Goolsbee's Daft Obamacare Apologia

I have always warned on this blog of academic economists commenting on developments in markets and business, because the results are usually pretty awful (see here, here and here).  Today is no exception as former Obama economic adviser Austan Goolsbee takes to the pages of the WSJ with a positively daft analysis of markets in the wake of John Robert's switched vote on Obamacare.  Here is Goolsbee's main point and the big laugher:

Of all the public reactions to last Thursday's surprise ruling from the Supreme Court on the Affordable Care Act, one of the most interesting came from the markets: Nothing happened.

That probably disappointed those who spent the past two years saying that the costs from increased regulation and fear of the health plan explain why U.S. companies have not hired faster and have accumulated huge amounts of cash on their balance sheets. If that were so, the court ruling should have had a big impact on expected future profits. Stocks should have tumbled.

Um, no.  This is typical of how academic economists have no clue how markets and business work.  ObamaCare was the law of the land on Wednesday June 27th and on Thursday June 28th, after Roberts announced his 4-4-1 decision, Obamacare was...the law of the land.  With no material change in the policy environment, one would expect markets to do precisely nothing. 

Goolsbee goes on with a lame attempt to say that damaging effects of Obamacare are non-existent because there is no data saying companies with more than 50 employees are doing worse than companies with less than 50 employees. Huh?  The law isn't fully implemented yet, so there is no ability to make these distinctions now.  Goolsbee's argument is a chimera.  What is real however is the numerous and constant criticism of the law and description of its chilling effects by businesses and business groups. And I (along with Nobel-prize winning economists) have laid it all out for my readers as to why the recovery is non-existent. 

I have discussed here many times how businesses are hoarding cash and shrinking rather than expanding.  I know because 1) I am not an academic economist who believes crazy sh*t that isn't remotely sensible and 2) I actually talk to business leaders all the time.  Goolsbee mentions briefly that businesses have been hoarding cash, glossing over how integral this effective boycott has been to the anemia of the recovery, and dismisses this as a factor because it's been happening for a long time.

What about the companies that have hoarded so much cash? It turns out that the hoarding began years before the Obama administration even took office. Researchers with the National Bureau of Economic Research have documented a major rise in cash holdings as a share of assets beginning in the 1990s.

Yes, cash accumulation has been going on since the 1990s, mostly because of terrible tax policy that incentivizes companies to keep cash from foreign profits parked abroad.  However the cash hoarding in the wake of ObamaCare and the many other policy depredations of the Obama administration has been pronounced and well-documented as stemming from the uncertainty at best and hostility at worst coming out of the White House.   Furthermore, much of the cash hoarding has come in the form of balance sheet shrinking that wouldn't show up in Goolsbee's cited data.  I doubt Goolsbee talks much to CEOs and businessmen and women, which is probably why he doesn't know what is actually happening on the ground. Hell, even Democrat businessmen have been decrying Obama's terrible economic policy.

The rest of the article is not worth fisking because there is nothing substantial or even sensible offered.  Goolsbee says that everybody hoards cash, George Bush was bad and something about Cass Sunstein.  That's it.  This guy is putatively a rising star in the academic economics world.  I've never understood why and this effort makes my see it even less.

The truth is had John Roberts stuck with his original, law-based, opinion and ObamaCare was struck down, the stock market would have rocketed up.  As it is, the events of June 28th have changed nothing and markets yawned because there was no reason to get excited, so they put their gaze back on Europe for a few months before they focus on the main event for the future of the US economy, the November election.