How to save the ACA

Economists -- and policy analysts of all backgrounds -- should pay more attention to video games. More specifically, we should pay more attention to the design of games with large online multi-player components. Designers of multi-player online games know more about how real-world people respond to incentives than anyone else in the world. Constructing systems of incentives and measuring exactly how players behave in response is their bread-and-butter.

Consequently, the designers of popular MMORPG World of Warcraft can show us how to save the Affordable Care Act. No, seriously.

First, let's recap the current situation. Earlier this year, Republicans failed to repeal the ACA, largely because almost everything in the ACA is extremely popular. Almost everything. There is, in fact, exactly one thing that people dislike about the ACA: the so-called "individual mandate." (Indeed, Barack Obama defeated Hillary Clinton in the 2008 Democratic primary partly by promising that his health care plan would not include an individual mandate.)

So today, Republicans in Congress have passed their "tax overhaul" bill which, in addition to adding special tax breaks for real estate investors (like Donald Trump and his family) and heirs (like Donald Trump and his family), also effectively repeals the individual mandate. (Technically, it eliminates the penalty for non-compliance.)

We should expect the GOP messaging machine to cast the bill as "tax cuts plus Obamacare repeal," thus declaring success on both 2017 legislative priorities. Yay team!

But there is an opportunity here. In 2018, Democrats (and Republicans of good will, should any turn up) have a chance to re-imagine the individual mandate in a form that will be unassailably popular. "But how can this be?" you may ask. I will explain. But first, a YouTube video. It's five minutes long. Give it a try. I'll wait. (For the truly impatient, the relevant point concerns the optics of World of Warcraft "rested experience" system, which starts at 3:15.)

The upshot is this: (1) People hate penalties. (2) People love bonuses. (3) People don't care very much where you set the baseline against which the penalty or bonus is measured. And the lesson for policy-makers is, "incentivize with bonuses, not penalties."

In immediate practical terms, this means that the Democrats should propose a refundable tax credit, in an amount similar to the old "penalty," for anyone who does obtain coverage under an ACA-qualified health insurance policy (through an employer or through a state or federal exchange). Now, since the majority of people already comply with these terms, this will entail a large-ish cost. However, the Republican tax bill has both (a) moved the goal-posts for "revenue neutrality" and (b) provided a target-rich environment of loopholes to be closed and egregious giveaways to be repealed. So the measures needed to "pay for" this tax credit could be politically popular all by themselves.

Slogan suggestions: "You've protected your family with a qualifying health insurance plan. We think you deserve a tax cut." Also: "Don't miss out on your ACA tax credit! Sign up for a qualifying health plan today!"

Also: keep an eye on these video game people...they're crafty.

The Taxonomy of Oligarchs

Rich people in America have the luxury of indulging an astonishing variety of self-destructive fantasies.  The rule of law and the power of voters to throw the rascals out when things turn really bad have, together, helped to insulate America's billionaire fantasists from consequences of their zanier notions.  Fear of the voters has kept Social Security, Medicare, and, recently, Obamacare safe from the lunatics who imagine that these socialist handouts have sapped America's moral fibre and polluted our precious bodily fluids.  The courts, and even the U.S. Department of Justice, have blocked, slowed, or limited the efforts of the White House to abuse its powers to the utmost.  And because their nuttier ideas have never been put into practice, America's oligarchic class -- if I may call it that -- can go on imagining the utopian world that might have been, if only their imprecations had been heeded, safe in the knowledge that liberals stand ready to save capitalism (again) should anything go really wrong.

Thus far, the worst "ideas" of the American oligarchic class have been blissfully free of consequences.  (More specifically, free of consequences for the oligarchs themselves, which is of course what really matters to oligarchs.)

But over the last decade or so, a new fantasy has captured the imaginations of a faction of America's oligarchic class: the notion that American oligarchs can make common cause with the oligarchs of countries like China, Saudi Arabia, and, especially, Vladimir Putin's Russia.   Like all such fever dreams, this one entails a puzzling blindness to certain obvious facts.  And like the flights of fancy preceding it, it will have catastrophic consequences for the oligarchs themselves if seriously pursued.

Once again, it will probably fall to America's liberals to save the imbecilic rich from their own idiocy and malice.  'Twas ever thus.  But for the record, it may be worthwhile to point out the fundamental category error that underlies this particular dangerously wrong idea.

The basic political idea which drives oligarchs of all stripes is that wealth and power go together, and, more importantly, that is is a desirable feature to be sought and preserved in any political system.  And in this, the oligarchs of America and the oligarchs across the sea share values and vision.  But there is a crucial difference apparently overlooked by all to many oligarchs of the American variety.  Namely, that American oligarchs are, with a few exceptions, plutocrats, while the oligarchs they admire, particularly in Putin's Russia, are kleptocrats.  This is a distinction which Americans overlook at their own great peril.

In a plutocracy, money buys power.  Often this is the power to protect one's money, and not infrequently the power to make more.  But the ultimate source of power is wealth obtained in the course of private business.  Now, this wealth may be obtained by shady means, it may involve evading regulations or simply breaking laws.  It may involve lucrative government contracts.  It may involve favorable legislation paid for with an advance of the anticipated proceeds of a desired loophole.  But, on balance, the arrow of causality runs from money to power. 

Kleptocracy is almost exactly the opposite.  Kleptocrats mingle wealth with power in much the same way as plutocrats, but the the arrow of causality is reversed:  power yields wealth.  More specifically, kleptocrats become wealthy by expropriating plutocrats.  Kleptocrats don't create or run businesses - they take yours, either metaphorically or literally at gunpoint. 

Precisely why American oligarchs, plutocrats who uniformly decry the power of government to take their stuff, should imagine that a cadre of individuals whose personal fortunes derive precisely from the power of government to do exactly that, is their natural ally is for the moment a question left open.  Perhaps the kleptocrats' open avarice strikes the plutocrat as less alien than those pesky liberals, always taxing them to give "free stuff" to the undeserving poor.  Or perhaps our plutocrats imagine that the appetites of the kleptocrats can be appeased at an acceptable cost. 

It may be vain to hope, but one can at least wish that American oligarchs would realize that the Russians are coming for their money before it is their turn to sample Russian prison life from the inside or to explore the slimming effects of a diet high in polonium. 

American liberals, for our part, can remind our own faction of the oligarchic class (for there is one) that plutocrats and kleptocrats are not friends but mortal enemies: kleptocrats are predators, and plutocrats are their natural prey,

The Job

Last week, Anthony Scaramucci told CNN that, "[t]here are people inside the administration that think it is their job to save America from this President. That is not their job." Now, I can understand why he believes this.  Since he wasn't hired during the transition, he wasn't invited to attend this:


That's C-SPAN footage of the entire White House senior staff contingent on January 22nd, swearing an oath to "support and defend the Constitution of the United States against all enemies, foreign and domestic."

So let's be clear: saving America from this President is exactly the job that Administration members signed on for.  And it is for their effectiveness in doing that job that history will -- and should -- judge them.