RWCG


Seriously, everyone: ‘I choose not to work’ and ‘no job exists for me that’s worth doing’ mean the same thing
February 4, 2014, 3:19 pm
Filed under: Uncategorized

By now you will have heard of the CBO report containing a projection that attributes a marginal net -2 million jobs to the existence of Obamacare. This is being reported and discussed, somewhat colloquially, as Obamacare destined to lead to the loss of 2 million jobs, or, ‘destroying’ 2 million jobs, over whatever-timeframe CBO was doing its projecting.

If you pay even closer attention to that you will have also heard the pushback/spin from Smart People. These Smart People, who are Very Serious, are pounding away as we speak on blog posts and articles whose headlines will inevitably read something like No, Obamacare Is Not Going To ‘Destroy’ 2 Million Jobs.

The jist of this spin, which as far as I can tell is fine as far as it goes, is that the CBO’s prediction is based on the fact that Obamacare will increase, by that amount, the number of people at or below the margin of whatever means-testing benefits-threshold(s) below which the incentive to work doesn’t exceed the incentive not to. According to the Smart People, therefore, these will just be an additional 2 million people who ‘choose not to work’. Which is totally fine! (Because after all, isn’t it great if a welfare law increases the number of people who choose not to work? Hmmm.)

Anyway, all I’d like to say about all this is that, contrary to what everyone seems to think, they’re both right!

Grant – as the Very Serious Smart People are saying – that Obamacare will ‘merely’ increase the number of people who ‘choose not to work’ by 2 million, because it will boost the welfare-incentive above what those people will be able to earn on the job market at that time. But this can only mean that, in that event, there won’t exist jobs out there that will pay enough to be worth being off welfare for those 2 million people, even though (by definition) there are now. Another way to say that is: because of Obamacare, there will be 2 million fewer, oh let’s call them, ‘welfare-surpassing’ jobs, where I hope the phrase ‘welfare-surpassing’ is pretty self-explanatory. But then let’s note that the set of ‘jobs’ is identical with the set of ‘welfare-surpassing jobs’, given that if a job isn’t welfare-surpassing, it won’t exist, by definition.

And so another way to say that, admittedly a shorthand way but a reasonably accurate way nevertheless, is that Obamacare will destroy 2 million jobs.

Have a nice day.

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19 Comments so far
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As Hemingway would have put it, “The jobs were still there, but we did not go to them any more.”

Comment by Texan99

Enjoyable as always, but this is the definition of attacking a straw man. They haven’t even written the counterpoint yet.

Comment by Tangent Style

Huh? Are you saying that because I didn’t link to some particular instance of what I’m talking about or another? I figured you could do that yourself. Sigh.

“No, CBO did not say Obamacare will kill 2 million jobs”

http://www.washingtonpost.com/blogs/fact-checker/wp/2014/02/04/no-cbo-did-not-say-obamacare-will-kill-2-million-jobs/

“No, Obamacare isn’t handing out 2 million pink slips”

http://www.msnbc.com/msnbc/no-obamacare-isnt-firing-2-million-workers

“No, the latest CBO report doesn’t say Obamacare kills jobs”

http://www.dailykos.com/story/2014/02/04/1274963/-No-the-latest-CBO-report-doesn-t-say-Obamacare-kills-jobs

etc etc etc

Tell me again how the above is a ‘straw man’…

Comment by Crimsonic

Fair enough. Criticism retracted. The word ‘inevitably’ and the lack of links made me write the comment, but as you pointed out, I was lazy and didn’t Google anything.

Comment by Tangent Style

In fairness, I was reacting to these arguments as i saw them bubble up on twitter.

I wasn’t gonna pull out some specific tweets and link to them, cuz, that’s annoying.

But as you can see, i was 100% right that such pieces – and headlines – were inevitable. :-)

Comment by Crimsonic

Can you make this predictive talent pay?

Comment by The Unreal Woman

You mean, *besides* having built up a blog that consistently ranks in the top, like, 2,000,000 in the world in readership?
;-)

Comment by Crimsonic

But what if you start doing it only for the money, and lose the passion that got you started?

Comment by Texan99

Yeah, I wouldn’t want to get blinded by my RWCG-linked riches and lose sight of the inspirational spark that first drove me to RWCG. Always a pitfall for big successes like myself ;-)

Comment by Crimsonic

[…] ← Seriously, everyone: ‘I choose not to work’ and ‘no job exists for me that&… […]

Pingback by No, Comma, Annoyingly Authoritative Counterspin | Rhymes With Cars & Girls

There is also the funny ‘argument’ that this is OK because job reduction will come from the supply side (households) not the demand side (employers). Will Obamacare leave a 2 million job-shaped hole in employment demand, then? No. Since market always clears by definition, one or both of the following things will happen: 1) employers will cut positions and 2) illegal immigrants (or any other poor subpopulation ineligible for welfare) will take up the slack. And luckily we just happen to have lots of the latter subpopulation, and even more luckily Repugs in the Congress are finally seeing the light on amnesty!.. Pfui.

Comment by Candide III

Yup. (Although the latest argument we’re seeing is that instead of #1 or #2, employers will have to raise wages. Can’t say I follow that one.)

Anyway, I have to admit that economists’ penchant for separating things into ‘supply side’ vs ‘demand side’ has always seemed artificial to me (which is maybe another way of saying: I just don’t get it). Because like you say, markets clear! So the way I see it, the idea that:

“the supply-side will supply 2 million less FTEs worth of labor

means

“the supply-side will supply 2 million less FTEs at the levels the demand-side will be offering”

which means the same thing as

“the demand-side will not be offering enough to induce the supply-side to offer more than [2 million fewer] FTES”

which can be stated, for short

“the demand-side will offer 2 million fewer jobs”.

To me they are just two sides of the same coin! Separations into ‘supply’ and ‘demand’ ‘sides’ just don’t strike me as interesting or meaningful.

If I squint my eyes I guess I can see them thinking it meaningful because the (nominal) change that will be happening will all be occurring on the ‘supply side’. That is, employers won’t be reducing their (nominal) wages below employees’ reserve-wages; instead, employees will be raising their (nominal) reserve-wages above what employers are offering. That seems sort of significant, but not really.

Because after all, who cares about nominal quantities? We are talking about real effects not nominal. And the funny part is that usually macro-minded folks are all about emphasizing the difference between real and nominal.

Maybe I’m missing something though.

What you are saying is that the ‘demand side’ will make up the difference somehow (illegals etc). Maybe some of that goes on, but not necessarily. Employers can and will replace a good % of them with robots, with shutting down businesses at the margin of profitability, and with tossing extra workloads onto extant workers. I think the CBO statement is that *when the market clears* there will be 2 million fewer jobs that cleared, not that the ‘supply side’ will ‘supply’ 2 million fewer but the ‘demand side’ will still get the same amount workers from somewhere else. Again this is one of the pitfalls I see of the artificial ‘supply’/’demand’ ‘side’ separation, it just confuses things.

2 million fewer is 2 million fewer. Markets clear.

Comment by Crimsonic

Let’s remember that this is a CBO projection, which even if it agrees with our biases is roughly tantamount to Nostradamus pronouncing doom on the 27th. In fact, apparently they revised their earlier prediction of 800k. So we’re looking at about a 100% error, I think? I’m sure they do the best they can with what they have, but they have no idea what is going to happen.

It’s true that abstractly, it doesn’t matter whether #employed is reduced on the supply side or the demand side, but it does when trying to get a picture of the economy. I think the position they are coming from is that the 2 million workers were subpar check collectors, working only for the insurance and happy to quit now that they don’t need the benefits. Given that, those jobs will now be filled with motivated workers from elsewhere, or at the very least more check-collectors who would be otherwise unemployed. It would be worse in their estimation for the number of available jobs to be reduced, since that would mean that people who wanted to work couldn’t.

If the 2 million people quit, then really there are only three outcomes. One is that their jobs were unnecessary for some reason; the positions can be automated, eliminated, filled by shuffling others, etc. The second is that the lefties are right, and currently unemployed will shift into those jobs and the world will be a happier place. Third is that the positions are necessary, but companies can’t fill them at a beneficial wage, meaning that they either raise wages and eat the loss or just try to shift the responsibilities onto other employees.

Finally, I can’t but treat the phenomenon of people working just for health insurance as a sad and pointless consequence of our ridiculous policy of tying health insurance to employment. Of all the reforms Obamacare made, setting up the exchanges was one of the better ones, and it’s unfortunate (and inexplicable…what was in the other 999 pages?) that it didn’t go farther and just get rid of this silliness for good.

Comment by Matt

No argument re: CBO (with proviso that they do the best they can, etc.) My assumption on all these things is that CBO estimates are almost inevitably underestimates (in the direction of better-for-the-government-POV).

I still think it’s wrong to interpret the finding to imply that the 2 million will be ‘made up’ some other way. No. There will be 2 million fewer (FTE-equivalent) jobs in existence, compared to a no-ACA universe, period. The lefties’ point is not that those jobs will be made-up some other way but that it’s totally fine that those jobs just won’t exist/clear because those workers would have just been ‘check-collectors’ in ‘job lock’ anyway.

To that point, I’m actually not sure why it’s some kind of automatic tragedy that needs to be remedied when people work ‘just’ for health insurance. In a totally equivalent way, many other people could fairly say they’re working ‘just’ to pay their (say) mortgage+kids’ future college costs. Do I get weepy-eyes for that? where’s my federal program to liberate me from the ‘job-lock’ of having to work ‘just’ to pay a mortgage? why isn’t that ‘sad and pointless’? shouldn’t I be able to ‘choose not to work’ too, at whatever cost to others? If not why not? I do agree that tying health insurance to jobs was dumb in the first place but the rhetoric here is becoming a little much and doesn’t really seem thought-through or consistent.

If one has health problems, which cost a lot of money to treat, meaning insurance is hugely necessary, then performing some labor ‘just’ to defray that insurance seems like a perfectly good reason to work to me. If federal programs were set up to liberate all possible people from all possible forms of ‘sad and pointless’ ‘job lock’ in the sense of working ‘just’ to pay for this or that necessity, 99+% of people would quit their jobs. Yeah, that’d work ;-)

Comment by Crimsonic

It’s only a sympathetic case because insurance is tied directly to a job. That is, you can’t presently forego insurance and receive the money that would have paid for it where you could go buy your own. If it were not tied up together then you would still have to work to pay your insurance bill, but then you could work where you wanted rather than having to get a specific job just for insurance.

Comment by Matt

That is all true, and again I am fully on board with (and on the record saying so) killing that link between job and health plan.

That being said, the CBO report is not actually describing a situation where 2 million FTE-equiv people are liberated from their job-lock and then go ‘work where they want’. It’s describing a situation where they stay home instead of working.

Maybe in some of those instances that’s what we want because they will have been truly sympathetic cases, e.g. 59 year olds in late stage cancer who ‘had to work’ at a pointless job and now doesn’t. I’m pretty sure all those “No, the CBO did not say…” pieces linked above are chock full of such made-up anecdotal examples. I am skeptical however that such cases are truly representative of who-all belongs to this 2-million marginal group that will be knocked away from the incentive-boundary.

Comment by Crimsonic

There is a weird Leftist notion that there’s something wrong with a system in which you have to do something that’s meaningful or valuable for someone else, rather than only for yourself, in order to earn your daily bread (food, shelter, Rx, whatever). Most of the time it’s we conservatives who are supposed to be heartless and selfish, but when you get to the heartrending problems of workers, it’s all me, me, me. My leftist friends and relatives, many of whom are otherwise sane, intelligent, and generous people, really get twisted up over this. The idea seems to be that the world should be arranged so that they get nice things delivered to them in exchange for doing whatever floats their boat. It follows that whatever job they find particularly meaningful and pleasant is chronically “undervalued” by society, so the government should set prices.

The reasoning never works in reverse: when they’re buying something or hiring labor, it should be cheap even if it’s no fun to make or do. If that’s not possible, there’s usually some “middleman” to blame.

Comment by Texan99

[…] touches on the point I was fumblingly trying to make here. Basically, whenever economists split markets or transactions into ‘sides’ […]

Pingback by I don’t get ‘sides’ | Rhymes With Cars & Girls




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