Free Markets, Free People

More self-inflicted economic problems on the way

The Obama economy is a mess, with median incomes retreating, fudged employment numbers and generally the usual mess you can expect from a over-regulated and highly manipulated “market”.  In other words, it stinks because of government as much as anything else.  Our betters seem not to understand the very basics of human nature – humans respond to incentives.  So they continue to cobble together more and more feel good projects (i.e. they make the “elite” feel good) that backfire.  Why?  Because humans respond to disincentives as well – and their feel good projects are long on disincentives, something they can’t seem to wrap their heads around.

By design, the next example of that will take place after the November mid-term elections:

Starting this year, the United States’ working population will face three major employment disincentives resulting from the very benefits the Affordable Care Act (ACA) provides: (1) an explicit tax on full-time work, (2) an implicit tax on full-time work for those who are ineligible for the ACA’s health insurance subsidies, and (3) an implicit tax that links the amount of available subsidies to workers’ incomes.

A new study published by the Mercatus Center at George Mason University advances the understanding of how much these ACA taxes will reduce overall employment, and why. It concludes that the reduction will be nearly double that projected by previous analyses. Labor markets ultimately will reduce weekly employment per person by about 3 percent—translating to roughly 4 million fewer full-time-equivalent workers.

4 million more jobs in an economy already suffering one of the lowest labor participation rates in its history.  Why have “middle class” wages stagnated or dropped?  One major reason has to do with disincentives like this.  Its like the $15 minimum wage trope.  Force it on business and they have a “disincentive” to hire people for jobs that aren’t worth that and an incentive to automate or go short handed and double up the work on someone else.

That’s precisely the type of disincentive that ObamaCare is about to inflict on the economy.  We’ll then hear the usual nonsense about greedy and uncaring companies and how the “market” has failed us.  It is as predictable as the next blizzard being somehow blamed on global warming.

Meanwhile, these 4 million that may join the currently unemployed are real people who will suffer real problems because of the disincentive provided by a very poorly thought out law that won’t effect those who passed it.  All Democrats can hope is that enough people will drop off the unemployment roles by the time the next presidential election rolls around that the fudged unemployment stats look acceptable.

What a hell of a way to run a railroad.

~McQ

 

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9 Responses to More self-inflicted economic problems on the way

  • I saw a great Venn diagram of the people who believe a carbon tax will move demand lower, and those who concurrently believe a raise in the minimum wage will NOT move demand lower. Paul “Kwazy” Krugman was in the intersection. Of course.

    Again, it is impossible to rationally hold that the Obamic Decline is simply the result of fecklessness. I can only be a result of design and intention.

    • Yeah, it’s deliberate at this point. It has to be.
      We’re all assuming these various stupid plans are coming from Americans, and maybe we shouldn’t.
      Across the board, when he is in a position to make a decision that will be bad for the country, he does.
      That beats the odds that it’s accidental stupidity.

      • Across the board, when he makes a decision, he does it liberally. I suppose if you trace that back to Gramscian damage this becomes something deliberate, but at the moment I don’t find it necessary to hypothesize any sort of present plan or influence to explain Obama’s actions. He is simply the most doctrinaire liberal ever put into the Presidency, and, well, everything follows from that pretty easily.

        I also think this is why he is so visibly disillusioned, thin-skinned, and angry. Not only is this not what he promised us, this is not what liberalism promised him. I’ve often been tempted to put up a petition on the whitehouse.gov site that reads something like:

        Dear Mr. President: It is clear that you are concerned about your legacy. It is also clear by now that unless you change something drastically, your legacy is not going to be a positive one. You are clearly angry and frustrated… and why shouldn’t you be? It isn’t just us Americans that were made promises… people made promises to you. They promised that you were the Lightbringer. They promised you that you were so smart that once you got into office that everything would be easy. They promised that under the sheer radiating brilliance of your rightness, all the problems of the world (all created by America, natch) would simply melt away.

        Obviously, that hasn’t happened.

        You are a victim of their lies just as we are. You’ve seen now that their solutions don’t work. You’ve seen that liberalism is a failure of a governing philosophy. You know now better than anybody just how absurd liberalism is.

        So, may I make suggestion: Zig instead of zagging. Speak out. Tell everyone how hopelessly absurd liberalism’s prescriptions are. Tell the truth, that you tried everything that it said to do and no matter how you spin it, it doesn’t work. You’re in a position where these statements can’t be ignored. No academics could ever gainsay what you could say about the practical realities of liberal policy.

        You would find more support if you did this than you could currently imagine.

        And, well, let’s be honest… this is just about the only realistic chance you have now of going down in history any other way.

        Don’t go down in history as the Man Who Failed Liberalism.

        Go down as The Man Liberalism Failed.

        But I expect the half-life of such a petition to be measured in small numbers of seconds.

        • Yep. Somebody could rise to greatness were they to do that very thing.

          But not Barrackula. It is simply not in him to do. Perhaps he least of all, since his narcissism would absolutely preclude something so requiring humility, which I think is well-defined as the capacity to learn…to let in new information.

        • The country failed him. The only thing he’ll be missing for his retirement interviews is a Chaplin mustache and a Berlin bunker with the Russians closing in. Everyone failed him.

  • Look at it this way. If 4 million people drop out of the work force then the unemployment rate will drop. Maybe even go negative. The Obama administration will trumpet this as a success of his economic policies. I mean really… a negative unemployment rate! Who could argue with that? Certainly not the economically illiterate media.

  • So what ever happened to Recovery Summer I, Recovery Summer II, Recovery Summer III, Recovery Summer IV, and Recovery Summer V ?

    • All gonna be taken care of when he pivots to the Economy and focuses on it with laser like precision after the mid-terms by granting pardons to millions of undocumented Democrats and adding them to the work force (collecting unemployment).

      Then we can bank on recovery Summer VI!!!
      The man is a god, I’m tellin you!

  • This is your last chance. After this, there is no turning back. You take the blue pill—the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill—you stay in Wonderland, and I show you how deep the rabbit hole goes. Remember: all I’m offering is the truth, nothing more.

    Did you ever wonder about the assignment of the respective colors to the pills ?