Saturday, February 8, 2014

Cutler and Pollack are not with the White House Economists

Both Cutler and Pollack got the wrong impression that I called them dishonest. I did not write the WSJ article and did not call them dishonest. I told the WSJ interviewer that the 2011 letter authors and signers were unaware of the disincentives in the ACA:

there was "a general lack of awareness" and economists simply didn't realize everything that government was doing to undermine incentives for work. "You have to dig into it and see it,"

Regarding the White House economists and their allies this week (neither Cutler nor Pollack are in that group. Hardly any of the letter signers are either) who now praise the market-contracting/drudgery-avoiding attributes of their policies, I said "it looks like they're trying to leverage the lack of economic education in their audience by making these sorts of points."

To be clear, Cutler and Pollack did not and are not trying to leverage the lack of economic education ... That's Furman, Krugman, etc.

5 comments:

J said...

For what it's worth I didn't get the impression Mulligan was disparaging anyone. Great article. Great work.

Patrick Sullivan said...

My guess is that the 'it's a feature, not a bug' talking point came from the very top. I mean, Obama has also proclaimed that in private business, 'profits eat up overhead', and that everyone driving a beater automobile should have collision insurance on it.

He got away with those too.

Patrick Sullivan said...

Keith Hennessey also has a good post along these lines; http://keithhennessey.com/

Regarding Extended UI, Minimum Wage increases and Obamacare;

'The costs of all three of these policies include higher structural unemployment and fewer people building additional skills to move up the income scale over time. When the U.S. economy eventually recovers fully, our unemployment rate should be in the low 5s. Because they keep layering on “protections” and “assistance,” France’s comparable rate is around 10 percent. Imagine if the U.S. steady-state unemployment rate were 10 percent. We’re not there yet, but all of President Obama’s policies push us toward a European-style model.

'I think movement in that direction is a huge mistake, but my point today is a more basic one. These trade-offs must be considered and debated openly, and the Obama Administration is doing a disservice by suggesting that no trade-offs exist, and that those who oppose these programs do so because they are mean. Extending unemployment insurance benefits, raising the minimum wage, and ObamaCare have long-term labor supply costs that must be weighed against their more immediate benefits. There is no free lunch here. Do you want a stronger ladder or a higher safety net?'

weareastrangemonkey said...

I am confused by the claim that the workers choosing not to work as a result of the ACA will be worse off.

Isn't this the same as saying that workers will be worse off if they choose not to work as the result of higher unemployment insurance?

If not why not?

weareastrangemonkey said...

Those who choose not to work are not being made worse off, they are being made better off. They would be even better off if the subsidies were not conditioned on their income level, i.e. a free of the point of service system like the NHS, but being given something that may be taken away if you make some choice is better than not being given that thing at all. The budget constraint of these people has been relaxed by the ACA.

What model can you have in mind that makes these people worse off? Its certainly not any standard economic model.