Just when you thought it couldn’t get any worse

This caught my eye:

WASHINGTON (AP) — A different health care issue has emerged for Democrats, in sync with the party’s pitch to workers and middle-class voters ahead of next year’s elections.

It’s not the uninsured, but rather the problem of high out-of-pocket costs for people already covered.

Democrats call it “underinsurance.”

In 1986 Ted Kennedy voted to cut the top income tax rate to 28%.  In 1987 the NYT advocated eliminating the minimum wage.  In the 1990s Paul Krugman spoke up for sweatshops.  By 1999 he was ridiculing the idea that Japan should rely on fiscal stimulus, when monetary stimulus was the obvious choice.  In the 1990s lots of liberals favored ideas such as a progressive consumption tax, and health savings accounts. They favored free trade agreements.  I miss the 20th century.

And now even Fox News seems to find the FairTax (a flat consumption tax that rebates the estimated tax paid by the poor, making it progressive) to be too right wing for their taste.

Eight years ago the minimum wage was $5.15/hour, and people were proposing a 40% increase to $7.25/hour.  Cynics said, “if $7.25 is such a good idea, why not $15?”  The minimum wage advocates said that this sort of reductio ad absurdum argument was ridiculous, no one is advocating $15/hour.  Until now.  So I’ll ask the obvious question—if $15/hour is such a good idea, why not make it $30?

The New York Times was right in 1987, make it zero.  And Warren Buffett is right today, raise the wages of the poor with a higher EITC (but also stop EITC fraud.)

PS.  How many times do I have to pay for college?  I had to work my way through college and grad school (although I did get some loans too).  Now I’m about to have to pay for my daughter’s college education.  And now Hillary Clinton wants to raise my taxes to pay for the college education of kids I don’t even know, who will comprise the top 50% of the richest major country in the world once they graduate.  And who will enjoy a lifestyle far ahead of mine.



39 Responses to “Just when you thought it couldn’t get any worse”

  1. Gravatar of Ray Lopez Ray Lopez
    16. August 2015 at 06:41

    Shorter Sumner: “Get off my lawn”

  2. Gravatar of benjamin cole benjamin cole
    16. August 2015 at 06:43

    I blame the Fed.

    A poorly performing economy is promoting political polarization.

    If there were chronic labor shortages in America for the next 10 years or so, I suspect support for social welfare programs would wane.

    That said, the sweetest medical program of all is the American Communist healthcare package for former federal employees: the VA.

    Free medical care provided in federal facilities staffed by federal employees.

  3. Gravatar of bill bill
    16. August 2015 at 07:19

    Here’s another complaint for the list. In the 90’s, leftish friends of mine complained about how onerous it was to require downpayments for the poor to buy houses. By 2008, loans with no downpayments were predatory lending. I guess this complaint is different because they were wrong both times, not right in the 90’s.

  4. Gravatar of Christian List Christian List
    16. August 2015 at 07:40

    Okay LA wants to raise its minimum wage from $9 an hour to $15 an hour by 2020. But at least this applies “only” at the local level. This could be good news for communities that are in competition with LA.

    There are already other plans that might be even worse. In his 2014 State of the Union address for example, Obama called on Congress to raise the national minimum wage from $7.25 to $10.10 an hour by 2016. This plan is still valid.

    Obama also signed an Executive Order to raise the minimum wage to $10.10 for all individuals working on federal service contracts.

    Australia surprises me a bit here. Its minimum wage is 11.14 in “international dollars”. That’s one of the highest minimum wages world-wide. Other rich countries like Switzerland and Sweden don’t seem to have a minimum wage at all.

    I bet there are enough people/politicians/scientists that compile lists in the sense of: “Look rich countries got very high minimum wages, poor countries got very low minimum wages, let’s double the minimum wage and we are twice as rich as before.”

  5. Gravatar of Kevin Erdmann Kevin Erdmann
    16. August 2015 at 07:53

    Bernie Sanders proudly stands against every major trade agreement of the past 30 years and wants to close the border…

  6. Gravatar of Andrew_FL Andrew_FL
    16. August 2015 at 08:03

    There Ain’t No Such Thing As Right Wing Tax

  7. Gravatar of Don Don
    16. August 2015 at 08:05

    Looking at my millennial kids, it seems like entertainment is moving to “zero” cost things. Somehow GDP and productivity need to accont for things like reading/writing fan fiction, blogging, and online game tournaments. What does income inequality mean, when there is nothing to spend money on?

  8. Gravatar of Major.Freedom Major.Freedom
    16. August 2015 at 08:27

    Don’t worry so much Sumner, you’ve already been paying for other people’s stuff through the inflation tax, which you have supported, encouraged, to the point of even attacking people who don’t support it.

    A rise in your direct taxes isn’t all that much different.

    Reap what you sew.

  9. Gravatar of TallDave TallDave
    16. August 2015 at 08:44

    So odd that education becomes an increasingly effective cartel even as information becomes ever more easily obtainable. Your tax dollars at work.

  10. Gravatar of Morgan Warstler Morgan Warstler
    16. August 2015 at 09:01


    I’ll say it again, this is why you need to trumpet loudly #Uber4Welfare

    You, Miles, and Roger all support it, put your new Math skills to work… hell, Kevin Spacey did a ad for it!


    When you pussyfoot around with EITC and say undeveloped things like wage subsidies, you don’t get to the root of “ending unemployment” you don’t finish the debate about “illegal immigration” and you LOSE the 1M+ new (mostly minority) millionaire SMB owners who’d all reliably lobby govt for tax breaks for SMB owners.

    It’s time Scott, get going.

  11. Gravatar of Morgan Warstler Morgan Warstler
    16. August 2015 at 09:11


    having been thru this with Scott, you are missing his logic on inflation.

    He basically assumes nobody can reliably outperform the market, and that inflation and interest cancel each other out. So while he waves off your concern about inflation, he does complain that capital gains should be zero, bc nobody makes real investment profits long term.

    I don’t buy it, bc I only concern myself with VC and Startup equity, but anyway, that’s why taunting him about inflation = taxes doesn’t make a dent.

  12. Gravatar of Frankly Frankly
    16. August 2015 at 09:44

    well, it’s hard to blame this change entirely on people born after 1987 …
    It would seem that a lot of this evolution of views must be due to people’s actual experience with the 1990s and 2000s. I remember the 90s very foundly, but most everyone seems to want to wax poetic about the 60s or 80s for some reason. I didn’t exist in one or have any idea what was happenin in the other, so I really can’t say why this is.
    many of these moderate policies came to pass. People don’t seem to like what happened afterward all that much.
    The coalition behind others feel apart because conservatives were too dogmatic about the absolute level of taxation and democrats who bargained in good faith with them about efficiency ended up looking foolish. But this post complaining about polarization also contains a complain (by a professor, no less) that Hillary Clinton wants to waste his money educating the next generation.
    This is the kind of inflexibility that leads to these results. You have to listen to people. It doesn’t matter that the 40-80% in this county is objectively well off. This fact makes them a more potent political force and often necessitates acceding to their demands.
    Hillary understands this and is trying to strike a bargain. The national Republican Party is still obsessed with how to get people to vote against self interest. News flash: It’s ugly, incoherent, and it involves a lot of race baiting…

  13. Gravatar of ssumner ssumner
    16. August 2015 at 10:18

    Morgan, Maybe the wage subsidies should go to (or through) small business owners, not the workers, it might reduce fraud.

    Frankly, You said:

    “But this post complaining about polarization also contains a complain (by a professor, no less) that Hillary Clinton wants to waste his money educating the next generation.”

    is it too much to ask that they pay for their own college education, given that I paid for mine? Should I also pay for their cars, so they don’t have to take out car loans?

  14. Gravatar of Luis Pedro Coelho Luis Pedro Coelho
    16. August 2015 at 10:32

    High deductible plans were one of the best idea in obamacare, but they are also the most unpopular (frankly, they make more sense coupled with a HSA, but Democrats are not a fan of those).

    My social media feeds have had a steady trickle of disappointed liberals, basically saying “I voted for Obamacare and all I got was this lousy insurance”, complaints split between high deductibles and trouble finding doctors.

  15. Gravatar of Bob Murphy Bob Murphy
    16. August 2015 at 10:46

    Scott wrote:

    “I miss the 20th century.”

    Me too. Back then, free market economists were for sound money.

    (“Oh no he didn’!”)

  16. Gravatar of ssumner ssumner
    16. August 2015 at 10:59

    Bob, I agree, especially Milton Friedman who complained money was tight in 1932, when the Fed had near zero rates and lots of QE.

    Now free market economists have abandoned their advocacy of sound money, and have become hard money nuts.

    Can you tell me what happened?

  17. Gravatar of Jon Jon
    16. August 2015 at 13:01

    Yep, I look at the more left leaning countries around the world and see more rational conversations about policy than in the US.

    I blame the end of the clinton years. The left leadership really internalize say anything.

    As an example of this: the wsj us news section on the Colorado spill that the epa created. Pure twilight zone.


    It’s mind blowing an editor signed off on publishing that…

  18. Gravatar of Lars Christensen Lars Christensen
    16. August 2015 at 13:01

    Scott, and the crazy GOP is all about closing the borders. Reagan’s Republican party is no more.

  19. Gravatar of collin collin
    16. August 2015 at 14:22

    I miss the 20th century. Get off my Lawn…

    And TPP passed Congress. And one Party is promoting a peace deal in the Middle East and in reality more voters are more for open borders than in the 20th. The phone company was a monopoly. And hell the unemployment rate for the Obama has less than the Reagan adminstration! And finally with Obama Presidency and Republican Governors, Obama will the first President that public payrolls decrease. Lord knows what detailed economic news was open to the average person.

    And I don’t like HRC college recommendations as it seems like we need to figure how to make college less expensive. More workers need an education in the global economy and I don’t like HRC solution. I don’t think there will debt crisis with student loans but it does significant hinder family formation.

  20. Gravatar of Morgan Warstler Morgan Warstler
    16. August 2015 at 14:56

    Scott, for the love of god stop talking about fraud.

    if fraud was an issue, Ebay would be a huge money laundering business. It’s not.

    Circular hiring / buying is blocked by the software.

    There’s simply no payoff to a boss (who is the ONLY guy criminally liable, a narc employee gets no punishment at all), trying to build a network of no show guys who get $240 from govt – forking part of that to you.

    you buy 10 guys at $40 a week – $400 out of pocket.

    10 guys get $280 ($240 from govt $40 from you)

    They give you back what?

    $140 a piece? ($100 + your $40) you make $1K

    They get $140.

    Machine notes you, of the 10, the guy who narcs first gets $Y prize.

    You GO TO PRISON. and can never hire from or get GI again – EVER.

    They all go work some easy job and make $280 instead of $140. All day long their mom, wife, gf, family, is yelling at them for living on $140 instead of working to get $280.

    please stop saying fraud. It’s wrong.

    Now get serious.

  21. Gravatar of Lorenzo from Oz Lorenzo from Oz
    16. August 2015 at 15:00

    Christian List: “Australia surprises me a bit here. Its minimum wage is 11.14 in “international dollars”. That’s one of the highest minimum wages world-wide. ”

    That dates back to the creation of the Wage Arbitration system in the late C19th/early C20th.

    Australia had scarce capital and labour (it imported both–still does) and plentiful land, so capital and labour forced protection on land.

    Which is straight Rogowski:

    Wage arbitration was pushed by what was the most powerful labour unions anywhere in the world at the time. It gave them guaranteed roles, monopoly coverage and a series of “victories” to provide to its members. (And a career path for retired union officials in the arbitration system.) (It did something similar for employer organisations.)

    So, history. And yes, it gave us higher unemployment — both structurally and through making us more vulnerable to economic shocks. Still does probably elevate structural unemployment, but no recession for almost 25 years does wonders for pushing down the unemployment rate over time.

    A paper on the history of the “Deakinite Settlement” (Trade Protection, Wage Arbitration, White Australia, State Paternalism, Imperial Benevolence) is here:

  22. Gravatar of Morgan Warstler Morgan Warstler
    16. August 2015 at 15:07

    Lars, I support Rick Perry, but you are wrong anyway.

    As noted, once #Uber4Welfare is in place – the illegal immigration problem is solved.

    Note kids, for years at Breitbart I tested both this plan and Manifest Destiny Mexico amongst the most hardcore.

    The PROBLEM with minor thinkers like Bryan Caplan, is that they do not understand how to use Libertarianism to appeal to the reptile brain.

    You take the most ardent of trump supporters and you say, “Mexico should be OURS! It’s a NEW FLORIDA! Let’s force them to allow our middle class to buy up all their good beaches and respect our property rights under threat of repercussions”

    And that Trump supporter will get a wild look in his eye. Psssttt… Trump supporters ALL want to be Trump.

    Another Pssst…. gird your loins kids….

    You think for a god damn second, Trump isn’t INCREDIBLY WELL VERSED in the property rights situation in Mexico????

    He never buys foreign property without first world property rights 🙂

    He licenses his name to foreign development. Read up on his Ensenada nightmare.

    Look, real Libertarians are not passive little introverts, we don’t care about DEMOCRACY in foreign lands, we care about PROPERTY RIGHTS.

    Anyway, 5-10M middle class Americans, and 500 American corporations DESERVE to go colonize Mexico with capitalism.

    Nobody will even think about manual labor coming to pluck chickens and pick cabbage.

    Think big Lars, think like a Trump.

  23. Gravatar of LK Beland LK Beland
    16. August 2015 at 18:35

    “I had to work my way through college”

    In the 1980s, tuition was roughly 25% of instructional costs at the U of Wisconsin. Who paid the other 75%?

    Nowadays, tuition is about 70% of instructional costs at U of Wisconsin.

  24. Gravatar of Anand Anand
    17. August 2015 at 03:31

    LK Beland makes a good point which I was about to make myself. Though I don’t know if his numbers are accurate.

    Here are some different numbers: http://www.leftbusinessobserver.com/College.html

    “University of Virginia, one of the so-called “Public Ivies,” got 33% of its budget from the state in 1989; that was down to 12% in 2009. Tuition accounted for 19% of revenue in 1989″”and 31% in 2009. “

  25. Gravatar of ssumner ssumner
    17. August 2015 at 04:37

    Lars, I don’t even bother to bash the GOP anymore, they are so hopeless.

    Morgan, Yes, fraud can be addressed, but it’s a problem in the current EITC.

    LK and Anand, Good point, but it doesn’t change the fact that people ought to pay for their own education. If it’s not worth it, then don’t go to college.

  26. Gravatar of Majromax Majromax
    17. August 2015 at 06:25


    > LK and Anand, Good point, but it doesn’t change the fact that people ought to pay for their own education. If it’s not worth it, then don’t go to college.

    But it does change your normative point, that you “paid for” your own university education the first time through such that new tax subsidies would be unjust.

    Besides, we can reduce this argument further: should you pay for your own high school education, or perhaps your own kindergarten? At some point, society draws the line between education as a social service and education as a private good; the “university funding/student loan” debate is where precisely that line should be drawn with respect to undergraduate university education.

    Worse yet, students are liquidity-constrained, having no significant stock of assets; individual funding must be on the back of loans. However, student loans have famous moral hazard problems, which is why the market only exists with loans nondischargeable in bankruptcy.

    This lack of a truly viable market funding mechanism has in turned spawned the present vigorous policy debate, which is exposing the multiple (and contradictory) rules of university education. This should be welcomed, not dismissed.

  27. Gravatar of Morgan Warstler Morgan Warstler
    17. August 2015 at 09:08

    Ok Scott!

    So no that I have convinced you fraud is solved with with game theory and software in #U4W….

    Let’s get on with telling everyone #U4W is better than EITC.

    You, Roger, Miles – it’ll be great.

    Note I continue to flesh it out, so that everyone understands difference between my preferred settings (Guaranteed Income / Choose Your Job) in the software (Uber for Welfare) and other’s preferred settings:


  28. Gravatar of Morgan Warstler Morgan Warstler
    17. August 2015 at 09:12


    should you pay for your own high school education, or perhaps your own kindergarten?

    In TX (and I think elsewhere) we do pay for all of those – the mortgage / rent value per sqft perfectly corresponds to quality of schooling from Pre-K on.

    We can live in a shitty part of town send our kid to private schools and it is almost always a wash in every neighborhood in Texas.

  29. Gravatar of Majromax Majromax
    17. August 2015 at 11:49

    @Morgan Warstler:

    > In TX (and I think elsewhere) we do pay for all of those – the mortgage / rent value per sqft perfectly corresponds to quality of schooling from Pre-K on.

    Not quite. Your parent pays for your early education. In fact, not doing so (by withholding a child from school and not providing an alternative) is illegal. (This also is an attempt to regulate around a principal agent problem, where parents do not directly benefit from the quality of their kids’ education.)

    However, we change the societal rules for university education, where parental support is no longer obligatory. Looked at from afar, this choice seems arbitrary.

  30. Gravatar of LK Beland LK Beland
    17. August 2015 at 12:19


    It depends if you take the whole university’s spending, or instructional costs. Instructional costs are about half of a typical big university’s total spending. Research is a big non-instructional factor; so are sports, if I understand well.

  31. Gravatar of Morgan Warstler Morgan Warstler
    17. August 2015 at 13:25


    The non-parents bear the brunt, which I call a win-win, in that I favor favoring parents.

    But yes, I was speaking of paying for my kids edu.

  32. Gravatar of ssumner ssumner
    17. August 2015 at 14:46

    Majromax, I was making both an efficiency and an equity argument.

    1. The subsidies are inefficient, as we grossly over-provide college education to many people that get almost nothing out of it.

    2. It’s inequitable, because the cohort of Americans who go to college will be richer than those who don’t. Why not stop subsidizing college and instead give $20,000 to every high school grad who doesn’t go to college?

  33. Gravatar of Christian List Christian List
    17. August 2015 at 19:56

    @Lorenzo from Oz
    Thank you for explaining!

  34. Gravatar of Benny Lava Benny Lava
    18. August 2015 at 04:52

    Scott your last two sentences are wrong.

  35. Gravatar of Floccina Floccina
    18. August 2015 at 06:28

    I wonder what do people who insist that the minimum wage does not cause unemployment believe about a 100% income above some level.

  36. Gravatar of Floccina Floccina
    18. August 2015 at 06:36

    Also if a rise in minimum wage from $72.5/hour to $10/hour causes a worker who would hold out for a better job at lower rate, to take a job at McDonald’s, bearing the ignominy of being seen asking if you would like fries with that, and he replaces one worker willing to work for $5.00/hour but getting $7.25/hour and only able to get the McDonald’s job, would that be a good thing? The net value for guy willing to work cheaper is higher.

  37. Gravatar of Benny Lava Benny Lava
    19. August 2015 at 04:00

    It is also kinda funny when a rich jerk makes the argument that poor people should be denied the opportunity to go to college because it might make them rich later. Almost as dishonest as the New York times.

  38. Gravatar of Tom Brown Tom Brown
    19. August 2015 at 21:32

    “Just when you thought it couldn’t get any worse”…. that could be the title to this piece about Iowa radio host Jan Mickelson’s call to repeal the 13th amendment and start enslaving illegals. How would that affect growth? Would that be a positive structural change? The other candidates have got to get on this if they want to out-Trump Trump (assuming Trump hasn’t already embraced it). (H/T Mike Sax)

  39. Gravatar of ssumner ssumner
    20. August 2015 at 04:17

    Benny, I also hate it when rich jerks do that.

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