Tel Aviv, Jerusalem
July 5, 2017
I should say that there are many things I wish for in life. One of them is that I had the capacity for abstraction to follow the typical lecture at this remarkable seminar, which I know has done so much to shape so many careers and has meant so much to Kenneth. From discussions of gridlock in democratic countries, to issues of health insurance, to debates about how to discount the future benefits of environmental projects, to issues around derivatives markets, we see every day that albeit with long and variable lags, abstract economic theory moves the world.
I do not need to tell this group of Kenneth's genius. You've all heard the stories of him, apparently asleep, waking up to ask exactly the right question in the middle of a seminar. You've all heard the story of the group of assistant professors that were tired of him knowing everything, and, so found an obscure issue of National Geographic on the sounds that dolphins make to communicate with each other and drove the conversation to that topic, figuring this would be a topic that they knew more about than Kenneth. Kenneth proceeded to explain that National Geographic had described a superseded theory, and that the most recent work in the area explained that what the assistant professors were saying was wrong.
I witnessed one of these moments at our annual family Thanksgiving in Philadelphia. We took the kids to see Independence Hall–that's a relatively standard site when visiting the city. On the ride back, Kenneth recited the entire Declaration of Independence from memory. Later on that same trip, my wife Lisa, who's a Professor of American Poetry at Harvard, found herself in conversation with Kenneth. They were discussing Emily Dickinson, who Lisa was writing about at that stage. Kenneth asked Lisa which of the two then recent biographies of the poet she felt had captured her better and discussed at length their respective merits.
Those stories could be multiplied, but one wonders when one thinks about genius, what other human qualities go along with it? I thought my comparative advantage might be commenting on a few aspects of Kenneth's life that I think were inseparable from, but not the same as, his genius.
First, Kenneth the child: I didn't know Kenneth, obviously, as a child, but I've heard many stories from my mother and two features of those stories stand out. One, that for someone so brilliant, he was extraordinarily patient and gentle in teaching his younger siblings about anything they wanted to know. When his ten-year-old sister, four years younger than he, inquired of Kenneth, "What exactly does the phrase, 'make love' mean?," Kenneth found an appropriate and judicious answer. As I've heard it described, roughly speaking, as a child Kenneth did nothing wrong. This was good because there was the problem of how you punish a child like Kenneth. How do you punish normal children? You send them to their room. Well, there was no activity Kenneth liked better than being in his room, reading. Far, far better than trying to play baseball, or sitting outside on a hot day. What could be better than sitting in his room and reading? And he read and he read.
Second, Kenneth the teacher. Many have already referred to Kenneth as a teacher. As best I can tell, the only athletic ability at which Kenneth excelled was tossing a piece of chalk in the air and catching it. I experienced, when David and Andy were young, playing various ball games with Kenneth. I can reliably report that he was not able to catch a ball thrown from a distance of more than six feet, but with chalk he was excellent. For the right students, Kenneth was as good a teacher as there has ever been. But Kenneth had a real problem as a teacher, which is that he didn't really think like the rest of us. From his Olympian perspective, it was very difficult to understand what students did and did not understand.
A story is told—and I'm not sure it's true, but it's a good story–that in the year that I was in Kenneth's microeconomic theory graduate course, nobody was in any doubt about the profundity of what we were being exposed to, but there was some group in the class that was having substantial difficulty discerning the main points. So, a group of students very politely and humbly approached Kenneth and said, perhaps, he could work at explaining definitions and explaining terms, and just being a little more clear so people could follow the lecture. At the next lecture, very sweetly and innocently, Kenneth wrote, f(x) on the board, and he explained what f(x) means: a function. A function is something that maps one variable into another.
Now, if I had done something like that, it would have been because I was being sarcastic. If others had done that, it likely would have been because they were making a point about students needing to keep up or their frustration about students' slowness. Kenneth was utterly sincere and in good faith. From his perspective, the Slutsky equation and the meaning of a function were equally elementary concepts.
Not everything Kenneth did succeeded. There was a movement in the Harvard Economics Department in the early '70s (this is an experiment that has not been repeated as best I know in the last 45 years) to assure that faculty rather than graduate students would teach introductory economics to college freshmen. This was accomplished in two ways: one is assistant professors were required to teach introductory economics, and the other is that generous souls were prevailed on. Kenneth was a generous soul and he was prevailed on. So, for a full year Kenneth was the teaching fellow for 24 fortunate freshmen. He reported afterwards, and I fear data confirms this, that he had not been quite able to find their level, and of 24 teaching fellows that year, he had been ranked 13th. The experiment was not repeated.
Third, Kenneth's insatiable intellectual curiosity: You don't become a prodigious contributor to a discipline like Kenneth, with the kind of insights that Kenneth offered us, without a certain extraordinary intellectual intensity. I remember the fall night in 1972, after Kenneth was awarded the Nobel Prize. The other American Nobel Prize winner at that moment, Paul Samuelson, also my uncle, hosted a party for Kenneth and the Cambridge economics community. I was a sophomore economics major at MIT, so I was hardly appropriate company for such an august gathering, but I was a little unique in being related to both the host and the honoree, so I was invited and I participated as best I could in the conversation. I have only one enduring impression of that evening, which is that seven o'clock, became eight o'clock, became nine o'clock, and then approached ten o'clock. Almost everybody left, and Paul and Kenneth were discussing turnpike theorems. Kenneth was discussing aspects of the Pontryagin's maximum principle. Paul was discussing how stupid Joan Robinson was. Those of you who are old enough will really get this. And they were discussing the turnpike theorem, and the maximum principle, and the Hamiltonian and whatever. My aunt Marion, Paul's wife, went upstairs. The caterers finished cleaning and left. Selma had her very heavy winter coat and looked on impatiently. I was waiting for my ride back to Cambridge Kenneth and Paul were still discussing the theorems. Until they got it straight, that discussion was not going to end. It made an impression on me that I never forgot. There were two people in that room who wanted to discuss economics for the longest period of time, with the least regard for social exigencies. And those were the two people in that room who had won the Nobel Prize.
Fourth, Kenneth and public policy. Some of you probably don't know this, but Kenneth was proud of having been integral to the first cost benefit analysis of the US SST (Super Sonic Transit) proposal during his time on the staff of President Kennedy's Council of Economic Advisers. He had the right to be proud as his analysis was part of the reason that the United States did not join Britain and France in their costly SST error.
Kenneth followed many, many aspects of public policy, closely. The two Americans who, in my experience, were able to discuss Israel's dozen or so political parties with the most nuance were Bill Clinton and Kenneth Arrow. He would, each year at Thanksgiving, review with Eytan Sheshinski the progress of each of Israel's political parties. While it was enough for me to get a sense of how the good guys were doing, Kenneth was on top of every twist and turn.
I think there was only one moment in the 62 years of my being Kenneth's nephew, when we were seriously annoyed with each other, and I don't actually know now which of us was right. In the summer of 1996, when I was in charge of international financial policy for the Clinton Administration, Boris Yeltsin was running for reelection against Zyuganov who was the full-fledged revanchist, the "return to the old way" Communist. Privatizations had taken place and were continuing. As history has recorded, the privatizations were not entirely legitimate, to put it mildly, and had substantial elements of unjust enrichment. It bears emphasis that some of the enterprises being privatized were being stolen from their state managers, so there was a reasonable argument that at least having some owner, even an illegitimate one, would improve the way in which they were being managed. The United States government, while not supporting the details of the privatization, was working very hard to support Boris Yeltsin against the Communist, and to support the idea of economic reform in Russia.
Just before the election Kenneth signed a letter, along with a group of pre-perestroika, pre-glasnost Soviet economists condemning the economic policies of the Yeltsin administration. It got enormous play in Russia. I thought it was an irresponsible and politically naïve act to intervene in a way that would predictably favor the communist without checking with the US government. He thought that I was losing my proper focus on what the right economic policy should be, in order to serve the political objective of the government. My poor mother had to hear my view of Kenneth's actions and Kenneth's view of my views. Fortunately, there were months that passed before Thanksgiving.
Five years ago I was involved in forming a commission of various former officials and scholars on global health. Dean Jamison, who is a former student of Kenneth's, and was my collaborator in this venture, asked whether we should have Kenneth join. I said, "No, he's 89 years old. The commission's going to meet in Oslo. The commission's going to meet in Addis Ababa. Who knows where this commission is going to meet? This is surely not what he wants to be doing at this stage in life. I don't think that really makes sense." And Dean said, "Really??" I thought about it and I decided that consumer sovereignty was a good principle in which Kenneth believed, and so I worked very hard to figure out a way of asking him whether he'd be interested in doing it, that was designed to make "no" as easy an answer for him as possible. Kenneth said, "Yes, absolutely, I'd be happy to do it. And just one more thing, as I'm approaching my 90th birthday, I probably won't be able to write a section of the report myself." And I said, "That will be okay." I can report in a style that I do not think has been passed onto the next generation of academics, Kenneth joined the commission before learning that it would be possible to fly business class to its meetings. He would have been wholly prepared to fly coach, if that is something that had been requested.
Fifth, Kenneth, the person: One of the things that has never stopped impressing me about Kenneth was that while he was obviously extraordinary and he was obviously treated by people, like the people in this room and so many others, as extraordinary, he never had a sense of himself as special. I remember many, many years ago, probably 35 or 40 years ago, the American Economic Association, for some reason, had its meeting in Atlantic City. Atlantic City is about an hour, maybe an hour-and-a-quarter from Philadelphia, and after the meeting Kenneth was coming to my parents' home. There are many ways one could make the journey. Kenneth went to the Atlantic City bus terminal, got on the bus, rode the bus to Philadelphia, and wanted to be picked up at the bus terminal. My mother explained, "You know, you were given a fair amount of money, we read in the paper a few years ago, when you won the Nobel prize. There are taxis, there are limos, there are many Penn faculty who, undoubtedly, would have been delighted to give you a ride in order to spend an hour with you. Did you really need to take the bus?" He said, "Oh, really? I guess I could have done those things but I never really thought of anything else."
This was something that ran very deep. Four or five years ago, Kenneth found himself in Stanford Hospital needing surgery, and there were different surgical options. For whatever reason, the process of finding the way to the right option was not happening in an especially effective and efficient way. My mother and I said to Kenneth, "Kenneth, you know, you are not just any patient at the hospital of Stanford University. You have devoted much of your life to Stanford University and you are, perhaps, the most distinguished person associated with Stanford University. They really should take care of you and they should see you quickly, not slowly." Kenneth said, "Really? Well, what should we do?" And I said, "Well, just kind of make it clear." And it was clear that he didn't really quite know what I meant, or how to do it. I asked, "Would it be okay if I made a couple of phone calls?" And he said, "Yeah, I suppose, if you want to." The appropriate things then started to happen.
A final example of this, just slightly ethereal quality: I remember being in a conversation, with Kenneth and Selma in their kitchen in Cambridge, many years ago. We were discussing annuities. We were having a highly-animated conversation about intemporally separable utility, the nature of the bequest motive, risk aversion, adverse selection and whether purchasing annuities was optimal. A group of economic theorists like those here can more or less imagine all the propositions. Selma didn't really find the conversation very interesting, but said, "Well, wait a minute, annuities? , We're approaching retirement. Do we have our plan?" And Kenneth said, "Oh, I don't know. Whatever, it will work itself out. It will work itself out in some reasonable way."
Finally, Kenneth as an uncle and as a great uncle: If there's a lot of ruin in a nation, there's a fair amount of ignorant assertion in a family of 17, with many young persons present. I have never heard Kenneth treat a comment other than utterly seriously. If a nine year old or a twelve year old was trying to figure out whether it was true, false, or sometimes that all equilateral triangles are isosceles, he was prepared to devote himself to that question with the same thoughtful seriousness that he was prepared to devote himself to questions of mechanism design or the limits of information. If an opinion was being expressed about gambling or football betting, he was prepared to devote himself to at least the quantitative aspects of the betting, if not the content of the sport, in the same way that he would devote himself to the Savage axioms of risk and utility theory. He was there for everyone, expecting nothing in return, and, therefore, for his family, as for all of us here, he made us feel like we were smarter, more noble, and better than we actually were.
I miss him today, and the world will miss him always. Rest in peace, gentle genius.
John Maynard Keynes: John Maynard Keynes was brought up a classical liberal and a classical economist. He believed in free trade, economic progress, cultural uplift, and political reason. He then found himself working for the British Treasury during World War I, unable to stop what he thought were disastrous post-World War I political decisions. He then found himself watching as the classical economic mechanisms he had been taught to admire all fell apart.
He then picked himself up.
After World War I Keynes used what power he had to—don't laugh—try to restore civilization.
He had, all things considered, amazing success and an amazing impact.
In Skidelsky's—powerful and I believe correct--interpretation, Keynes before 1914:
believed (against much evidence, to be sure) that a new age of reason had dawned. The brutality of the closure applied in 1914 helps explain Keynes's reading of the interwar years, and the nature of his mature efforts... to restore the expectation of stability and progress in a world cut adrift from its nineteenth-century moorings... (ES, page xv)
Thus he then spent the rest of his life arguing that, if only statesmen would be farsighted and clever enough, they could put Humpty-Dumpty back together again: the world could get back to a good world of free trade, economic progress, cultural uplift, and political reason. He undertook a brave if losing struggle against the approaching Great Depression, against political insanity, and against the Nazi Party's attempted revenge for the German defeat in World War I. And when he lost in the 1920s and the 1930s he picked himself up yet again, and tried yet again in the mid-1930s and thereafter to lay the groundwork for future victories for prosperity, rationality, and technocracy.
And, in the end, he succeeded.
In this second attempt at the task of rescuing civilization he was successful: His General Theory of Employment, Interest, and Money did change the world. The book ends with a bold claim for the importance of ideas rather than interests that, in context, has to be read not as a considered judgment but as his desperate hope:
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.... But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil... (page 570).
The most extraordinary thing is that Keynes was right.
But what, exactly, did he think needed to be done? What framework of ideas did he construct in the process of trying to persuade people to do it? And how well did he do? And how did he do so well?
These notes assume that you have followed my advice for how to read Skidelsky's Keynes: A Very Short Introduction http://amzn.to/2utbWBG: Start with the first paragraph of chapter 1, then skip forward to chapter 3, and read to the end of chapter 5, and then read the eipilogue. Only after that go back: read first the Introduction, and then chapters 1 and 2, and finally chapter 6.
1st ¶: "Keynes set out to save what he called 'capitalistic individualism'...:
Chapter 3: The Monetary Reformer: Skim (and largely ignore) the sections if this chapter in which Skidelsky summarizes and analyzes Keynes's Treatise on Money: It was largely a dead end. Focus on the sections devoted to Keynes's Tract on Monetary Reform, The Economic Consequences of Mr. Churchill, and Can Lloyd George Do It?
Keynes believed that full employment and price stability were the essential keys to the creation of prosperity and the maintenance of social and international peace. The rich, under the influence of their established morality of thrift, would take the profits from the capital they owned and largely reinvest them, thus boosting productivity, and thus raising wages and creating equitable growth. The key for Keynes was therefore that the government had to manage the monetary system to avoid the extremes of both "deflation" and "inflation":
Rising prices and falling prices each have their characteristic disadvantage.... Inflation is unjust and Deflation is inexpedient. Of the two perhaps Deflation is, if we rule out exaggerated inflations such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier. But it is not necessary that we should weigh one evil against the other. It is easier to agree that both are evils to be shunned. The Individualistic Capitalism of today, precisely because it entrusts saving to the individual investor and production to the individual employer, presumes a stable measuring-rod of value, and cannot be efficient—perhaps cannot survive—without one. For these grave causes we must free ourselves from the deep distrust which exists against allowing the regulation of the standard of value to be the subject of deliberate decision...
But if full employment and price stability could not be maintained, bitter political experience taught that the result would be the very unpleasant victory of Hitler-Mussolini fascism or Lenin-Stalin communism.
But how did you avoid inflation or deflation? In the terms in which Keynes was thinking in the 1920s, you did so by having the government take steps to balance the supply and demand for money. If there was an excess demand for money, people would slow down their spending in order to build up their money balances—and the result would be closed factories, unemployed workers, and deflation. If there was an excess supply of money, people would speed up their spending in order to get rid of money they did not think the needed—and the result would be inflation and disappointed savers. Clever technocratic management of monetary policy could, Keynes thought in the 1920s, do the job of balancing the supply of and the demand for money. Skidelsky's chapter 3 follows Keynes's thought as he makes this first attempt to explain why he thought that, and thus his first attempt to build something that could be called a "macroeconomic theory".
Chapter 4: The General Theory: Chapter 4 is Skidelsky's account of how Keynes changed his mind: how he came to believe that clever technocratic management of monetary policy could not always and—perhaps—could not even usually do the job, and that other tools would be needed: "a somewhat comprehensive socialization of investment" under the auspices of the government or of incentives provided by it, was his ending point. Most of the issues we will cover in at least the business cycle portions of the course are raised here, in Skidelsky's chapter 4, in his account of Keynes's second attempt to build something that could be called a "macroeconomic theory", and his publication of that theory in his book The General Theory of Employment, Interest and Money http://amzn.to/2utumlZ.
Chapter 5: Economic Statesmanship: With the growing influence of the General Theorybefore September 1939 in promising an easy and straightforward policy path that would lead the North Atlantic out of the Great Depression, and with the outbreak of World War II in Europe in September 1939, Keynes's influence grew. He found himself applying his theory to problems of how to finance World War II (in which his theory had moderately conservative implications, in that it required less of a government takeover of the whole economy than was presumed to be needed) and how to build a strong and prosperous post-WWII economy (where his role in creating the Bretton Woods system of international macroeconomic management was a remarkable politico-economic success). He also found himself nurturing and guiding a growing group of economists who took the task of managing and damping the business cycle seriously. Unlike other schools of economics, which tended to see depressions as things like bad weather that one had to endure, Keynes and his disciples promised a much more sunny future for the economy.
Epilogue: The View from 2010: What has remained of Keynes's accomplishments? Among economists, the idea that it is the government's business to generate full employment and price stability has remained—except for diminishing factions of economists at the University of Chicago, the University of Minnesota, and the Ludwig von Mises Institute. And, among economists, the General Theory framework he proposed of focusing primarily on the components of spending and demand rather than primarily on the excess demand or supply of money has endured. In addition, we owe to Keynes:
As Skidelsky closes his book:
We do not need a new Keynes; we do need the old Keynes, suitably updated. He will not be our sole guide to the economic future, but he remains an indispensable guide.
Introduction: By now you should have read chapters 3-5 and the epilogue, and should be circling back to the introduction. Tell me what you think of the introduction: there is a lot in it, but it is, it seems to me, written more for somebody steeped in the intellectual and cultural history of Great Britain in the first half of the twentieth century than for you, or indeed for pretty much anybody likely to pick up the book in this day and age. This time through reading it, I was struck by a passage in the introduction that, I believe, summarizes Keynes's standpoint toward life and toward his mission very well:
After 1914 there was the management of the world to attend to—a world which, after 1914, seemed to be spinning into chaos. Here the problem was one of control, not liberation. Civilization, Keynes acknowledged in 1938, was a 'thin and precarious crust'. The men of power took over... Stalin... Mussolini... Hitler.... But the important point is that [Keynes] never succumbed to the politics of cultural despair. Despite everything, that Edwardian [era, 1894-1914,] cheerfulness survived. Uncertainty could be managed, not by brute force, but by the exercise of intelligence, and gradually the harmonies might be restored. This was his ultimate credo, his message, if there is one, for our time...
Chapter 1: The Life: Keynes's life was one of the most interesting lives I know of lived in the twentieth century. It is not, however, clear to me that it has all that much to do with his economics—either with the economics of John Maynard Keynes or with the doctrines of those who have claimed to follow and develop his insights and created Keynesian economics. So read this chapter for a flavor of the times in which he lived: not to get a secret key to understanding macroeconomics.
Chapter 2: Keynes's Philosophy of Practice: This chapter, also, is very interesting in its own right—the intellectual and cultural portrait of a particular kind of man, the early twentieth century British anti-democratic liberty, a man for whom the Conservative was the stupid party and Labour was the silly party. Inequality did not much bother Keynes. Disappointment did. And waste. And lost opportunities. Nevertheless, as with chapter 1, it is not clear to me that this chapter has all that much to do with his economics—either with the economics of John Maynard Keynes or with the doctrines of those who have claimed to follow and develop his insights and created Keynesian economics.
Chapter 6: Keynes's Legacy: This chapter is, I think, largely wrong. It was written in July 1905, just a few years after the Reagan-Thatcher high tide. In the United States, Ronald Reagan had been president for eight years from 1981-1989, his Republican successor George H.W. Bush for four from 1989-1993, and then Bill Clinton had become president in a confused three-candidate election. Clinton was seen as largely an accident—and it was, after all, Clinton rather than Reagan who had announced that "the age of big government is over" in his State of the Union address. In Britain, the highly conservative Margaret Thatcher had ruled from 1979-1990 and her Conservative successor John Major was still resident at 10 Downing Street. Thus Skidelsky's judgment was that Keynes and "Keynesian" policies were of little relevance:
Keynesian policies come to us today wrapped in a history of rising inflation, unsound public finance, expanding statism, collapsing corporatism, and general ungovernability, all of which have seemed inseparable from the Keynesian cure for the afflictions of industrial society. We do not want to traverse that path again...
This conclusion is very much of the particular time in which it was written. The epilogue is, I think, much more balanced.
Further Reading:
John Maynard Keynes:
Brad DeLong:
MOAR from me, if you have time:
Housekeeping:
--Is it really about spite? I dig anything that exposes the jackass. But, if it IS spite, I am sure the billionaires think its entirely justified -- "why should EYE pay for YOUR health care....blah blah"Paul Krugman: Health Care in a Time of Sabotage
http://economistsview.typepad.com/economistsview/2017/07/ paul-krugman-health-care-in-a- time-of-sabotage.html "It's basically about spite":
Health Care in a Time of Sabotage, by Paul Krugman, NY Times: Is Trumpcare finally dead? Even now, it's hard to be sure, especially given Republican moderates' long track record of caving in to extremists at crucial moments. But it does look as if the frontal assault on the Affordable Care Act has failed.And let's be clear: The reason this assault failed wasn't that Donald Trump did a poor selling job, or that Mitch McConnell mishandled the legislative strategy. Obamacare survived because it has worked — because it brought about a dramatic reduction in the number of Americans without health insurance, and voters ... don't want to lose those gains.Unfortunately, some of those gains will probably be lost all the same: The number of uninsured Americans is likely to tick up over the next few years. So it's important to say clearly, in advance, why this is about to happen. It won't be because the Affordable Care Act is failing..., when Trump threatens to "let Obamacare fail," what he's really threatening is to make it fail.On Wednesday The Times reported on three ways the Trump administration is, in effect, sabotaging the A.C.A.... First, the administration is weakening enforcement of the requirement that healthy people buy coverage. Second, it's letting states impose onerous rules like work requirements on people seeking Medicaid. Third, it has backed off on advertising and outreach designed to let people know about options for coverage. ...And there may be worse to come: Insurance companies, which are required by law to limit out-of-pocket expenses of low-income customers, are already raising premiums sharply because they're worried about a possible cutoff of the crucial federal "cost-sharing reduction" subsidies that help them meet that requirement.The truly amazing thing about these sabotage efforts is that they don't serve any obvious purpose. They won't save money — in fact, cutting off those subsidies ... would probably end up costing taxpayers more money than keeping them. They're unlikely to revive Trumpcare's political prospects.So this isn't about policy, or even politics in the normal sense. It's basically about spite: Trump and his allies may have suffered a humiliating political defeat, but at least they can make millions of other people suffer.Can anything be done to protect Americans from this temper tantrum? In some cases, I believe, state governments can insulate their citizens from malfeasance at H.H.S. But the most important thing, surely, is to place the blame where it belongs. No, Mr. Trump, Obamacare isn't failing; you are.
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"It's basically about spite":
Health Care in a Time of Sabotage, by Paul Krugman, NY Times: Is Trumpcare finally dead? Even now, it's hard to be sure, especially given Republican moderates' long track record of caving in to extremists at crucial moments. But it does look as if the frontal assault on the Affordable Care Act has failed.
And let's be clear: The reason this assault failed wasn't that Donald Trump did a poor selling job, or that Mitch McConnell mishandled the legislative strategy. Obamacare survived because it has worked — because it brought about a dramatic reduction in the number of Americans without health insurance, and voters ... don't want to lose those gains.
Unfortunately, some of those gains will probably be lost all the same: The number of uninsured Americans is likely to tick up over the next few years. So it's important to say clearly, in advance, why this is about to happen. It won't be because the Affordable Care Act is failing..., when Trump threatens to "let Obamacare fail," what he's really threatening is to make it fail.
On Wednesday The Times reported on three ways the Trump administration is, in effect, sabotaging the A.C.A.... First, the administration is weakening enforcement of the requirement that healthy people buy coverage. Second, it's letting states impose onerous rules like work requirements on people seeking Medicaid. Third, it has backed off on advertising and outreach designed to let people know about options for coverage. ...
And there may be worse to come: Insurance companies, which are required by law to limit out-of-pocket expenses of low-income customers, are already raising premiums sharply because they're worried about a possible cutoff of the crucial federal "cost-sharing reduction" subsidies that help them meet that requirement.
The truly amazing thing about these sabotage efforts is that they don't serve any obvious purpose. They won't save money — in fact, cutting off those subsidies ... would probably end up costing taxpayers more money than keeping them. They're unlikely to revive Trumpcare's political prospects.
So this isn't about policy, or even politics in the normal sense. It's basically about spite: Trump and his allies may have suffered a humiliating political defeat, but at least they can make millions of other people suffer.
Can anything be done to protect Americans from this temper tantrum? In some cases, I believe, state governments can insulate their citizens from malfeasance at H.H.S. But the most important thing, surely, is to place the blame where it belongs. No, Mr. Trump, Obamacare isn't failing; you are.
The Trump administration's Department of Labor is actively working to weaken or rescind the "fiduciary" rule (the rule that requires financial advisers to act in the best interest of their clients). The latest step in these efforts is a Request for Information that, among other things, requests comments from the public about whether the department should delay parts of the rule past their already-delayed current implementation date of January 1st, 2018.
We estimate that the delays the department has already instituted under the new administration mean that retirement savers will lose $7.6 billion over the next 30 years. Each year of further delay will cost retirement savers an additional $7.3 billion dollars over the next 30 years. Given the large, persistent losses by retirement investors that would result from a further delay, we oppose a delay of any length of the full implementation and enforcement of the rule.
The map below shows how much retirement savers would lose in each state over the next 30 years as a result of a further one-year delay. Losses from an additional delay range from $10.4 million in Wyoming to $88.2 million in Iowa to $432.4 million in Texas and $804.9 million in California.
It is worth noting that we look over a long horizon due to the fact that if there is a delay, losses to retirement investors persist and compound long after the delay ends. The Labor Department itself has noted that as a result of a delay, the losses to retirement investors would "continue to accrue until affected investors withdraw affected funds or reinvest them pursuant to new recommendations" and that losses up to that point "would not be recovered, and would continue to compound, as the accumulated losses would have reduced the asset base that is available later for reinvestment or spending."
