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January 2011 posts

From Florida, another judicial blow to individual mandate

Mark D. White

Today, Judge Roger Vinson of Florida reiterated Judge Henry E. Hudson's opinion from last month that the individual mandate provision of the Affordable Care Act is unconstitutional. From The Wall Street Journal:

In his ruling, Judge Roger Vinson, a Republican appointee, said that the law's requirement to carry insurance or pay a fee "is outside Congress' Commerce Clause power, and it cannot be otherwise authorized by an assertion of power under the Necessary and Proper Clause. It is not constitutional."

Notably, Vinson went even further than Hudson in one important sense:

The ruling also said that entire law "must be declared void," because the mandate to carry insurance is "not severable" from the rest of the law.

For my previous commentary on the individual mandate and health care, see here (on the Hudson decision in particular) and here (on the ACA in general).

Quoth the Krugman, “Spend some more”

Mark D. White

Check out "The Krugman" on Swimming Against the Mainstream, by Christopher Stiffler (obviously a Poe man's economist). An excerpt:

With inquisitive expression quickly I began to question
“How do we end this recession and full employment to restore?”
Not shaken up nor shaven was the economic maven
Quoth the Krugman, “Spend some more.”

“More spending can’t be provided," were the words I gently chided
"With congress ever divided, nothing makes it to the senate’s door”
“Maybe in a perfect setting, but what you seem to be forgetting
The whole plan is just begetting of higher deficits galore?
Borrowing now is easy, paying it back is quite a chore!”
Quoth the Krugman, “Spend some more.”

Which sense of freedom represents "The Moral Heart of Economics"?

Mark D. White

Ed Glaeser's Economix/New York Times blog post from yesterday, "The Moral Heart of Economics," argues that a belief in the value of freedom is "at the core of our discipline." While I appreciate that someone of Glaeser's stature and influence is highlighting the role of ethics in economics, I find his claim regarding the universal economic belief in freedom to be weak, simply because he opens the door for so many interpretations of it:

Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.

But that is certainly not the meaning of freedom that many classical liberals (or any libertarians, for that matter) would endorse--which is not an argument against it, of course, but merely points out that proposing freedom as a uniting value among economists does not carry much water if the definition of freedom is allowed to vary so widely.

(HT: Chris Coyne via Peter Boettke at Coordination Problem.)

CUNY bans smoking on all campuses--the unintended consequences

Mark D. White

Wow. The New York Times reported yesterday that the board of trustees of the City University of New York (CUNY) voted to ban smoking on all 23 of its campuses. The article notes that the ban won't mean much for the urban campuses, since the university cannot ban smoking on the public streets in between college buildings, but on the more traditional campuses--like at the College of Staten Island (CSI), where I teach--it will prohibit smoking in all outdoor areas between the buildings.

Just considering CSI, this will be huge. By my casual estimates, a significant percentage--I would say at least half--of the students at my school smoke. Preventing them from smoking between classes (and during breaks in classes, official or "otherwise") will definitely have unintended (if not unanticipated) consequences. Most obviously, less students will stay on campus between classes when there are significant gaps in their schedule, implying less attendance at extracurricular events, talks, and so forth.

Perhaps less obviously, many students will seek sanctuary in their cars to grab a smoke between classes (assuming either that this is allowed, or that it will not be well enforced if the ban extends there). This could also drive (pun intended) more students to travel to school by car rather than bus, stretching parking resources on campus (and countering any environmentally- or safety-minded initiative to cut down on automobile traffic).

"Unnecessary" nutrients?

Mark D. White

An article from The New York Times reports on changes in the food industry's labelling standards with respect to calories, salt, fat, ands sugar, which presumably are intended not only to provide better information to consumers but also to encourage food manufacturers to lessen such aspects of its products (as Wal-Mart agreed to do not long ago). The article explains that an earlier report from the Institute of Medicine urged the food industry not to include positive ingredients--such as calcium, vitamins, and the like--because it might "encourage manufacturers to fortify foods unnecessarily with vitamins or other ingredients."

Since when is fortifying foods with healthy ingredients "unnecessary"? Unnecessary to what? So reducing fat and salt is necessary, but adding vitamins and minerals isn't? And who is going to say what ingredients and additives are "necessary"? (Sit down, Mayor Bloomberg.)

Keynes on China’s Currency War

Jonathan B. Wight

Whether you like Keynes or not, he had a genuine knack for prescience.  This week President Obama appointed the head of GE to lead the new Council on Jobs and Competitiveness—presumably aimed at fighting off our international challengers, especially China.  This portrays a view of trade as a game of win-lose.

The failure of macro policy to maintain full employment was the subject of Keynes’ book, and here’s a timely quote on trade from the concluding chapter of The General Theory (1936):

But if nations can learn to provide themselves with full employment by their domestic policy… there need be no important economic forces calculated to set the interest of one country against that of its neighbours.

There would still be room for the international division of labour and for international lending in appropriate conditions.

But there would no longer be a pressing motive why one country need force its wares on another … with the express object of upsetting the equilibrium of payments so as to develop a balance of trade in its own favour.

International trade would cease to be what it is, namely, a desperate expedient to maintain employment at home….

Can anyone doubt that China is using trade as “a desperate expedient to maintain employment at home….”?  The question is whether President Obama, in his declarations over the past year, is also heading in that direction.

Keynes on Individualism and Freedom

Jonathan B. Wight

I’m re-reading the final Chapter of Keynes’ The General Theory (1936) to prepare for a seminar class on the Great Recession of 2008.  Aside from Keynes’ push for death taxes and for nationalizing the banking system (!), and aside from the complete manipulation of income taxes and interest rates—okay, if you can get beyond that—here is what he says about individualism and freedom:

But, above all, individualism, if it can be purged of its defects and its abuses, is the best safeguard of personal liberty in the sense that, compared with any other system, it greatly widens the field for the exercise of personal choice. It is also the best safeguard of the variety of life, which emerges precisely from this extended field of personal choice, and the loss of which is the greatest of all the losses of the homogeneous or totalitarian state.

So, in other words, Keynes is the great moderate, saving liberalism from the communist threat.  At the macro level all is controlled by the government to maintain aggregate demand at full employment.  But at the micro level markets can work under laissez faire to produce whatever they want to satisfy individual desires. 

Now, there is that one modifying phrase above I’ve bolded:  how do we purge individuals of their defects and abuses?  I suspect Keynes had something in mind like Adam Smith’s moral sentiments:  it would take self control and social norms.  But I don’t know Keynes well enough to say. 

Does anyone else have an answer to that question?

Ronald Dworkin on the Good Life

Hedgehogs Mark D. White

In the latest New York Review of Books (Feb. 10, 2011), Ronald Dworkin asks "What Is a Good Life?", offering an answer drawn from his book, Justice for Hedgehogs. From the article:

We have a responsibility to live well, and the importance of living well accounts for the value of having a critically good life. These are no doubt controversial ethical judgments. I also make controversial ethical judgments in any view I take about which lives are good or well-lived. In my own view, someone who leads a boring, conventional life without close friendships or challenges or achievements, marking time to his grave, has not had a good life, even if he thinks he has and even if he has thoroughly enjoyed the life he has had. If you agree, we cannot explain why he should regret this simply by calling attention to pleasures missed: there may have been no pleasures missed, and in any case there is nothing to miss now. We must suppose that he has failed at something: failed in his responsibilities for living.

The End of Cost-Benefit Analysis?

Mark D. White

Today, the editors of The Wall Street Journal commented on the fine print of President Obama's recent executive order requiring all regulatory agencies to submit their rules to cost-benefit analysis in an effort to streamline government and reduce regulatory burden on business. They note that the order requires that agencies include in their cost-benfit calculations "values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts," which robs cost-benefit analysis of any epistemic value it might have had. They conclude by saying, "this sounds more like the end of cost-benefit analysis than the beginning."

We can only hope. As heterodox economists of every stripe, from social economists to public choice/political economists, have long noted, cost-benefit analysis is fraught with vagueness and ripe for political manipulation. More specifically, by its nature it cannot incorporate values and principles that cannot be quantified, as the language in the executive order states. The administration is to be lauded to some extent for realizing that policy and regulation design must take into account their ethical impacts, but proposing to do this within the context of cost-benefit analysis is self-defeating at best, and a cynical facade at worst.

I do not deny that cost-benefit analysis has its place, even within a system of allocation which is based primarily on principles like dignity and justice. (See my chapter from my fothcoming edited volume, Retributivism: Essays on Theory and Policy, for an example in the context of criminal justice.) But it should never be presumed to work with any precision nor provide any conclusive results, and rather should provide merely one piece of information--the rough balance of quantifiable benefits and costs--which should always be included alongside other factors, such as impact on dignity, equality, and so forth.