A showdown is coming on November 30: ObamaCare’s crippled website vs. Austrian School economic theory.
President Obama’s chief technology advisor is Todd Park. He testified before Congress on Wednesday regarding www.Healthcare.gov.
Mr. Park is the man who, as chief technology advisor, failed to warn the President on the condition of the website. Mr. Park was either out of the loop or else he decided not to bring bad news to the President. When the site opened for business on October 1, the site was dead in the political water.
In private industry, he would have been fired on October 2. But he is in government. He keeps his job. He now gets to testify in Congress.
He assured the committee that the site will be operational on November 30 for most Americans.
How does he know this? He apparently knew nothing on September 30. Why does he know what is happening now?
Why will the site be operational on November 30? Because, as he said, the programming team is working around the clock. Which team is this? The A-Team. The team that was not hired to design it back in 2010. The team that supposedly knows what it is doing. The team that is expected to clean up the mess in two months — the mess that took three years and $174 million (Kathleen Sebelius), or $350 million (Washington Post, pre-Sebelius), or $630 million (initial media estimate), for the B-Team to create.
Why should Congress believe Mr. Park? Because of the labor theory of value. “The team is working very hard.”
In 1871, Austrian economist Carl Menger’s book appeared, Principles of Economics. The Mises Institute makes it available for free here. Menger took issue with the classical economists, including Karl Marx, who had argued that the value of any asset is derived from the value of the labor that was used to create it. Not so, said Menger. Economic value today derives from forecasters’ expectation of future demand by consumers.
Of course, this expectation may be wrong. Future consumers may decide not to buy the item or service. In this case, the asset’s value will be close to zero. The producer will suffer a big loss. The fact remains that the labor invested in the production of the item is a sunk cost. It’s gone forever. Its value is gone forever. Think “dry hole so far”
In short, economic value is not intrinsic and objective. It is imputed and subjective. This insight launched Austrian economics.
What would anyone the private sector pay today for www.Healthcare.gov? The tavern owner in My Fair Lady expressed it best, when asked by Eliza Doolittle’s father to extend credit to him for a drink. “Not a brass farthing.”
Mr. Park wants Congress to be satisfied with his explanation of looming success: “The team is working very hard.”
In two weeks, Congress — and everyone else — will know about the value of the site. If it fails to work, we will have one more example of the labor theory of value’s failure to explain economic cause and effect. If it fails to work, the labor of the A-Team will prove to have been worthless in creating value.
Well, not quite worthless. Mr. Park will be able to stall Congress longer by invoking the hard work of the A-Team. He will say that January 2 will be the day of deliverance. He will assure Congress that the A-Team will work on Christmas day and New Year’s day. Such dedication will deliver a valuable product.
Hard work will do the trick. It will create value.
It did not create any value from 2010 to now. But it soon will, Mr. Park assured Congress.
All those Americans who have had their health insurance policies canceled will be able to buy really good policies on November 30. Mr. Park has assured Congress of this. Trust him.
If there were a way for me to short www.healthcare.gov, delivery date November 30, I would do it. But even if the contract existed in the futures market, I don’t think anyone would go long. Not even the Federal Reserve.