Another Reason I Want Obamacare To Succeed

Obamacare falling, by http://www.flickr.com/photos/charlesfettinger/

Under the Affordable Care Act, better known as Obamacare, people who lack health insurance have to sign up for insurance on health insurance exchanges, which opened up on October 1st. Unfortunately, the exchanges haven't worked so far. If you're curious about why, Sarah Kliff made a video explaining the exchanges' technical problems.

At this point it isn't clear whether Obamacare is just facing a few bumps in the road, or if it's a disaster in both politics and policy. If the latter is true, millions of people could lose their health insurance.

But I think there's a longer-term danger as well. If Obamacare is a disaster, it could discredit government in general in the eyes of Americans. And the American welfare state could use some visible successes. Many government programs are extremely popular, particularly Social Security and Medicare for the elderly, but a substantial minority of recipients don't even know that they're both government programs.

Obamacare, on the other hand, is quite conspicuously known as a government program. If the most conspicuous government program doesn't work, people will think government doesn't work. Citizens who expect less from their government don't expect high-quality government programs, and they don't demand them either, which makes government programs worse, which lowers expectations, et cetera.

And that's bad.

It's bad with regard to healthcare because managing healthcare costs, and improving outcomes, in the United States will most likely require more government involvement, not less. It's bad because government spending on redistribution, infrastructure, science, the arts and education are all important. And frankly, it's bad because a functioning government can use money much more effectively than rich people can.

Before anyone says it: Yes, Obamacare's problems could be avoided in a single-payer system. And no, that wasn't going to happen.

Links and a Nice Song for Sunday, April 14th

I'm digging this Miguel guy. Listen to this song and you'll experience what Ludacris experiences when he listens to "Fantasy". I mean his "Fantasy", but it's true of the Mariah Carey song too.

-When did the IMF become so reasonable? Seriously, if anyone knows, please send me an email.

-Felix Salmon wrote a great piece on long-term deficits in Europe and in America. If you find yourself agreeing with Wolfgang Schaüble or the Washington Post editorial board on any occasion, please re-read this.

-Joe Stiglitz is pumped about Shinzo Abe's economic reforms in Japan.

-Robert Solow  is worth listening to on banks, shadow banks, central banks, et cetera.

-Rick Perlstein provides some historical perspective on divides in the Democratic Party

-Jonathan Bernstein tries to figure out exactly what went wrong with the Republican Party

-Kenneth Roth has some ideas about how to rein in the drone program.

Take care of yourselves.

Bitcoin And The State

I lost all of my money on Bitcoin, so I hope you enjoy copyright-free images.

Bitcoin, a decentralized digital currency, has been markedly unstable lately. After it hit a high of $266 on Thursday, it dropped down to $105 the same day. As of this writing, it's still trading for $100 on the largest Bitcoin exchange. Bitcoin's evaporation has inspired a lot of schadenfreude, and its volatility over the past few days has really illustrated the technocratic advantages of central banking. These issues have been covered extensively, but I think the political issues surrounding Bitcoin are more interesting. Specifically, I'm interested in whether Bitcoin is relevant to emancipation as a political project.

Bitcoin is an alternative to the the centralized currencies that are essential to modern capitalism. And it's a criticism of capitalism that makes people enthusiastic about Bitcoin in the first place, even though it's hard to pin down exactly what that criticism is. Since almost everyone is uncomfortable with modern capitalism in one way or another, Bitcoin attracts a motley collection of fans.

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A few years ago, a friend of mine posted an article on Facebook about a hilarious Tea Party themed summer camp in Tampa Bay. Every activity at the camp sounds surreal (sitting quietly in an "austere room" represents Europe?), but one activity stood out to me.

Children will win hard, wrapped candies to use as currency for a store, symbolizing the gold standard. On the second day, the "banker" will issue paper money instead. Over time, students will realize their paper money buys less and less, while the candies retain their value.

I hope those kids enjoy their crippling deflation when they eat the candy!

Florida man holds foolish ideas about money.

Seriously though, candy isn't a bad analogy for gold, and combined with a lesson about supply and demand, that activity wouldn't be a bad way to teach kids about currency. Candy is more concrete than gold, and it doesn't have the same baggage. In the same way, gold is a great analogy for Bitcoin, and it's more straight-forward to talk about an alternative currency when our minds aren't clouded by the novelty and technical elegance of Bitcoin.

Gold plays an important part in a certain right-wing viewpoint because of what it says about capitalism, specifically, that it is prior to the state, historically and politically. As a history of money, this is pretty dubious, and as it's pretty dubious politics too—although that is a more complicated argument.¹

Of course, no one would claim that Bitcoin is historically prior to the state, but Bitcoin's decentralized, anonymous character severs the umbilical cord from the state so that the unconstrained market can function as it does naturally. I don't find this to be particularly compelling.

Do we really want to separate market exchanges from the state just because Bitcoin is a interesting new alternative? That isn't what makes a society free, and it doesn't help solve any of the problems of modern capitalism, if anything it exacerbates them.²  Bitcoin's independence from the state isn't a feature, it's a bug.

That's not to say that politics motivates everyone who is interested in Bitcoin. Some people want a simple way to make make international exchanges, and some people just want to gamble on Bitcoin's future value. There's still a problem with using Bitcoin. Namely, when you use Bitcoin, you're free-riding on the rest of society's taxation and regulation in the rest of the economy.

There is still one plausible reason to support Bitcoin: it makes it easier for people to get illegal drugs, and you might think that's essential to freedom. But there's a difference between being free to use drugs and a more generalized freedom to engage in market exchanges outside of the purview of the state.

In conclusion: capitalism isn't natural and you should use drugs. Tell your kids.

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1 I subscribe to the view that the state helps solve collective action problems. By enforcing contracts, the state makes complex systems of trade possible. If you allow state coercion for the sake of a market economy, it's irrational to forbid the state from using coercion to solve collective action problems involving involving, for instance, health insurance. This is one of the arguments in the excellent book Filthy Lucre, by Joseph Heath.

2  By "it", I mean the view that markets are a natural phenomena, in the thick sense of the word "natural". This is different from thinking that market forces are a good tool in particular circumstances. It's also different from the thinking that market forces are the correct tool for every circumstance, for that matter.