The Big Think

February 12, 2014

Legitimate Responses

Filed under: Politics — jasony @ 9:32 am

A law is enacted. It is done so by a slim but legal majority of the people’s representatives. This law is just as legitimate, and enacted under the same rules and considerations, as every other law of the land. You might not like it, but there it is.

You are a business owner with employees. The new law says you must do X if you have a certain number of employees. Because doing X would damage or maybe even destroy your business, you decide to avoid doing X by laying off people until you are under the threshold. (It’s obvious where I’m going here, but stay with me). Using this method to get below the threshold is totally with the law’s established legal framework. There is nothing preventing you from doing so. As economists would say, your reaction is a reasonable response to the incentives of the legal environment. The original law does not disallow your behavior–nor under most circumstances in our legal system would any law disallow your behavior. As long as you are not doing anything illegal like deciding on the basis of sex or marital status (or a few other established things), trimming employees in response to a changing business climate is one of the fundamental tools of business owners.

So far so good. The law was created and enacted with clear stipulations, voted into being by duly elected representatives, and responded to legally within established historical and legal frameworks.

Now the law is having trouble. This trouble is due, in part, by this exact response of the market to the “perverse incentives”. Don’t want to pay for X? Shrink your workforce to be below the threshold. However, the success of the law depends greatly on other businesses not following your lead and cutting employees. It depends on these businesses voluntarily keeping above the threshold, paying into the system, and helping the new law– a law that is strongly tied to a certain political philosophy– succeed. But the law is the law (as established in my first paragraph). To make matters worse, when companies lay off people (legally) to get below the threshold so that they don’t have to do X (legally), they tend to publicly express their dissatisfaction (also legally) and thus cause somewhat of a chain reaction as other companies look on and say you know, that’s not such a bad idea… Totally legal, but it makes the law, and the law’s supporters, look bad. It also puts at grave risk the ultimate success of the law, and by extension, that law’s proponents.

So now comes this:

“…officials made clear in a press briefing that firms would not be allowed to lay off workers to get into the preferred class of those businesses with 50 to 99 employees. How will the feds know what employers were thinking when hiring and firing? Simple. Firms will be required to certify to the IRS – under penalty of perjury – that [the law] was not a motivating factor in their staffing decisions. To avoid [the law’s] costs you must swear that you are not trying to avoid it. You can duck the law, but only if you promise not to say so.

Company officials will be trapped in a catch-22. They can lay off as many people as they want because of Obamacare. But because they’ll have to swear to the IRS that their decisions had nothing to do with Obamacare, they can’t speak publicly about what’s happening. What a great way to silence the people who are on the front lines of dealing with Obamacare’s horrific effects.”

Nowhere was the original law- the settled, codified, duly-voted-upon law– sent back to our representatives for reconsideration. And nowhere within that original law was the power to change the law to such an extent allowed or given to any entity. And if such a power can be read within the small print of the law, centuries of legal precedent would declare that power unenforceable and void. You can tweak “around the edges”, as they say, but the massive changes and counter responses to the legal reactions of the market that we have seen have stepped far outside of what can be considered reasonable. The courts are beginning to push back on this. If the law is not working the way it was written, the Executive branch cannot fundamentally change it without resubmitting it to Congress for a vote. In our system Congress makes the laws, the Executive enforces them.

This beautifully illustrates the problem that small government Conservatives and Libertarians have with our current system.

Related (and hilarious)

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