Understanding The Mysteries Of "Affordable Housing"

Our incoming mayor thinks that New York City has a "crisis" of not enough "affordable housing."   And certainly if you try to rent or buy an apartment in the private market, you will find that in Manhattan and the trendy areas of Brooklyn there is no such thing as a place you can afford with a middle class income.  Should the government try to fix this problem?  Any such effort is doomed to be a very expensive failure.

The old real estate cliche is that there are three important things:  location, location, and location.  It's an exaggeration, but contains a huge element of truth.  In housing, the bricks and mortar are generic, and the thing above all others that makes a home special (or not) is the location.  A place in bad condition but a good location can be fixed up; a place in a bad location is always going to remain in the same location.  For better or worse, in Manhattan you could have the smallest, most broken down one-room studio apartment and it would still be worth around $500,000.  Two bedroom apartments start at close to $1 million.  Meanwhile, in Detroit you can buy mansions for about $10,000 -- and if you have one of those to sell, you may not even get the $10,000.

And it's not just Detroit.  Many cities in the U.S. are losing population, and in those cities the price of housing falls way below the cost of new construction.  A good way to look at it is that if new construction is allowed and essentially unlimited, then the cost of new construction puts a cap on the price of housing  -- if you don't want to pay what someone is asking for an existing home, you can just build a new one.  But if a city is shrinking, then there is no reason to build new houses, and the price of existing ones can just keep falling.  Detroit is one example, but there are many others,  In upstate New York, cities like Utica, Syracuse and Buffalo have long had declining populations and extremely inexpensive housing.  In Buffalo there are hundreds of houses for sale for under $100,000.  Syracuse and Utica are smaller cities, but the situation is comparable.

Closer to home, we have Philadelphia.  Take Amtrak through there and you will see vast tracts of abandoned houses that could be bought up for a song.  But nobody wants them.  And still closer, we have New Haven, Bridgeport and Norwalk, Connecticut.  Bridgeport is the sorriest of that sorry group, although not so down and out as Buffalo.  Lots of houses in Bridgeport are available for under $100,000.  They also have excellent train service into New York.  You could buy a family a house in Bridgeport for approximately the one-year cost of subsidizing them to live in Manhattan.  Does the breadwinner need to get into the City to work?  The annual cost of an unlimited Metro-North ticket from Bridgeport to Grand Central is about $4500 -- a small fraction (about 5%) of the cost of subsidizing this family to live in Manhattan for that year.

But can the price of housing rise way up above the cost of new construction?  Easy -- just restrict how much can be built in a high demand area.  Here in New York, we have endless ways of doing that, from rent regulation (making it extremely difficult to remove existing tenants) to landmarking to zoning to Community Board approval for any significant change to anything.  And then, of course, there's the reservation of a substantial portion of the very limited land for affordable and low income housing.  I'm not saying I'm necessarily against all of that (just most of it), but at least we should be honest with ourselves and admit that the "crisis" of affordable housing is largely artificially created, an unintended consequence of pursuing other seemingly desirable goals. 

When the demand for housing is so strong that it drives the price well above the cost of new construction, then the price of the land will rise to make up the difference.  So existing landowners are huge beneficiaries of Manhattan's restrictive development policies.   That would be some small fraction of the hated top 1%.  I wonder if de Blasio realizes the extent to which policies he favors benefit this group?  Very unlikely.

In the very restricted private development market in Manhattan, we now have super-expensive projects setting price records and competing on the basis of luxury amenities and special finishes.  But how's it going in the government-controlled subsidized sector?  Not so good.  It seems that, despite many good locations that would be highly valuable in today's marketplace, the New York City Housing Authority is running out of money and the buildings are falling apart.  From Nicole Gelinas in the New York Post on October 21:

Gotham’s public housing, more than half a century old, is crumbling.  Fred Harris, real-estate chief at the New York City Housing Authority, told the Municipal Art Society last week it would cost NYCHA $17 billion to get its 2,596 buildings into a “state of good repair.”

With about 170,000 apartments in its buildings, that $17 billion repair bill would be $100,000 per family -- enough to buy every one of them a house in Bridgeport.  (OK, there aren't enough houses in Bridgeport to take them all.  But if you're willing to consider places like Philadelphia, Baltimore, Buffalo and Detroit, there are plenty.)

And the $17 billion is going to come from where exactly?  Many NYCHA projects have substantial amounts of unused land -- they are of the "towers in the park" architecture style that became trendy back in the 50s.  NYCHA came up with a proposal to generate some real money by selling or leasing some of that land to private developers to build market-rate buildings.  Of course the public housing tenants protested -- it would block their views!  Their champion was of course de Blasio.  For now, it looks like that proposal is dead.  However, it's unlikely that the Feds are going to be coming up with the repair money, so good question, what is de Blasio's next move.  

We have in plain view all over the city the results of failed socialist housing theories, and we have just voted to double down on more of same.   It's just one of the mysteries of "affordable housing."

Obamacare And The Third World Mindset

Do you ever wonder why rich countries get rich, and at least sometimes continue getting richer, while poor countries seem to remain mired in poverty?  Actually it's not all that complicated.  Essentially all wealth and economic betterment comes about by the exchange of privately-owned property via markets.  Think about how to make any life-enhancing product and you quickly realize that no one is smart enough to come up with this thing on his own within the short span of a human lifetime.  Even Apple contributes relatively little to the smartphone -- it buys from others everything from the chips to much of the programming to the metal case to the special glass to the apps.  Starting from scratch, you couldn't make something as simple as a pencil, and neither could a pencil manufacturer.  The generation of wealth is completely dependent on the ability to buy lots of things from others, and on the freedom of individuals to seek to act in their own economic self-interest by buying and selling things in markets.

Since markets tend to arise spontaneously in human affairs, it actually takes some work to maintain your status as an impoverished third world country.  But, to take just one example, Venezuela literally every day teaches new lessons on how a country can impoverish its people by making freedom of market exchange illegal.  Today's Wall Street Journal has a roundup of the latest actions of new strongman Nicolas Maduro.  Maduro has just been granted by his legislature the right to rule by decree for 12 months.  Maduro has said that he needs these new powers to counter what he calls an "economic war" against Venezuela.  The so-called "economic war" consists of people seeking to enhance their well-being by buying and selling things in markets.  Maduro is completely oblivious to the fact that this is where all wealth comes from.

Thus at the top of Maduro's list is the plan to go after everyone who publishes the black market price of the tightly-controlled Venezuelan currency:

Venezuela's telecommunications regulatory agency, Conatel, said on Tuesday that it sent a letter to the San Francisco headquarters of Twitter,  requesting that the social-media company take down accounts that publish the currency's black-market rate. Twitter didn't respond to a request to comment.  On orders from the president, Conatel previously blocked some 50 websites that distribute the underground exchange rate and opened administrative proceeding against several Internet service providers.

Then there are the periodic army-enforced orders that stores must cut prices by half:

This month, Mr. Maduro ordered home appliance stores to slash prices by half and sent soldiers to take over the operations of one retailer. He has vowed to next tackle businesses that sell textiles, toys, shoes, cars, food and hardware stores. Crowds of bargain hunters and long lines of shoppers formed last week in anticipation of further government-imposed discounts.

Multiple other examples are discussed in the article.  These measures are supposedly designed to address the "shortages of basic goods" that have been appearing throughout the Venezuelan economy.  Well, the betting here is that the shortages are about to get a lot worse.  In the process, I'm also betting that the Venezuelan people will become much poorer, while Maduro will become extremely wealthy.  Probably, he will become the richest man in Venezuela.

The United States, of course, would never be so stupid as to try to undo basic human behavior, restrict the free buying and selling of stuff and make it illegal for people to behave in their own economic self-interest and for companies to sell them what they want to buy.  Well, actually that is the very essence of Obamacare.  Left to their own devices, people act in their own economic self-interest by buying the cheapest health insurance that can meet their expected needs, or, in some cases, no medical insurance.  Those beyond child-bearing age skip maternity coverage; men skip birth-control coverage; teetotalers skip substance-abuse coverage; the childless skip pediatric dental coverage; almost everybody skips "preventive and wellness" coverage.  And insurance companies know that they must price policies for healthy young people cheaply or otherwise they won't sell any policies.

The architects of Obamacare can't see it in themselves, but they have exactly the third world mindset.  Don't let people behave in their own economic self-interest by buying and selling freely, but instead order them to behave in a way to achieve a result that the masters deem "fair"!  This of course has never worked and won't work, but it did take the Soviet Union 70 years to fall apart.

Looking for someone who articulates the third world mindset without realizing it, I find today in the Washington Post PostPartisan feature an article by Jonathan Capehart titled "The GOP is out to destroy the country."  Turns out that by "destroying the country" Capehart means any and all opposition to massive government programs that restrict economic freedom.   Among the issues facing the country that Capehart lists as needing prompt solution are (of course) healthcare, as well as climate change, income inequality, and "stimulating job growth."  And where are those evil Republicans on these issues?

[T]he GOP is grinding just about every sector of the federal government to a halt. And it is doing it through a cynical combination of obstruction, saying no and failing to have viable alternative proposals worthy of national debate.

In other words, in Capehart world the only acceptable "solution" to any of the above problems, or others, must come via a big program from the federal government.  How about as a solution to all the so-called problems: get the government out of it and let the people improve their economic positions by market exchange?  According to Capehart, that's not "worthy of national debate."  He has no idea that enabling market exchange is what creates wealth, or that cutting off market exchange prevents further wealth creation and puts the economy (or here, its healthcare sector) into stasis.

As particularly relevant to Obamacare, the good news is that the scheme's own self-destruction may be teaching people a lesson that could never have been learned in any amount of classroom time: that ordering people to behave against their own economic self-interest will not work.  That means that there are limits to what the government can or should do.  If there is any subject "worthy of national debate" in my view, that's the big one. 

The Looking Glass World Of The U.N. Climate Bureaucracy

When you saw the headline at the top right on the front page of yesterday's Sunday New York Times -- "Growing Clamor About Inequities of Climate Crisis" -- I know what you were thinking.  You thought, "Finally they are waking up to the fact that the consequence of the climate campaign for carbon emission reductions is to condemn a couple of billion people in poor countries to continued life without electricity and other energy."  You thought, "The forces of the Left that profess such concern and empathy for the poor must at last be coming to the realization that their carbon reduction program brings about no measurable environmental benefits while condemning the hundreds of millions of the poor to continuing to live without automobiles, internet access, air conditioning, electric light, refrigeration, and the many other benefits of modern life with access to energy."

Well, you sure got that one wrong.  This article is a report from the U.N.'s latest Conference of Parties under its Framework Convention on Climate Change, currently taking place in Warsaw, Poland.  The "climate inequities" and "climate injustice" that they are talking about have nothing to do with condemning the poor to lives of poverty, and everything to do with efforts to con rich countries into giving massive transfer handouts to corrupt third world governments to maintain their power and suppress the hopes of their people.  Hey, this is the U.N.!

At a U.N. climate conference, it is a given that bad weather in poor countries is caused by the sin of people in rich countries driving their cars and lighting their homes.  In U.N. parlance, this is referred to as "climate injustice."

 [The "climate injustice" issue] assumes the culpability of the world’s most developed nations, including the United States and those in Europe, and implies a moral responsibility to bear the costs. . . .

And thus we see the representatives of one corrupt third-world country after another blaming their woes on "climate change" and seeking handouts from the rich countries.  For example, here is John Kioli of Kenya:

John Kioli, the chairman of the Kenya Climate Change Working Group, a consortium of nongovernmental organizations, called climate change his country’s “biggest enemy.” Kenya, which straddles the Equator, faces some of the biggest challenges from rising temperatures. Arable land is disappearing and diseases like malaria are appearing in highland areas where they had never been seen before.

Developed countries, Mr. Kioli said, have a moral obligation to shoulder the cost, considering the amount of pollution they have emitted since the Industrial Revolution. “If developed countries are reasonable enough, they are able to understand that they have some responsibility,” he said.

Or how about this from Ronald Jumeau of the Seychelles:

“We’ve reached a stage where we cannot adapt anymore,” said Ronald Jumeau, the United Nations representative for the Seychelles, who is his country’s chief negotiator here. . . . .  Mr. Jumeau noted that Congress allocated $60 billion just to rebuild from one storm, Hurricane Sandy, compared with the $100 billion a year that advocates hope to see pledged to a Green Climate Fund by all nations.

And needless to say, the representative of the Philippines, site of the recent big typhoon strike, gave an emotional speech and vowed to fast for the duration of the conference.

Dare anyone mention to these people that world temperatures have not increased for some 15 years?  And while we can all be sympathetic to the people of the Philippines for their recent suffering after the big typhoon, the fact remains that worldwide hurricane activity is at a record low level.  Here is an October 6 report from Accuweather on the remarkably quiet Atlantic hurricane season this year.  There is no reason whatsoever to believe that global warming (should it occur) would be associated with more rather than fewer hurricanes.

And even if you accept that every hurricane is the direct result of rich, sinful people driving their SUVs, how exactly is that ameliorated by a massive wealth transfer from taxpayers in rich countries to governments in poor countries?  Only in the U.N. looking glass world, where wealth comes from the tooth fairy and the benevolent bureaucracy exists to take that wealth from the exploiters and redistribute it to their own friends and cronies.

Fortunately this exercise does not seem to be getting too far.  Among other big problems, inconvenient facts keep getting in the way.  No, I'm not talking about temperatures not going up -- they are oblivious to that one.  I'm mainly talking about China taking over the number one spot as the world's biggest emitter.  No way can the Chinese be guilt-tripped into paying.

People Who Have No Idea What They're Doing Ban Trans Fats

I don't know when the government first started promoting margarine as healthier than butter. But I do remember that growing up in the 50s my mom had the idea that margarine was healthier, and that's what she bought for the family.  I thought the stuff tasted nasty, particularly  by comparison with butter, which I would get from time to time when we ate at the homes of friends or relatives.  I flatly refused to eat margarine as a kid, and I would eat bread and sandwiches dry.

Whether the government was actually promoting margarine over butter as early as the 1950s, it clearly had taken that path by the 1970s.  This article by Steve Malanga in the City Journal in 2011 recounts some history of government dietary guidelines, and traces government recommendations to replace saturated with unsaturated fat in the diet as least as far back as a Senate Committee chaired by George McGovern in the mid-70s. 

Of course, barely anyone had even heard of "trans fats" back then.  And nobody mentioned that you make margarine have the desirable consistency of butter by bubbling some hydrogen gas through the liquid vegetable oil, during which process hydrogen atoms attach to both sides of the carbon chain in the fat molecule (i.e., trans fats) rather than almost all on the same side as occurs in natural oils (cis fats).  After all, how could that possibly make any difference?  

As recently as the 2000 version of the government's dietary guidelines, they were still recommending substituting unsaturated for saturated fats, with only a passing reference to the concept of trans fats, and even then no clues on how to know what foods had trans fats in them or how to avoid them.

Of course they had no idea what they were doing and their advice was likely at least somewhat dangerous.  Now this past week the FDA has announced new rules that will effectively ban trans fats from the food supply.  The question is, do they have any more idea what they are doing now than they did before?  No, they do not.

Well, over the course of the last 20 years or so, information has come out from various studies indicating potential problems with trans fats.  I say potential problems because as usual with things related to food and nutrition, what we have are poorly controlled epidemiological studies with Relative Risk results way below any acceptable standard for statistical significance, let alone to support government action ordering the people around.  For example, here is the big one on trans fats from the so-called "Nurses Study," Oh, et al., 2004, from the American Journal of Epidemiology.  This study followed some 78,778 U.S. women who were free of cardiovascular disease as of 1980.  How do they know how much trans fats these women consumed?  From questionnaires administered at most once a year based on memory -- not exactly a well-controlled study.   And the Relative Risk for cardiovascular disease based on trans fat intake?  1.33.  Other than the fact that some of the authors were from Harvard and they had done a huge amount of work, this hardly even qualifies as a publishable result.

Now I would say, combined with the fact that the stuff tastes nasty, that 1.33 Relative Risk is a perfectly good reason for a sensible individual to avoid trans fats.  It's also a perfectly good reason for the industry to reduce or eliminate the use of trans fats if they want to.  But for the government to ban trans fats?  Ridiculous.  

Meanwhile, how is it going with the government's campaign against saturated fats, otherwise known as steaks and butter?   I continue to look for actual evidence that saturated fat consumption is associated with an elevated risk of heart disease, and I can't find it.  Can you?  But here is a 1997 study following up on the large Framingham study population, and the conclusion is that margarine eaters have a higher risk of developing heart disease than butter eaters.

I have no doubt that there is an evolutionary reason why butter tastes much better than industrially-made hydrogenated oils.  Can't we just trust our tastebuds? 

The government's ban on trans fats will of necessity drive the food industry to something else, which in all likelihood will be just as unhealthy as the trans fats.  The bureaucrats don't have any idea what they are doing.  Can't they just keep out of this and let the people figure it out?  And how about an apology for the past recommendations?

Questions For Bill de Blasio And His Progressive Supporters

Here at the Manhattan Contrarian I extend my congratulations to Bill de Blasio on being elected New York City's new mayor.  On the other hand, I disagree with him on almost every policy idea he has put forward.  (Exception: He proposes to reduce or eliminate corporate relocation and retention subsidies.  Yes to that one.)   He has put forth one completely impossible pie-in-the-sky idea after another, and his attempts to deliver are likely only to make a mess of things.

So let's turn to his main themes, the ones that have dominated his campaign.  So far, he has been exceedingly unspecific in his actual proposals.  That's important because he seems to think he can solve problems that have defeated all of his predecessors and that are very likely beyond the competence of any government, let alone local government, to solve.  So, Mr. de Blasio, a few questions: 

  What exactly do you propose to do about income inequality?

If there is one theme that dominated the de Blasio campaign more than any other, it was what he called the crisis of income inequality.   The Villager, reporting on de Blasio's victory speech on the night of his election, had these quotes:

 “That inequality, that feeling of a few doing very well while so many slip further behind — that is the defining challenge of our time. …

 “But the challenge today is different. The creeping specter of inequality must be confronted, and will not weaken our resolve.”

On de Blasio's campaign website, he had posted an article from August 15, 2013 by David Sirota in The Nation with the following statistic:

The scope of [the "rich class"'s] victory in New York City is breathtaking. According to Census data, New York . . . is a place where the top 1 percent of income earners make an eye-popping 44 percent of the city’s total income.

Assuming for the moment that this is a crisis, what is the proposed solution?  I have seen four from de Blasio and his supporters: (1) more taxes on the high earners,  (2)  more in kind distributions to the low earners, (3) increased unionization and support for labor unions, and (4) higher minimum wage.  Let's take these one by one:

Those who propose more taxes on high earners as a solution to income inequality don't seem to realize that the inequality numbers they rely on, like the one from de Blasio's web site above, are pre-tax numbers.  In other words, increasing the tax rate, even doubling or tripling it, doesn't change the measured inequality at all.  The same concept applies as to in kind distributions at the low end of the income spectrum -- things like public housing, food stamps, Medicaid and education grants do not count in the income statistics. 

How about unionization as a way to raise up the lower earners?  An article in the current issue of de Blasio's big fan The Nation says that "A comeback for New York's working class will require the revival of unions."  Good luck with that.  Here's some history I'll bet de Blasio does not know.  In 1965 New York had over 1 million heavily-unionized manufacturing jobs.  The number today is 49,500.  That's a decline of over 95%.  A reasonable way of looking at this is that the unions forced their employers out of business.   And the process continues in other industries.  New York's construction unions continue to lose ground, and are almost completely gone from residential construction.  When the World Trade Center is finished during de Blasio's first term, will there be any comparable union job to replace it?  In supermarkets, the old-line union shops (D'Agostino, Gristede's) are still staving off Wal-Mart and Target by political action, but meanwhile non-union Whole Foods gains ground rapidly.  The unionized Postal Service is imploding before our eyes.  During his campaign, de Blasio attended rallies for fast food and car wash workers seeking unionization.  There's a reason that those kinds of very small businesses have essentially zero union penetration, namely, that any such business that accepts a union will quickly go under in a hyper-competitive environment.  Manhattan office workers, our big growth area for decades, are in a race for advancement that unions would only obstruct.  No union even tries to organize them.  It's very hard to see how the future for private sector unions in New York is anything other than continued decline, no matter what de Blasio does.

The minimum wage?  I expect a large increase to clear the City Council and be signed by de Blasio shortly after he takes office.  Immediately following will be a jump in unemployment among young members of minority groups, from already unacceptably-high levels.  The effect of these two things on measured income inequality will be to increase it.  De Blasio will not recognize the cause and effect.

In the end, there's really only one thing de Blasio can do to reduce measured income inequality, and that is to drive the high earners away.  According to that Nation article, back in 1980 and before, when New York's combined state and city income taxes approached 20% (today they're about 12%) and Connecticut had no income tax (today Connecticut's top rate is 6.5%),  the top 1% of earners only reported 12% of the income.  Another way of looking at that is that nobody making a big income in that era was stupid enough to report it in New York City.  Of course, total tax collections were also a lot lower.  Is that really where de Blasio wants to go?

How do you propose to generate "affordable housing"? 

The same article in the current issue of The Nation contains a striking but I think inadvertent contradiction.  In its section on income inequality, it advocates "persuading the state to end tax breaks for luxury properties."  And then a few paragraphs later under "Housing" it describes de Blasio's pledge to build 200,000 units of affordable housing over ten years a "laudable goal."

They don't seem to realize that the whole mechanism by which Bloomberg got "affordable housing" built was tax breaks for luxury developers.  I agree that this is a terrible idea, and leads to way excessive subsidies for small numbers of people, hidden off-budget where no one can find them.  Yet The Nation proposes no alternative method, nor have I seen any workable alternative from de Blasio.  Is the City to get back into the development business itself on a massive scale?  If you think that's a good idea, check out any of many articles on the current financial crisis facing New York's previous adventure in the development business, the New York City Housing Authority.  Here's one.  Guess what?  If you charge people almost no rent, they will never move out, and meanwhile you will gradually run out of money to maintain the buildings.  Eventually you get where Chicago found itself a few years ago, and you have to dynamite the buildings. 

And what's the plan for the hospitals? 

De Blasio's second signature issue above the others may be his advocacy on behalf of "saving" the many hospitals around New York threatened with closure due to insufficient revenues to pay their operating expenses and debts.  In the heat of the campaign, de Blasio actually got himself arrested in a protest over the closing of a hospital in Brooklyn Heights called Long Island College Hospital.  Today, that hospital remains open under court order, although it has few remaining patients and is hemorrhaging money. 

The problem here is that, up to now, the question of hospital closures has been for New York State, not the City.  The small amount of money in the City budget for hospitals, other than the City-owned hospitals, has been required Medicaid sharing.      

I can't even imagine a proposal for the use of City tax money or other resources for these hospitals that makes any sense.  The reason that certain hospitals are going broke is that the hospital industry has over-expanded, and the weaker hospitals are therefore half (or more) empty.  Shouldn't we recognize it as a good thing that there aren't enough patients for all the hospitals?  Any subsidy program that keeps hospitals open will never go away -- the need for subsidy will only increase with time.  It's a black hole.  Is de Blasio capable of recognizing this? 

And finally, what about the pensions? 

And of course, the biggest issue of all is the exploding cost of city worker pensions.  De Blasio has never even mentioned it.  Well, he has gotten lucky this year with a 20+% run up in stock market prices.  Unfortunately that may take the pressure off him, at least for the first year or two of his term.  I say unfortunately because delaying addressing this problem is only going to make it worse.  But I will be very, very surprised to see de Blasio address it. 

Obamacare And Its Marks

Conservative news sources, led by Fox News, are all over the falsifying of the President's big lie ("If you like your plan, you can keep your plan, period.") with the opening of the Obamacare exchanges.  So now the tune has changed.  The new party line from the President in the past week has been, the risk of cancellation of policies only applies to "about 5%" of the population in the individual market, whereas "the majority of folks will end up being better off" under Obamacare. 

I can't seem to find any calculation of how that "majority" thing has been determined.    But it's at least as dishonest as the "if you like your plan you can keep your plan" thing.  At very best they have a model projecting that effective premiums for healthcare will go down for 50+% of the population, but that's only one piece of whether a given individual will be "better off."   To figure that out honestly, you need to take into account that the subsidies in the system must be paid for either in taxes or inflation, and attribute those costs to individuals over time.  There is no way that the President and his crew have even tried to do that.    Their way is to treat government subsidies as free money that doesn't have any cost to anybody.  Same with the loss of freedom from the various mandates.   

So you are in your mid-20s and healthy, and with few assets.  Your income from your starter job or freelancing this year is only $25,000.  You're entitled to a big subsidy.   According to a chart of New York healthcare exchange prices here, it looks like you can get a plan for close to free, or perhaps $100 a month.  Are you "better off" with Obamacare?  Counting only the premiums for your healthcare, the answer is, maybe this year, and maybe for a few years, if you're planning to keep your income at that $25,000 for the foreseeable future.  But if you're like almost everybody your age, you are not planning to earn the $25,000 per year for very long.  As soon as you start moving up, you are on the hook for rapidly escalating premiums (the same chart shows monthly premiums of over  $300 by the time your income reaches $40,000) plus the taxes to pay the subsidies to the people who keep their incomes low.  Plus, of course, Medicare and Social Security taxes to support your parents.  And don't forget your student loans!  They are trying to convince you that you are "better off", but yes, you are the mark, the sucker. 

And by the way, did I mention that the effect of the subsidies is to make your escalating healthcare premiums function as a gigantic additional marginal tax as your income rises from about $25,000 to $40,000?  While your income goes up by that $15,000, existing taxes are going to take about $3000 of that, leaving maybe $12,000, and then as the subsidies phase out your healthcare premium is going to go from $100 to $300 per month, an increase of $2400 per year, which is a full 20% of what otherwise would have been your increase in take-home pay.  You are 27 years old, earning a lower-middle class income, and facing an effective marginal tax rate of 50%.  HAHAHAHAHAHAHAHA.       

A few days ago I predicted that people in the private economy would quickly get to work to find ways around the Obamacare debacle.  I came up with a few ways they might do that, from family re-definition to buying black market insurance from Canada.  But of course, the big idea is something I didn't think of, yet spotted on a tv commercial a couple of days ago.  This idea is prepaid care from a large medical group.   It's not "insurance" from an "insurance company," so it looks like Obamacare does not apply.  (In fact, the pre-paid care model is how the Blue Cross plans got started back in the 1920s.)  A group in this area called AMG is now offering unlimited doctor visits for a flat pre-paid fee of $79 per month, below even the cheapest Obamacare subsidized plans for people making as little as about $30,000.   OK there's no pediatric dental coverage, and no maternity care for young men.   More importantly, it doesn't cover hospitals, but your risk of needing hospital care is small and if you have the big accident they have to treat you and you can just not pay the bill.  Not perfect, but clearly a far better solution for many many young people than the Obamacare ripoff.