Libertarianism, Neoliberalism and Medicare for All?

post by Logan Zoellner (logan-zoellner) · 2020-10-14T21:06:08.811Z · score: 5 (6 votes) · LW · GW · No comments

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I suspect there are a fair number of people on this site who self-identify as libertarian or neo-liberal.

 

This question is more for neo-liberals--those who believe "the market should do what markets are good at, governments should do what markets are bad at"-- but I would appreciate a libertarian perspective as well.

I have a basic intuition that goes like the following:

If the government is going to mandate something, it should also pay for it.

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For example, rather than mandating a minimum wage, it would be preferable if the government were to provide a minimum income--and pay for it using government funds.  This provides the benefit of guaranteeing people a certain level of income, but avoids the drawback of tying people to certain jobs and mandating that those whose skills are worth less than the minimum wage remain unemployed.

 

Applying this same logic to health care, it seems one would conclude that "Medicare for all" is superior to a Public Option or requiring that employers pay for their employees health care.

 

The intuition is this:  if the government has already identified a minimum level of health care, there is no additional benefit to privatizing the task of buying that health care.  If coverage for a certain treatment is mandatory, then it becomes an inelastic good--demand no longer depends on price--therefore the only thing that matters is negotiating power.  By negotiating "on behalf of us" the government has the most negotiating power possible and hence should be able to get the best prices.

 

This heuristic has the additional benefit of forcing the government to internalize the costs associated with its policy.  No longer can the government create unfunded mandates only to discover they have a devastating ripple effect across the rest of the economy.

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So my question is: does this heuristic seem correct?  What are some obvious drawbacks or counter-examples?  What are some unintuitive cases where this heuristic could be applied--perhaps with foreseeable good or bad results?  How would this be codified into law?

One interesting case is, how would this heuristic apply in the case of "negative mandates"?  For example "emitting carbon dioxide is forbidden" is a foreseeable government mandate, but the best policy is generally agreed to be a carbon-tax.  Perhaps this simply means that the proceeds of the carbon-tax should be refunded on a per-captia basis rather than used to fund other programs?

For the purpose of this question, assume that all government revenue comes from a VAT with a UBI prebate that is set at a level to ensure government deficits are zero "over the course of the business cycle".  Adding additional spending will require raising the VAT or lowering the prebate.  Set the prebate according to your own political preferences: 

 

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PS.  Is there a shorter word for "level which maximizes income for the poorest"?

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answer by AnthonyC · 2020-10-23T17:05:54.801Z · score: 2 (2 votes) · LW(p) · GW(p)

I'm American, and I'm answering based on my understanding of how the US government operates. I'm sure there are differences elsewhere.

I share much of your underlying intuition, and many of the types of policies you outline do in fact get proposed, regularly, by people who actually study policy, and not just from the viewpoints you highlight. 

Then we run straight into Inadequate Equilibria and what gets passed as law, if anything, looks completely different. If we're lucky, we end up with what we hope are crude kludges that nevertheless approximate good policy in practice, and leave the huge flaws for future generations with slightly fewer overwhelmingly important problems to resolve.

That said, "If the government is going to mandate something, it should also pay for it," is not something I fully agree with in all cases. 

First, sometimes a mandate is effectively a way to counteract already-existing externalities without needing constant legal battles that make it too inefficient for civil lawsuits to fix. "Clean up your own mess" is, I think, a reasonable government demand on private actors who are already (though legally) harming others. Any assistance, financial or otherwise, should be temporary, transitional, or a way to level the playing field for domestic versus foreign participants in a market.

Second, the government controls both the supply and demand for money, and without going all Modern Monetary Theory, it's still important to acknowledge that what budgeting means for a sovereign government that buys and sells and taxes in its own currency is different than what it means for anyone else. The question isn't whether the government makes private entities pay, it's which private entities do so, which for a funded mandate would be determined by tax policy in all its complexity, which makes the question mostly invisible to many onlookers.

In that sense, I'm not sure an unfunded mandate is any different than a tax increase on a specific activity with the goal of reducing or offsetting that activity. It's the opposite of a tax deduction or credit, where the government pretends it is not spending money by reducing the taxes on specific sets of individuals or business who meet certain qualifications. It just looks different to most voters and thereby alters what the leaders in power can get away with doing without losing their jobs. 

You list the minimum wage as an unfunded mandate. The implication seems to be that a UBI or targeted cash welfare payments are better policies than minimum wage, and I agree. But what about extending that logic? Aren't "taxes" in general an unfunded mandate, backed only by threat of force? Diehard libertarians are the only ones I've seen bite the bullet of opposing all taxes on that basis.

Suppose tomorrow the US government passes a law that abolishes the federal minimum wage, but imposes a tax on all businesses calculated to be exactly the difference between the wages paid to any employee making less than $7.25/hr and what their wage would be at $7.25/hr. Also, because why not, a tax equal to the value of any federal benefits its employees qualify for. Then without eliminating any federal welfare programs, you've eliminated the need for them, because it makes no difference to companies whether money they pay goes to employees or government, but the former is better for morale and retention. Technically there's no mandate, and any tax increase is completely avoidable and therefore optional. Business would see right through it of course. Voters might be fooled for a while. Also, part of the upshot is fewer opportunities for politicians to look like they're delivering something to their specific constituents, and they may get voted out of office just for changing the labels on things without changing the substance.

I've kinda lost the thread somewhere in all that, but basically: I think your intuitions are good but don't survive contact with the average level of intelligence, sanity, and knowledge in political practice.

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