Protecting the Nanny State Boss

Republicans claim that Democrats in general — and the Obama Administration in particular — believe they know what is best for people and are ready to impose it through the state just as a nanny governs foolish children.

The idea of a nanny state that Republicans attribute to President Obama is thus a threat of the loss of simple freedoms and an insult to citizens who are not, after all, children.

So it is an especially bitter irony that the new Republican agenda tries to strengthen corporate powers over the private lives of employees that are at least as oppressive as the powers of the nanny state Democrats supposedly want to impose.

Here is a way to see through the fog of warnings about a nanny state that shows that the Republican alternative is, in fact, a very strict nanny in the form of our employers.

By cutting back corporate power over people’s private lives, President Obama’s healthcare and immigration reforms put workers in a better position to stand up to their bosses. For the contemporary, post-compassion Republican, that is apparently a very bad thing.

Take healthcare first. In a sentence, the Affordable Care Act (ACA) requires and enables insurers to cover all illnesses by enabling and requiring everyone to buy insurance.

The employer-based system that ensured employee contributions to the nation’s healthcare costs broke down beyond argument in the financial collapse when companies fired unprecedented numbers of workers. The ACA at least recognizes that employers have the wrong incentives to implement health policy today.

In fact, by denying some employees all access to health insurance if they quit their jobs, the employer-based system was serving increasingly to strengthen employers’ bargaining power over their workers.

That might have made sense when workers were scarce during World War II. But it makes very little sense at a time when employers recognize no particular responsibility for keeping their workers employed.

The situation with immigration policy is strikingly similar. President Obama’s directive to stop deporting undocumented immigrants who entered the country as children creates a path to legal residency that does nothing to cut employers’ long-term labor costs.

The reason is that immigrants living permanently in the United States face the same cost of raising children and retiring as native-born U.S. citizens. So they cannot really afford to live on lower wages for long.

In contrast, work permits for temporary workers can radically cut employers’ labor costs. Temporary immigrants who return home to raise kids or at least to retire face much lower costs than native-born U.S. citizens — and that means they can accept much lower wages.

Both temporary workers and the President’s directive relieve labor shortages. But only temporary workers sustainably suppress wages.

By unhitching immigration from employers’ demand for cheap labor, the directive rebalances a policy that has become skewed toward wage suppression and battalions of temporary workers separated from their families. In other words, it recognizes employers lack the right incentives to run immigration policy.

Outsourcing social policy

These reforms effectively stop the government from outsourcing social policy to corporations. The ACA fixes an employer-based system that bribes employers (through an expensive tax deduction employers can take for their employee health-benefit contributions) to implement a disguised individual mandate in the form of employee health-insurance payroll withholding.

And by letting kids brought to the United States by their parents stay and work, President Obama’s immigration directive redresses an unbalanced system dominated by temporary workers.

This could help lift stagnant wages for the reason explained above — that it is temporary workers, and not the resident immigrants benefiting from the President’s directive, who enable employers to suppress equilibrium wages.

Outsourcing social policy to corporations makes little sense because corporations are not very good at it. Corporate efficiency depends on the simplicity of corporate objectives.

If corporations genuinely worried about maintaining a wide base of payers for the nation’s healthcare system or shaping balanced cohorts of immigrants to maximize the productivity of the next generation of Americans, then they would have a hard time focusing on developments in their own product markets.

Outsourcing social policy to corporations may nevertheless be a huge benefit to them at a time when workers are getting fed up. Controlling access to health insurance keeps many gifted employees from breaking free to develop their own, potentially competitive, product concepts.

And controlling access to the largest categories of visas ensures a steady stream of cheap labor unencumbered by the cost of raising children and retiring in the United States.

Outsourcing social policy to corporations tips the scales of the labor market strongly in favor of employers at a time when workers in some sectors are losing their last collective bargaining rights.

Today’s Republicans are against a nanny state only insofar as they lose the power to choose the nanny. They prefer the status quo, where their contributors are the nannies.

Seen as an effort to stop outsourcing social policy to corporations, the Obama Administration’s healthcare and immigration reforms start to cohere and even look muscular.

And the President’s rollback of corporate power over people’s private lives gives families more freedom, not less.