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Monday, April 18, 2016

A Legacy in Three Acts

President Obama is at the point in his administration when the occupant of the White House begins to think hard about the legacy he'll leave to history. Mr. Obama may himself be indifferent to such matters, but if he does care about how historians will judge his tenure it must be giving him heartburn.

Consider just three issues into which his administration has pumped a lot of time, energy and political capital:

Health care (Obamacare) - For the third straight year insurance companies participating in the Obamacare marketplaces are finding it necessary to raise their premiums, arguing that the system is unsustainable if premiums are actually "affordable." If they can't raise premiums many of the insurers will be leaving the system. If they do raise premiums many healthy people will simply not buy insurance leaving the risk pool full of people most likely to use coverage which makes it more expensive for everyone else. In any case, Obamacare is growing increasingly unstable and will probably be greatly changed after Mr. Obama leaves office.

Mr. Obama's credibility has been seriously tarnished by this. He promised on numerous occasions that his plan would actually make insurance cheaper for families, a family of four, he insisted, would actually pay, on average, $2500 less for premiums, but the opposite has been the case. Just as bad as higher premium costs has been the rise in deductibles. Many people with insurance are not only paying more for their coverage, but their deductibles are so high the insurance they're paying for never gets used. Mr. Obama also promised that everyone would be insured under his plan, but that hasn't happened, either. Millions are uninsured and their number is actually expected to rise over coming years.

Moreover, twelve of the original 23 federally-financed Obamacare co-ops have already collapsed and eight of the 11 remaining co-ops appear likely to fail this year. All in all, Obamacare does not look like an achievement upon which historians will look upon with favor.

See the link for a more detailed synopsis of the problems the Affordable Health Care law is facing.

Education - Joy Pullman at The Federalist concludes that Common Core, despite costing the taxpayers hundreds of millions of dollars, has been an educational failure. It's a failure a lot of teachers saw coming long ago. Pullman writes that:
[T]he centerpiece of Mr. Obama's education policy, is dead. The big postmortems will roll out in a year or two, but it’s already clear this education monstrosity is eking out its last gasps.

To recap, Common Core is an organizing scheme that aims to control all of American education, from preschool through college. Its core is a set of testing and curriculum blueprints being used as a lever to get all of what kids learn in every subject and at every age into “alignment” with its centrally planned, academically low-quality, and one-size-fits-all mandates.
In fact, Pullman says, all Common Core succeeded in doing is enriching the consultants who lobbied for its implementation.
Last week the Brookings Institution issued the preliminary autopsy in its annual major report on education. It finds that American children are receiving objectively worse academic instruction because of Common Core, in two major respects: In the increase in nonfiction their teachers are assigning, and in a nationwide decline in students taking algebra in eighth grade.

Further, it finds that Common Core has done nothing to help children learn more overall, which was one of its supporters’ major claims: “there also is no evidence that CCSS has made much of a difference during a six-year period of stagnant NAEP [National Assessment of Educational Progress] scores.” NAEP is the nation’s highest-quality set of large-scale tests, used widely by researchers as benchmarks for American kids’ abilities over time. While younger students have made some small gains on NAEP since it began in 1992, high-school graduates since then have not improved one whit. Even though its supporters promised it would, Common Core isn’t helping.

Researcher Ze’ev Wurman looked at several other indicators of student achievement and found none have improved since Common Core went into effect. In fact, SAT and ACT scores are slightly down. Maybe this spring’s new, Common Core-aligned SAT will start covering for that by making the test easier (as it has every time it did a major test change).
Employment - A third unfortunate aspect of Mr. Obama's legacy is his support for raising the minimum wage. Jed Graham of Investors Business Daily gives us some empirical evidence that forcing employers to pay their employees higher wages simply results in fewer employees:
Despite a nationwide increase in low-paying retail jobs (an increase of 400,000 retail jobs since the end of 2014) three states have experienced a contraction. One, North Dakota, has suffered because low worldwide oil prices have pulled in the reins on the fracking boom there, but the other two states Massachusetts and Connecticut have lost retail jobs for a different, thoroughly predictable, reason.

It’s probably no coincidence that Connecticut and Massachusetts, the first two states to approve hikes in their statewide minimum wage to north of $10 an hour, now stand out because of retail-employment contractions.

Massachusetts has lost 2,200 retail jobs since employment in the sector peaked last July, seasonally adjusted Labor Department data show. Retail employment is down 500 from December 2014, before the first step of the state’s wage hike went into effect. In January, two of the four Sam’s Clubs slated for closure by Wal-Mart were in Massachusetts. While the company didn’t specifically blame the state’s rising minimum wage, closures of other Wal-Mart discount centers or Neighborhood Markets came in high-minimum-wage havens including Oakland, the city of Los Angeles and Los Angeles County. Meanwhile, Wal-Mart scrapped plans for two stores in D.C., where the $10.50 minimum wage will rise by $1 this July.

Massachusetts was also home to two of the 40 department stores targeted for closure by Macy’s in January after a weak holiday season.

Before Massachusetts approved an $11 wage, Connecticut held the title for the highest state wage. The state first hiked its minimum from $8.25 to $8.70 at the start of 2014, then became the first to embrace President Obama’s call for a $10.10 wage. The current minimum wage of $9.60 will hit $10.10 at the start of 2017.

Now retail employment in Connecticut is down 1,400 from a peak of 185,000 first hit in April 2014, and the state has fewer retail jobs than it did 30 months ago.
This seems to be a pattern everywhere that the minimum wage is rising. American Apparel, for example, is laying off 500 workers in California.

This is how the market works and why government interference is so often counter-productive. Government intrusion into the economy is like trying to tune the engine of a race car with a hammer. When government deprives employers of the freedom to pay their workers what the workers are worth to the employer, the employer will simply hire fewer workers. Politicians will preen themselves on having raised the minimum wage while more low-skilled job-seekers despair of finding any work at all.

Adopting policies that put people out of work is a very odd way to help the poor, and it's a terrible way to build a legacy.