Remedial economics: Obamacare as teachable moment

Photo credit: peasap / Foter.com / CC BY

Here’s a good news article–from AFP of all places–that highlights the problem when government negotiates prices.  The headline says it all: “Secret pricing spikes US healthcare costs.”   The unflattering description of price negotiation, which is a favorite tool of economic liberals, is remarkable.  The article quotes European health policy experts, who advise the US to follow their lead by turning pricing over to market mechanisms. What a concept!

Meanwhile, a blogger at Values and Capitalism reminds us of the importance of basic economic literacy.  Her mention of “price signaling” triggers that part of me that must lecture everyone: prices communicate information about scarcity.  When government offers subsidies or fixes prices, it distorts that information.  These interventions produce illusion and falsehood.  It’s quite arguably immoral.

The spectacular implosion of the Affordable Care Act that we are now going through is a teachable moment.  Many fiscal conservatives spend a lot of time snarkily tweaking liberals and the Obama administration.  It would be a serious waste not to turn aside for a moment, and soberly remind our fellow citizens that no one can wish away immutable economic realities.  Central planning will never beat a free market.

Constitutional curve ball

For politicos, the Obamacare decision was something of a “Where were you when . . . ?” moment.  Surprisingly, Chief Justice John Roberts–not Justice Anthony Kennedy–was among the upholding majority.  And the mischievous wording of Robert’s majority opinion memorably made the breakneck news cycle stop for just a couple minutes as reporters rushed to divine the arcane document on live television.   CNN even embarrassed itself (and FOX less so) with a Dewey defeats Truman blunder, but I doubt it will be remembered as long as the original.

Throughout the day I caught a few whiffs of this idea that Roberts’s institutionalist inclination was coming through.  That is, he voted the way he did to spare the Supreme Court from allegations it had succumbed to an intractable polarization along party lines .  It was batted around on NBC’s live coverage, and resurfaced for the evening’s All Things Considered.  Hard liberal Robert Reich presciently cited this institutional loyalty a day in advance.  Supposedly, John Roberts is not even the first chief justice to spike his vote in the hope of saving the court’s influence.

If this protective phenomenon of institutionalism is real, isn’t it self-defeating in practice?  It would seem the court is compromising its deliberative process in order to not appear compromised.

Yet, short of Justice Roberts being interrogated with truth serum, the institutional motive will probably remain just speculation.  There’s been profuse coverage and the decision’s dissection will only become more detailed and complete over time.  I cannot pretend to be an expert on jurisprudence, so I trust those who say Roberts had good reason for pegging the mandate as a tax.  Indeed, it may have been more a pebble in Democrats’ shoes than a charitable move.

It seems at this point that the GOP has been invigorated considerably by the shock that for some is also accompanied by a sense of betrayal.  I’m surprised that there are still holdouts coming out of the woodwork to support Governor Romney.  It’s like those Japanese soldiers who only surrendered to American forces in the age of disco.  What a trauma that must have been.

The response on the Right, including over one million spontaneous dollars taken in by Romney’s campaign today, is encouraging for those who hope to roll back the collectivist tide.  It seems conservatives have their own way of going “Forward.”

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