Wednesday, March 28, 2012

Behaviorial economist and tendentious arguments in support of Obamacare

In an earlier post I told the story of a company which made cookies and after awhile tested a cost reduced recipe against their current, successful cookie.  Testers couldn’t tell the difference so they switched to the cheaper formula.  A year or so later, they repeated the test with a further cost reduced version with the same result.  This went on for a number of years until sales started to decline significantly.  Struggling to find an answer they finally tested their current cookie against the original version and discovered that the original tasted much better.  The incremental changes had been too small to notice but the cumulative change was very noticeable.

Which brings be to a tweet from Obama supporter, co-author of Nudge along with Cass Sunstein, the noted behavioral economist Richard Thaler in the aftermath of yesterday’s Supreme Court hearings:
Talk of mandated broccoli and cell phones illustrates a general rule: ALL SLIPPERY SLOPE ARGUMENTS ARE STUPID. No evidence slope is positive.”
In context, one has to ask what in the wide, wide world of sports is he talking about.  Thaler is a very smart guy so he must know that the constitutional question in regard to the individual mandate is whether it extends the commerce clause in a new way, and if the mandate is accepted, is their any limiting constitutional principle that would allow the mandate to be accepted without it being extended. 
How could be extended?  The economic historian John Steele Gordon suggests one possibility:
Or how about this for a scenario. Treasury securities circulate in interstate commerce, being bought and sold by the millions every workday. So, could Congress mandate that individuals purchase treasury bonds, bills, and notes, perhaps requiring that a certain portion of 401(k)s and IRA’s be invested in treasuries? That, of course, would be tantamount to a “forced loan.”  The Romans used that technique to help finance the Punic Wars. But when King Charles I tried it early in his reign it led directly to the Petition of Right of 1628, one of the fundamental documents that make up the British Constitution and deeply influenced our own. Indeed the Third, Fifth, Sixth and Seventh Amendments of the Bill of Rights derive directly from it. The U. S. Constitution does not, however, expressly forbid forced loans.”

According to Thaler, this is stupid. 

I am of course no more a constitutional lawyer than Prof. Thaler, but it strikes me that his ruling out any speculation of where a legal decision might lead is to entirely miss how the law works.  This is the after all the Supreme Court.  Contra Thaler, to speculate on how a ruling in a particular constitutional case might be interpreted in the future strikes me as not only allowed but required.  And by making his argument in a case involving the commerce clause, is a particularly unfortunate for Mr. Thaler, as many already consider the clause to have been so brazenly extended in prior rulings as to be all but unrecognizable.

But again we are dealing with the liberal mind, and any form of reasoning which might restrict what liberals want to do is of course stupid.  Had we been talking about a free speech issue (we can’t ban porn because it will lead to great works like of literature like Lolita being banned) or the establishment clause, then I seriously doubt whether Prof. Thaler’s first thought would be that arguing by extension is stupid.

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