the Unintended Consequences of Explaining the Unintended Consequences

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A consequence of the previous page – These People are Afraid of a Brain Drain?! – is, if they believe what they say, then they know this law is bad for Americans.

If abiding ObamaCare would cause high-value aides to leave, then ObamaCare must be judged as being anti-competitive. Therefore, when American business is brought into compliance, it will reduce our competiveness, causing business to do whatever it can to reduce the arbitrary costs of ObamaCare – set key employees aside and 1099 or part-time as many of the rest as they can. If you’re small enough, do what you can to stay under 50 employees. Avoid union involvement (they will bind you to the most expensive plans). One can only guess how much of a depressive this exerts on the unemployment and labor participation rates.

People who repeatedly seem mystified by the effect of regulation on employment are forgetting a fundamental relationship in business – to be hired, you must be worth more to the company than you cost. If, for example, you make $25 an hour (of which you take home ~$20), you cost your company ~$39.73 an hour, thus you must represent more than $39.73 an hour of productivity, else the company has no reason to incur the cost. Everything that increases the cost of employment depresses employment. It’s not rocket science.

Therefore, it behooves every company to minimize the costs of ObamaCare, depressing hiring, and what hiring does occur will be less favorable to the new-hire (than before ObamaCare). The 99%, in other words, are the ultimate victims of a program that says it helps them.

“But wait!” I hear you scream, “the unemployed with ObamaCare are better off than the unemployed before ObamaCare.” Well, yes, but, being unemployed, their premiums are picked up by everybody else, raising absolute governmental costs of ObamaCare, resulting in some combination of higher debt and higher taxes. This, of course, further raises the business cost of hiring, further depressing hiring, further increasing unemployment, putting more people in the subsidized pool, further raising government spending, and so on.

It’s a self-licking ice cream cone – it’s set up to solve a problem it creates.

4 thoughts on “the Unintended Consequences of Explaining the Unintended Consequences

  1. I would say that you have made some very dire predictions as to what will happen when the AHCA is finally and completely implemented. I hope they are over-reactions. Time will tell…

    If what you have predicted comes to pass then I think there will be a massive hue and cry from everyone to Repeal Obamacares. Not just from the Republican / Conservative right. And that in the end will spell victory for your side. A win-win situation I’d say.

    • These aren’t “predictions,” per se, it’s how economics works in the real world. If you aren’t worth more than you cost (and you cost more than your paycheck), you won’t be hired. It’s that simple. Anything that raises the cost of employment shrinks the pool of eligible applicants – i.e., eliminates some from consideration – increasing systemic unemployment.

      You know as well as I do that if they can just hang on until the freebees kick-in, the Liberal narcotic of handouts will increase those who favor ObamaCare whether or not it hurts the economy. They want theirs – they are now entitled. Look to southern Europe as to how well this works.

  2. Southern Europe is not a very realistic analogy to use I don’t think. Their economic distress is directly tied to the implementation of the European Union’s monolithic currency. If you want to cite countries like Greece, Italy, Spain and Portugal as examples of what happens to a country when it adopts a healthcare plan that penalizes employers by saddling them with an unrealistic costs vs returns profit ratio; then you should in all fairness look at the EU countries that are functioning successfully with the same “onorous” restrictions. Such as Germany, France, Sweden, Denmark, Norway…etc.

    The “successful” countries are that way because their governments, their companies, their unions, and their employees decided that working together to implement reforms would in the end benefit all. Just sayin’.

    • The adoption of the euro by 17 of the EU’s 27 member states didn’t cause their problems, it merely illuminated them. Their systemic problem is that they are welfare states. Of the success stories that you cite, France is in serious trouble itself; Sweden, Denmark and Norway are all closet-communities (smaller than some of our states); only Germany would be apples-to-apples, and it is faring better than rest of EU states because it is the most market-capitalist European country and its output is in demand – Germany exports the most to, and imports the least from, the rest of the EU than any other European country. The “reforms” of which you speak are designed by Germany to aid Germany’s continued economic dominance of EU policy. They’re paying the bill (for southern Europe) and will continue only if southern Europe behaves in an “acceptable” manner. Germany works because Germans work; Southern Europe doesn’t work because they’ve got more takers than makers.

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