Four theories to explain Hillary's stunner.

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Jan. 9 2008 5:04 AM

Hillary Stuns--Four Theories

Bonus 5th Theory just added!

(Continued from Page 10)

** Obama's closing argument is more audacious than it seems; it's an end-run around the established interests of the Democratic Party. He is angering -- often deliberately -- some of the party's core constituencies; Markos "Daily Kos" Moulitsas and my Atlantic colleague, Matt Yglesias, have both (sort of) withdrawn their endorsements of Obama because of his penchant for allegedly using right-wing talking points to smear his Democratic rivals.

Oh no. He might lose Yglesias! ...

P.S.:  There he goes echoing Republican talking points again --To his credit, Yglesias argues, contra Krugman:

I don't see any need for liberal pundits to get in the business of denying that labor unions are, in fact, "special interests." Indeed, it's impossible to understand the dynamics of American politics without acknowledging them to be special interests. They're special interests who sometimes take the "wrong" side of policy debates when what's "right" for the country is "wrong" for the sector in which they work.

I think the problem with unions--or, more precisely, with legalistic, work-rule-generating Wagner Act unions--is rather more general than this. But even Yglesias' concession is enough to condemn, say, the sacred cow Davis-Bacon Act, which effectively requires union wages for government construction projects.  (What's "right" for the country is that it be as inexpensive for the government to build something as it is for private industry. That's "wrong" for construction unions, who want the law to artificially boost wages in the government-construction sector above what the private market pays. Who should win?) Not to mention the teachers' unions. (What's "right" for the country is that mediocre teachers can be fired as easily as you'd cut a mediocre tight end from a football squad. What's right for the NEA is ...) ...  4:23 P.M. link

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I'm reluctant to write skeptically about the NYT's David Leonhardt--I owe him one, having failed to answer his reasonable response to a criticism of several years ago. (All in good time!) His contrast between Hillary Clinton's domestic policy approach ("narrowly tailored government policies, like focused tax cuts," relying on rational economic incentives) and Obama's (broader, "simpler" programs that acknowledge people don't act rationally) seems highly useful.

But I don't see how the great health care "mandates" debate fits this typology very well Isn't it Hillary who is proposing the broad, simple program: 'Everybody has to buy insurance!' And isn't this mandate at least somewhat similar to Obama's semi-mandatory ("opt out") employer-deduction savings plan in that it acknowledges people, if left to their own devices, won't do something that might in fact be good for them or at least for society,** even if given a seemingly sufficient incentive? Won't Obama need lots of little complex subsidies to enable people to afford the insurance he won't require them to buy? And if  he actually adds a penalty for those who buy insurance later, when they get sick, isn't he relying on the "idea that people respond rationally to financial incentives"?

That said, Leonhardt does make Hillary's vision seem dreary ("She has proposed new tax credits for savings, tuition, health care, elder care and renewable energy use. ...") Her husband's best moments as president weren't his little targeted tax breaks but his big, simple notions: "Make Work Pay," "End Welfare As We Know It," "Save Social Security First." ...

Update: Yglesias makes a similar point. ...

**--You could argue that mandating health insurance is designed to get young, healthy people to do something that might not really be in their rational economic self-interest, namely pay for health insurance they probably won't need. But you could also argue that the social interest in having a decent rate of savings is greater than the interest in any poor individual in putting aside money he or she could really use now. My college professor, Stephen Marglin, speculated that individuals would never voluntarily save enough to meet a society's investment needs. If I remember right either the savings had to be extracted artificially (e.g. involuntarily) or else the economic growth had to be so rapid that individuals saved simply because it took them a while to learn how to spend all their money. ... 1:02 A.M.

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