Something about the Supreme Court’s recent decision affirming the Affordable Care Act brings to mind Frank Capra’s movie classic,”It’s a Wonderful Life.”
For the sake of newly-arrived space aliens who may not have seen it, the movie stars Jimmy Stewart as George Bailey, whose many friends include an old buddy, Sam Wainwright. Sam is the guy who leaves small-town Bedford Falls to achieve success in the wider world, while George stays behind to run the family Savings and Loan. Things go bad for George when evil commercial banker, Mr. Potter, takes advantage of a misplaced deposit to bring ruinous charges of malfeasance against him.
In the midst of his despair George embarks on a dark fantasy in which he experiences what the world would have been like if he had never been born, which, it turns out, is not a pleasant prospect. In this alternate universe Potter rules supreme over the dark and ominous landscape of Pottersville, a place full of violence and corruption.
Meanwhile, back in reality, George’s wife, Mary (Donna Reed), manages to rally all of George’s friends, who crowd into and into the Bailey’s living room on Christmas Eve to donate wads of cash to keep George and the Savings and Loan afloat. In the end, George’s brother Harry arrives with a telegram from Sam Wainwright announcing the transfer of $8,000 (a considerable sum back in 1946) and signing off with his trademark expression “Hee Haw,” prompting even the bank examiner to tear up his summons and throw it on the pile.
So, what has any of this got to do with the high court’s ruling on ACA? –Only everything. While the movie has become a yuletide standard, its association with Christmas is incidental. The story is really all about Keynesian economics.
Let’s review. John Maynard Keynes (1883-1946) was a British economist who argued that governments should play an active role in managing modern economies, a position that challenged the laissey-faire theory of his 18th-century predecessor, Adam Smith. Under the laissey-faire model, government was cordially invited to play no part in business affairs, which tended to promote entrepreneurship of all kinds. While this was good for early-stage capitalist economies, it tended to produce behavior typical of Mr. Potter from the movie, a character who personifies the greed-is-good ruthlessness of his more modern analog, Gordon Gecko.
For Keynes, who studied economics in the age of the modern corporations, the downside of laissez-faire was not just its tendency to promote bad personal behavior; it promoted bad economics, exascerbating the boom-and-bust nature of business cycles and creating growing social inequities. Laissez-faire policies, he recognized, were especially bad at addressing economic slowdowns or recessions, during which businesses tend to respond by cutting costs and downsizing. When such remedies are applied to economies as a whole, they tend to create conditions like those we see in today’s Greece, a country currently on economic life-support.
Under the Keynesian model, instead of insisting on the austerity measures of hard-core capitalists, governments are encouraged to provide seed-money to promote economic expansion in much the same way that the Bailey Savings and Loan enabled people in the movie to buy homes and settle in Bedford Falls, thereby growing the local economy. The middle class expanded, as exemplified by the townspeople crowding into the Bailey’s living room, and they in turn helped bail out George Bailey. Everyone benefitted.
Similarly, ACA has helped middle and low income people buy health insurance, giving them a greater sense of financial security and thereby encouraging their participation in the national economy. According to all reliable inidicators, the results–in the form of lower medical costs and increased economic activity–have already outstripped expectations, producing greater revenues in the way of taxes, which in turn will allow the government to pay off the initial investment.
The only thing missing from this happy scenario is modern Republicans, or at least their candidates for president, who have all declared a Grinch-like abhorrence of ACA, which they promise to repeal in whole or in part if elected. And all because they fear the political downside associated with the success of a program they themselves insisted on calling Obamacare. Never mind that the program got its start as a Republican idea, otherwise known as Romneycare, which proved a brilliant success in Massachusetts.
At this point–with the legal basis for ACA virtually unassailable–the most viable path out of this dilemma of their own makng is for Republicans to declare victory and move on; own the succes of Romneycare and take credit for its role as the model upon which ACA was developed, a chronology everyone accepts as true. This way they can assume the role of Sam Wainwright, the successful businessman who gives back to his friend and his community and is celebrated by all. The althernative is to go down fighting to create Greater Pottersville, a morally and financially bankrupt country whose angry citizens are forever at each others throats. No one wants this. We’ve seen the movie.