Author Archives: Neil Browning

The Intrinsic Durability of Obamacare

Source: Quora

Despite having control of the Senate, House, and Presidency, Republicans have been repeatedly unsuccessful in their attempts at repealing the Affordable Care Act and replacing it with an alternative. The fight drags on; on Tuesday, the Senate narrowly voted to advance to floor debate, and needed Vice President Mike Pence to cast a tie-breaking vote. An economic concept called loss aversion provides some insight into the uphill battle Republicans are facing with a healthcare replacement. It also indicates that voters are even less likely to support a “repeal-now, replace-later” plan.

Introduced by behavioral economists Daniel Kahneman and Amos Tversky, loss aversion refers to the idea that people feel more pain when they lose something than pleasure when they gain something.

Kahneman explains the phenomenon in this way: Let’s say I told you that I was going to toss a coin; If it lands tails, you pay $10. How much money would you need to gain if you won, before you took the bet? “People want more than $20 before it is acceptable,” says Kahneman, “And now I’ve been doing the same thing with executives or very rich people, asking about tossing a coin and losing $10,000 if it’s tails. And they want $20,000 before they’ll take the gamble.”

Companies use this glitch to influence our behavior, too. Would you pursue a $10 rebate as doggedly as you would avoid a $10 surcharge? Gaining something is only about half as enjoyable as losing something is painful, according to empirical studies. So in the world of politics the threat of losing something, be it a part of your income or a service you’ve become accustomed to, can have a heavy impact.

This became the case with the Affordable Care Act. Initially, and for many years, the ACA was opposed by the majority of Americans. It was not until serious discussion of losing the act became part of the public discourse that the ACA gained majority approval in Gallup polls.

While it is the Republican Party’s general consensus that Obamacare should be repealed, the Congressional Budget Office’s well-publicized projections of coverage loss, Medicare loss, and insurance regulation loss have made their proposals deeply unpopular to the public. In June, the CBO forecasted that the Senate’s plan would leave 22 million more people uninsured. The gains that they tried to sell, like decreasing taxes and lowering the deficit, have not been very effective. In an unexpected move last Tuesday, Republican Senators Mike Lee and Jerry Moran joined Senators Susan Collins and Rand Paul in announcing they would vote against the Senate’s latest bill. Because Republicans have only 52 seats in the Senate, losing any more than two votes is fatal. These defections sank the bill, which was only narrowly supported.

Finding consensus between the moderate and hard-right wings of the party has proven to be extremely difficult. “This has been a very, very challenging experience for all of us,” McConnell told reporters following the bill’s collapse. “It’s pretty obvious that we don’t have 50 members who can agree on a replacement.”

Once something becomes the status quo, it becomes more difficult to do away with because of loss aversion. It is this phenomenon that makes it difficult to alter welfare and service programs once they have been put in place, and it is one reason why Social Security is a third rail in Washington.

Politically, Obamacare is inherently difficult to repeal. Obamacare sought and succeeded at creating a rapid expansion of coverage over the course of President Obama’s tenure. An expansion in the economy that, once in place, created a new status quo; not only for individuals, but for health-related businesses. Interestingly, many at the far right of the Republican party came to power during the Tea Party movement. It was a movement that began in response to the threat of a different loss from the status quo; the increase in taxes that came with Obamacare.

The Senate’s latest proposal, to repeal parts of the Affordable Care Act with no required replacement until two years down the line, would increase the number of uninsured by 17 million next year and 32 million by the end of a decade. Immediately after its introduction, this idea was opposed by three Republican Senators, Shelley Capito of West Virginia, Lisa Murkowski of Alaska, and Susan Collins of Maine, who announced they would vote against it.

This plan is likely to generate and even stronger sense of loss aversion. Supporting Senator McConnell’s plan to repeal now is essentially a choice between keeping the status quo, and rolling the dice with the hopes of getting a better outcome in the future. This will be an even harder sell than the one from last week.

Political rhetoric about loss is common and effective. “Loss” was something that President Trump used to great effect in the election, by saying that people will lose their guns, lose their money (through higher taxation), or lose their job to globalization. Rhetoric is not reality however. Should Congress pass a bill that takes away people’s healthcare, voters will feel the losses directly. Despite Tuesday’s vote, repealing Obamacare is still a long shot.

Neil Browning is a 2017 Master of Public Policy graduate interested in public health, development, and international affairs. He was the editor-in-chief of the Sanford Journal from 2016-17.

The Other Election: Choosing Earth’s Governor

Source: United Nations

All five permanent members of the UN Security Council (China, France, Russia, United Kingdom, and the United States) skipped the first World Humanitarian Summit in May. The summit produced groundbreaking agreements on a range of humanitarian issues. However, expert opinions are mixed on how effective these changes will be, due to the absence of the permanent five (P5.)

UN Secretary-General Ban Ki-Moon was resolute. “The absence of these leaders from this meeting does not provide an excuse for inaction,” he said. “They have a unique responsibility to pursue peace and stability, and to support the most vulnerable.” However, UN Secretary-General Ban Ki-Moon’s last day in office is December 31, and his tenure is almost over; the election for his successor is already underway.

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A Rising Power in Decline?

On October 19th, China announced its weakest quarterly growth rate since the financial crisis: 6.9%. For the past few years, China’s economic slowdown has been making headlines and raising questions about what role China will play in the global economy when it shifts away from being an export economy. Will China still become the new “economic superpower?” If so, what does that even mean?

China’s “slowdown” is relative, and its growth rate is still consistently two to three times that of the United States. According to a Pew Research Center survey, most people worldwide believe that China either will replace or has already replaced the United States as the world’s economic superpower. Indeed, America and China are already roughly tied in terms of their shares of world GDP, the US is at 16.14% while China is at 16.32%. Estimates as to when China may surpass the US in terms of GDP vary and are frequently revised, but one need not look into the future to find examples of how China conducts itself like a superpower.

China’s steadily decreasing domestic demand for commodities has led to a global drop in commodity prices. Negative effects of this are exacerbated in regions like South America and Africa, where China has invested heavily for the opportunity to access cheap minerals and agricultural products. Critics say that Chinese investment has incentivized many developing nations to specialize in commodities so they can meet China’s demand, and some developing countries have done this at the expense of diversifying their economies to protect themselves from commodity price drops like this one.

China bankrolls massive infrastructure projects worldwide to enable it to cheaply transport commodities across continents, further influencing how developing economies are structured. Its downturn has not stopped this. This year, for example, construction began in South America on a transcontinental rail line across the Amazon and, as recently as October 16, production started on an $11B port in Tanzania that some expect will be East Africa’s largest. China’s push to generate support for its Asian Infrastructure Investment Bank has also not lost momentum as it builds ties abroad.

However, this summer’s flailing stock market and the Chinese government’s ham-handed interventions to try and control that market provide us with an example of how China may fall short as a traditional economic superpower. China’s reactions to fluctuations in the stock market ranged from banning selling, requiring buying, and devaluing the yuan to its lowest rate in years. Such economic tinkering is characteristic of the Chinese government, and does not amuse investors. For this reason, it is unlikely that the yuan will soon be as trustworthy a reserve currency as the dollar, regardless of the size of either economy.

One thing is clear; if (when) China’s economy outstrips the United States’, it will be a very different sort of economic superpower. If past behavior is any indication, it is likely that China will focus its diplomatic influence on trade advantage, and that it will micromanage its currency in a way that diminishes demand for it and empowers other currencies. Whether it will be able to achieve its goal of building a global import network as its growth declines will depend on how great this slowdown proves to be.