The Pizza Tax

The claim that Obama’s policy agenda generally, and “ObamaCare” specifically, are going to vastly increase the costs borne by “job creators” to the expense of their, well, job-creatin’ mojo is at the very heart of the conservative argument that America can’t afford another four years of his presidency. Claims that these alleged burdens will be shifted to consumers are a bit less common, except in the energy arena, where every bump in gas prices is almost universally interpreted on the Right as attributable to various socialist impositions on America’s fine and ever-civic-minded fossil fuel industry.

So it’s interesting to see maximum Mitt-o-maniac John Schnatter, founder and CEO of Papa John’s Pizza, publicly charge that ObamaCare is going to hit consumers of his reasonably tasty if highly caloric products right in the breadbasket (I’m surprised, though, he didn’t use the standard Romney campaign phrase of “kick in the gut” for bad things Obama is doing to Americans). Indeed, he’s very specific: expanding access to health care will cost Papa John’s customers 11 to 14 cents per pie.

In his usual calm way, Slate‘s Matt Yglesias deconstructs this threat to late-night noshers:

Stipulating for a moment that this is true, doesn’t it seem like a rather small price to pay? Papa John’s website is currently offering to deliver me a large pepperoni pizza for $14.08 and Schnatter is warning me that the problem with Obamacare is … a one-time price increase of less than 1 percent! That seems eminently reasonable. What’s more, it’s well within the range of the kind of price swings Papa John’s is going to have to expect just based on the vagaries of the weather, which impacts the price of ingredients, and the ups and downs of the oil market. There’s just nothing there. I can believe that the Obamacare provision requiring prominent calorie labeling on menus would hurt Papa John’s by encouraging people to order smaller pizzas or fewer toppings, but the idea that they’re getting hammered by a one-time 14 cent per-pie increase in labor costs is silly. Now Schnatter personally stands to lose money as a result of the progressive tax increases that will help pay for the law. He’s probably mad about that, but he shouldn’t attribute his personal problems to his business.

Matt gets right at the problem with a lot of conservative “cost-benefit analysis” fretting about business costs associated with public-sector initiatives: they rarely look at the benefits. It is undoubtedly true that businesses could offer lower prices (and for that matter, boast much higher profits) if they had lower costs for labor and regulatory compliance, just like they would if the raw materials they use were cheaper. Unfortunately, the kind of society in which the lowest possible business costs were the sole determinant of public policy wouldn’t sport nearly as many consumers with the wherewithal to take advantage of these bargains–totally aside from the eventual costs to business and society alike of the heath, environmental, and safety hazards associated with unregulated markets, low wages, and poor-to-nonexistent worker benefits.

This is pretty basic economics, folks, but you wouldn’t know it sometimes to hear conservatives who believe there are seven deadly sins that all involve higher business costs. As I’ve observed many times before, if their implicit theory made sense, Mississippi and Alabama would be the most prosperous states in the Union. It just doesn’t work like that.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.