crisis of 2008 and ensuing Great Recession. The fact that this never seems to prevent the next crisis doesn’t seem to penetrate the public consciousness, for the only antidote for the failure of government regulation is more and stronger government regulation.

On the demand side of a free market, consumers scrutinize the products and services available at alternative prices and choose the ones they prefer the most. But consumers are not used to buying their own health care and vaguely feel that the idea is both dishonest and unfair. “Health care should be a right, not a privilege,” is the rallying cry of the left wing – as if proclaiming this state of affairs is tantamount to executing it. No such thing as a guaranteed right to goods and services can exist, since giving one person a political right to goods is the same thing as denying the right to others. In the financial sense, somebody must pay for the goods provided. In the real sense, virtually all goods are produced using resources that have alternative uses, so producing more of some goods always means producing fewer other goods.

This is not what the “health-care-should-be-a-right-not-a-privilege” proclaimers are talking about. Their idea is that we will give everybody more of this one thing – health care – and have everything else remain the same as it is now. That is a fantasy. But this fantasy is the prevailing mental state throughout much of the nation. One widely quoted comment by a bitterly disappointed victim of policy cancellation is revealing: “I was all for ObamaCare until I found out I was going to have to pay for it.” On right-wing talk radio, this remark is considered proof of public disillusion with President Obama. But note: The victim did not say: “I was all for ObamaCare until I found out what I was going to have to pay for it.” The distinction is vital. Today, a free lunch is considered only fitting and proper in health care. And the only free lunch to be had is the pseudo-free lunch offered by a government-run, single-payer system.

As it stands now, few if any Americans can recall what it was like to pay for their own health care. Few have experienced a true free market in medicine and health care. Thus, they will be taking the word of economists on faith that it would be preferable to a government-run system like the one in Great Britain. It is a tribute to the power of ideas that a commentator like Rush Limbaugh can make repeated references to individuals paying for their own care without generating a commercially fatal outpouring of outrage from his audience.

Grim as this depiction may seem, it accurately describes the dilemma we face.