The Potemkin Presidency meets a moment of sanity in The New York Times (with an observation from Hilaire Belloc and an admonition from Friedrich Hayek)
Right you are, Professor. But leaving that hypothetical to one side, everyone knows that the whole point — at least, a large part of the point — of the “public option” is to achieve public, i.e., taxpayer, financing of health care. Professor Mankiw puts it as delicately as possible:
In practice, however, if a public option is available, it will probably enjoy taxpayer subsidies. Indeed, even if the initial legislation rejected them, such subsidies would be hard to avoid in the long run. Fannie Mae and Freddie Mac, the mortgage giants created by federal law, were once private companies. Yet many investors believed — correctly, as it turned out — that the federal government would stand behind Fannie’s and Freddie’s debts, and this perception gave these companies access to cheap credit. Similarly, a public health insurance plan would enjoy the presumption of a government backstop.
Fannie Mae and Freddy Mac. Remember them? (Barney Frank, please call home.)
And if keeping costs down is the goal, how would a “public option” do that? Professor Mankiw explains: “A dominant government insurer . . . could potentially keep costs down by squeezing the suppliers of health care. This cost control works not by fostering honest competition but by thwarting it.” How do you spell “rationing”?
It has become increasingly clear that the Obama administration is a Potemkin Presidency. It has an impressive façade, propped up by some high-gloss rhetoric and a formidable public relations machine. But at bottom, President Obama and his ideological confrères are totally out of their depth.
They came to the job with an aggressive left-wing agenda that set out (as Obama put it just before the election) “to fundamentally transform the United States of America.” He was going to remake the country top-to-bottom: health care, the environment, foreign policy, immigration policy, the redistribution of wealth and evening out of income (“spreading the wealth around”).
Like so many “community organizers” before him, Obama is a friend of humanity. He wants to make the world a “better place” — better, that is, according to his lights. The problem is, he knows almost nothing about the way the world actually works. The result is that his efforts at beneficence are a series of violations — violations of the law, for example (ask the secured bondholders of Chrysler’s debt about that), as well as violations of some basic principles of a free society (the integrity of private property, for example).
It is too early to say how it all will end. Obama has cast many balls in the air. His first few months in office really have been an example of what Governor Mitch Daniels called “shock and awe statism.” We have, of course, been down this road before. And that is what makes Obama’s drama so sad. Unchecked, his initiatives will ruin America. Ruin? I mean, they will make it poorer, less free, less secure. Writing in 1943 in The Road to Serfdom, Friedrich Hayek had this to say about one of the many earlier productions of this socialist drama:
The adjustments that will be needed if we are to recover and surpass our former standards will be greater than any similar adjustments we had to make in the past; and only if every one of us is ready individually to obey the necessities of this readjustment shall we be able to get through a difficult period as free men. Let a uniform minimum be secured to everybody by all means; but let us admit at the same time that with this assurance of a basic minimum all claims for a privileged security of particular classes must lapse, . . .
It may sound noble to say, “Damn economics, let us build up a decent world” — but it is, in fact, merely irresponsible.
It may sound noble to say, “Damn economics, let us build up a decent world” — but it is, in fact, merely irresponsible. That’s only 119 characters. Can’t someone Tweet that message to the President and his enablers?