Must-Read: Paul Krugman (2015): Nobody Said That

Must-Read: Paul Krugman (2015): Nobody Said That: “Imagine yourself as a regular commentator on public affairs…

…The Obama stimulus, you declare, will cause soaring interest rates; the Fed’s bond purchases will ‘debase the dollar’ and cause high inflation; the Affordable Care Act will collapse in a vicious circle of declining enrollment and surging costs. But nothing you predicted actually comes to pass. What do you do? You might admit that you were wrong, and try to figure out why. But almost nobody does that; we live in an age of unacknowledged error. Alternatively, you might insist that sinister forces are covering up the grim reality…. Finally… you can pretend that you didn’t make the predictions you did. I see that a lot when it comes to people who issued dire warnings about interest rates and inflation….

Where I’m seeing it most, however, is on the health care front…. Go back to 2013… or early 2014…. Several months into 2014 many leading Republicans—including John Boehner, the speaker of the House—were predicting that more people would lose coverage than gain it…. Instead, the new line—exemplified by, but not unique to, a recent op-ed article by the hedge-fund manager Cliff Asness—is that there’s nothing to see here: ‘That more people would be insured was never in dispute.’ Never, I guess, except in everything ever said by anyone in a position of influence on the American right. Oh, and all the good news on costs is just a coincidence….

Refusing to accept responsibility for past errors is a serious character flaw in one’s private life. It rises to the level of real wrongdoing when policies that affect millions of lives are at stake.


Paul Krugman: Remembrance of Death Spirals Past: “Kenneth Thomas has a nice post about how those pooh-poohing the… Affordable Care Act…

…are moving the goalposts. The latest, as he points out, is this absurdity [from Cliff Asness]:

If we predict that something good will happen as a result of a new law, and that good thing happens, it doesn’t count as proof that the law was good.

But the question isn’t just whether the law is good; it is who has some credibility. So far, enrollment is growing more or less in line with the projections of supporters… [who] are looking pretty good on the prediction front…. Right-wing ‘experts’ were predicting a death spiral in which only a small number of sick people would sign up, and premiums would soar. This didn’t happen. So, of course, conservatives have ditched the people who got this so completely wrong, and started listening to those who got it right. OK, I know, sick joke.

Who is he talking about? John Cochrane, among others:

John Cochrane (December 2013): What To do When Obamacare Unravels: “The unraveling of the Affordable Care Act presents a historic opportunity for change….

…Next spring [2014] the individual mandate is likely to unravel when we see how sick the people are who signed up on exchanges, and if our government really is going to penalize voters for not buying health insurance. The employer mandate and ‘accountable care organizations’ will take their turns in the news. There will be scandals. There will be fraud. This will go on for years…

As you may have noted, there was no adverse-selection meltdown of the ObamaCare exchanges in the spring of 2014–no more than there had been an adverse-selection meltdown of the Massachusetts RomneyCare exchange when it was implemented in the second half of the 2000s.

And what has been Cochrane’s reaction to the failure of his confident prediction? The closest to an acknowledgement of error I can find is:

…Long laws and vague regulations amount to arbitrary power. The administration uses this power to buy off allies and to silence opponents. Big businesses, public-employee unions and the well-connected get subsidies and protection, in return for political support. And silence: No insurance company will speak out against ObamaCare or the Department of Health and Human Services…

Shorter John Cochrane: Never mind that all my predictions were false. ObamaCare is a disaster. And insurance companies are not happy with it–they have just been intimidated by fear that Obama will somehow come after them if they speak ou about what a disaster ObamaCare is for them.

Perhaps in a decade, there will be a column by Cochrane pretending that he always knew that on net ObamaCare was profitable for insurance companies—which would rather be in the business of making money by efficiently processing claims than by exploiting adverse selection.

Perhaps not.

March 31, 2017


Brad DeLong
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