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Dec 08

You Cannot Afford to be Stupid

dare to be stupidYou Cannot Afford to be Stupid

Mary Crawford

Many people do not care about economics. They would rather watch paint dry then a report on the state of the economy. Sure business news channels will say people need to be informed about economic issues, but is ignorance of the inner workings of the economy really such a bad thing? After all, most people are able to drive to work every day without any knowledge of how their car actually works? What difference does it make if a person does not understand how an economy operates?

For many people, ignorance is not a problem, because they can rely on experts to fix their problems. Plumbers, carpenters, and electricians allow a home owner to outsource repairs to their house, which saves time and frustration. This of course only works as long as one is able to trust their expert. Things can go horribly wrong when experts cannot be trusted. Outsourcing haircare to a bad beautician can result in humiliation and the purchasing of hats. The results can be even worse, when the situation has a broader impact.

Recently, the healthcare industry has gone through a rough patch with the Affordable Care Act. The American people were promised they could keep their doctor, their insurance rates would not increase, this huge new government program would not increase the federal debt, and if they liked their insurance plan, they could keep it. All of these promises have been broken. How could this have happened? How could the American voters been hoodwinked?

Jonathan Gruber, one of the primary writers of the Affordable Care Act, has eloquently described exactly how the Affordable Care Act was passed: “Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically, that was really, really critical to get this thing to pass.” Moving beyond the fact that Mr. Gruber is a condescending elitist ass, he does raise an interesting point: horrible economic policies are passed into law when they are not recognized as horrible policies.

People make bad decisions when they lack key information. Most people would not have dated their x-boyfriend if they knew at the beginning what a jerk he actually was. A little knowledge at the beginning of the relationship would have avoided a horrible relationship and heartache. The same thing goes for the Affordable Care Act; if people had a better understanding of economics, it never would have passed.

Mr. Gruber pointed out the Affordable Care Act “was written in a tortured way to make sure CBO (Congressional Budget Office) did not score the mandate as taxes. If CBO scored the mandate as taxes the bill dies.” Mr. Gruber understood “if you had a law which … made explicit [that] healthy people pay in and sick people get money, it would not have passed.” The only way it could be passed would be to deceive the American public by calling the tax something else and hoping no one noticed. Since not enough Americans were familiar with economics to see the bill for what it was, the bill passed.

Mr. Gruber asserts that the Affordable Care Act was enacted, because the American people are stupid; however, his claim of stupidity, like his claim of affordability for his bill, is not 100% accurate. It was not a lack of intelligence, but an absence of interest that allowed this monstrosity to become law. As a result of their apathy, Americans will now be forced to pony up more for insurance. People need to realize that there is a cost to not attending to economics. Those who do not pay attention end up paying more money.

 

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