Chapter 4: In which Malcolm helps kill some industries (Part 1/3)
ATTENTION:
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AN:
To H. E., this should've been in the previous update: Thank you for your feedback and your thoughtfulness! I seriously appreciate it. It does help.
To those who filled out the survey, especially those who added comments, thank you! I appreciate you! I incorporated these comments throughout chapter 4 in different ways. (There are more parts coming.) So you helped put this chapter together!
And to the dear person who wrote, "This is a riot i love it", ENJOY!
After five hours of rest and three full minutes observing the rough fibers of his camp bedsheets and staring at his phone that lay out of arm's reach, Malcolm decided he wouldn't waste a potential half an hour pretending he could still nap. Dragging himself up, he ignored his betraying yawn and heavy eyelids that warned him he'd regret refusing extra rest.
The remaining five residents of Cabin Six were sound asleep. Alicia and her beaver plushie, he noticed, were in Claire's bed. Gods, Malcolm hoped his answers to her questions last night hadn't given her another existential crisis.
'Mal? I'm scared,' he remembered her whispering last week.
'Of?' he'd asked.
Alicia hadn't said. She'd merely snuggled up to his chest and took expansive breaths while nestled in the crook of his neck. But who knew? Maybe he'd actually helped quell her fears?
Yeah, what were those odds?
Trying not to blame himself, Malcolm crept to the bathroom to splash water on his face and brush his teeth. Finally changed into sweatpants and an old Columbia t-shirt, he tried not to wake up his siblings as he exited Cabin Six. Then in went the earbuds, silencing the chatty birds and hellos from the sound.
Once he finished his stretches, he sped off to a deep kick drum. The beats rolled with a guitar riff and heavy bass, overlaid with bars confronting one with an impossible question—
I'm wonderin' if a thug's prayers reach
Is pious pious 'cause God loves pious?
Socrates asks, "Whose bias do y'all seek?"
—the line of questioning that always led to a Nietzschean conundrum. Malcolm wouldn't have gone so far as to renounce religion; however, the guy'd had a point. Given that the gods owed their continued power to mortals' and demigods' and others' worship, how could the gods so often do little more than sit back and watch the world implode?
But there were assumptions that laid in that line of thinking. Because, in the first place, how much control did the gods truly have? If demigods, after all, had to keep solving the gods' problems, what did that say about the immortals?
No, that wasn't a fair assessment, Malcolm thought. Mortals, demigods, and gods all created problems and all solved each other's problems.
That thought only brought him back to that self-perpetuating cycle Plato detailed in the Euthyphrōn. What made something pious? Who had the power to make something holy? Did that party hold the cards? Or was Plato right all along, that gods and mortals existed in a symbiotic relationship? Did that imply that no one, not even the gods, had control over the world's shit?
Was that a comforting discomfort? Or perhaps a discomforting comfort?
On one hand, lack of omnipotence meant that choices mattered. So, given the limits to godly power, perhaps life on earth could go on fine without the gods. Or at least without relying on the gods.
Yet, given that gods were more powerful than mortals and demigods—no matter who or what made deities powerful—and given that the gods couldn't fix mortals' issues—what then could lesser lives accomplish?
Could the city that Malcolm imagined, just and free, possibly be created? Was this dream of his simply a delusion?
He opted to believe the opposite. What he witnessed during each of his runs was this vision getting farther and farther from just that. The evidence was present in the steel frames that rose daily in the New Athens city center. In the carbon-capturing concrete materials that Leo had so excitedly talked his ear off about a few months ago and that Malcolm now saw dress the lower floors of the apartment skeleton that Annabeth had designed.
The evidence was there in Malcolm's own work. In all the data that he, Chiara, and Bae had collected and utilized. In the internal and external policies that Rayel drafted. It was there, even in the sorts of issues that Malcolm and other councillors were grilled on by constituents—some of whom didn't seem to know what the hell they were even talking about.
But at this moment, there was no one with him to delay progress—no one coming to him with more problems. So, before he'd have to rein his thoughts at City Hall, Malcolm let his sprawling thoughts direct him wherever they wished.
The freshly paved streets before him had him wonder how best to fuel public transit and the odd cars and motorbikes in the upcoming 15-minute city. Why not biomethane sourced from landfills? He'd have to ask Marcella for her advice on the costs and benefits of an anaerobic digester. Would it be worth it to use the city's waste and even buy New York's waste and make something of the methane building up in landfills? Or would such a business incentivize industry away from eliminating waste in the first place?
Marcella probably also had other thoughts on whether it'd be preferable to advance the adoption of blue hydrogen. Or, better yet, green hydrogen. Or perhaps she'd advise him to first focus on potentially lower-hanging fruits in the city's marginal abatement cost curves—options that could still yield more cost-effective emissions reductions (or prevention, in this case) for decades to come.
And still, residents wanted more say in how their city was run. Wind turbines! Small modular reactors! Direct air capture! Which... weren't uninformed exactly. But as if their advice would outmatch that of a wood nymph with decades of experience in creating alternative fuels and researching nature-based solutions to climate change.
There had already been some valuable crowdsourced ideas, however. Top of the list: Public bathrooms everywhere, equipped with bidets! What a game changer.
Perhaps in a few years, once the city budget had room, New Athens could poach mortal connections in the federal government or the private sector to run open innovation challenges so the public could give experts a run for their money. And for that, the city would have to cultivate an innovation hub to pull and push together the best and brightest minds. Hell, they didn't even have to be "experts". Randos would do, so long as they possessed varied knowledge and experience.
Ah, and Malcolm remembered as well he'd have to look into applications of concepts from the social settlement movement. Was it good enough that the most well-off individuals would live in the same buildings as the least well-off? He'd have to reconsult Jane Addams's theories and any rigorous findings available. Though perhaps it'd be easier to pick Annabeth's brain on ideas on infrastructure's role in achieving social interconnectedness and a lower Gini coefficient...
Ideas continued to flow as blood circulated in his body until Malcolm zoned out and let himself embody the braggadocio of his run's soundtrack.
Beat the odds, beat the Feds
It wouldn't be wise to bet against the kid
It was always productive to start the day with a heavy-bassed banger with a dose of arrogance. But the abrupt change in melody reminded him it was precisely that attitude that fueled the chaos—that helped cause the melancholy that soon mirrored the somber beats pulsing in Malcolm's ears.
He'd known it was coming. He knew he'd hurt. And he welcomed it.
Yet, his legs still carried him faster and farther. Farther east. Farther away from window-boarding plans, from biweekly pew-sittings. Farther away from what felt like everything—in search of calm nothingness. New York could offer only so much escape. But by now, tucked away past the pearly gates of Camp Half-Blood and New Athens, it was simply impractical to head back.
But there, Athena had thrust upon her son a choice he'd made nearly every day: run in or run away. To aid him or haunt him, she'd merely given Malcolm a single tool: that cord he'd once worn on his wrist, reminding him that the one time he'd fight back could have been his last. And that all the times he hadn't could have counted as a trade for someone else.
What was his current tally? Billy, DeShawn, Tom, Andre, Michael, Dylan... That made six. There was his old neighbor Miles, who taught him disarming tactics. His pal Keenan, he ran errands for who'd kept him updated on territorial disputes. There'd been a student from the school around the block. A shopkeeper at the corner store. In total, at least a dozen of his former neighbors. By now, probably a handful more of his old classmates, like those kids from school who'd never returned. Maybe they'd moved, maybe they'd dropped out, maybe they'd gone to juvie. Or maybe they were dead.
Is it genocide?
And what, pray tell, had the gods bothered to do?
'Cause I can still hear his mama cry
Know the family traumatized
Shots left holes in his face about piranha-sized
Malcolm pushed his legs to their limit. But he'd never run fast enough. In his mind rang the echoes of that familiar sound of a bang and then a crack that no mortal—and even no demigod—could outrace.
The old pastor closed the cold casket
And said the church ain't got enough room for all the tombs
Fury and anguish coursed through him and ruled his head. Malcolm ran faster along the shoreline. His muscles were protesting. His heartbeat approached dangerous levels. He was running out of oxygen.
Malcolm sucked in sharp breaths, filling the deepest depths of his lungs with Long Island air.
It's a war going on outside we ain't safe from
I feel the pain in my city wherever I go
Three hundred fourteen soldiers died in Iraq
Five hundred nine died in Chicago
Leap by leap, Malcolm continued sprinting, nearly stumbling as he persisted. His abdomen was prickling again. His chest was on fire. His body screamed at him to slow down. His brain flashed with reminders of the quarts that had pooled out on the way to Stroger.
But that—this—was more tolerable, wasn't it, than the aftermath had been? Than being given mortal blood transfusions that weakened his muscles, that weighed down his bones, that fogged his brain, left him in a haze, and impaired his reaction time?
Waking up, Malcolm remembered, had felt like an unbearable hell—had freaked him out in a way that no one, not even his father, could understand. The doctors had insisted it was the opioids. At seven, he'd known they were wrong.
But he had his brain back now—sixteen years and counting. And he wasn't going to sleep this time. Not like she had.
If he'd had the odds then, surely he could manage here and now. Surely he could do his little run. This was easy. This was just him and his body and an empty pathway. He was in control. He could take a step. He could run. He could set this city on the right course.
Here, no one would need to worry about strays or accidents. No child here would walk onto the blood on the streets before firefighters had time to hose it down. Kids here would never, ever grow up listening to the screams of victims and cries of the other souls that died with the murdered. Because here, violence and trauma wouldn't be normal.
And brick by brick, policy by policy, by the grace of any willing gods, Malcolm would do every little thing in his control to construct a haven where luck was simply and radically unnecessary.
In the land of the bereaved and home of the depraved, they'd build an enclave with better problems.
New Athens would be everything the Second City should have become after that great blaze. Paralleling the wonders of the City Beautiful was simple enough. With a park system to make Bennett proud and a Burnham-inspired guarantee that not a foot of the shores would be appropriated to the exclusion of the people, New Athens could easily be established as "City in a Garden" and "City by the Sound". New Athens could, too, boast the togetherness and unshakeable optimism of Malcolm's kind of town.
But this city wouldn't squander its chance to start from scratch. New Athens would be the place hailed as the City that Works—that did work, and for all. Where Sadie could play ball and do ballet in any park. Where Tyrone could take that damn cord off his wrist and wander wherever. Where young demigods would have simpler decisions to make.
The sledgehammer beats pounding in his ears, complemented by disses hissed to those standing in the way of success, made Malcolm believe 20% more that his plan would come to fruition.
And they want me dead
But I'm so sorry, but I just can't die for you
As Malcolm rounded around a bend by the sound's shores and turned back towards camp, he felt a surge of power once his eyes fixed on the hilltop where the Athena Parthenos stood. It was as if Athena had in this moment blessed him with a turbo boost. Or perhaps it was Apollo making him feel like he was literally keeping pace with a pair of 1985 white Lamborghini Countachs.
Accompanied by the tinkling keys of a "Chariots of Fire"-esque piano melody that curved his lips into a grin, Malcolm let himself suspend judgment at such bizarre bars to sink into the universal feeling of weightlessness from an orchestra of instruments and a chorus of operatic voices.
He finished his run at the end of the masterpiece. 17.6 kilometers in a little over 51 minutes, his watch told him. A rate just 18 seconds over his record time.
He'd take it.
Cracking a smile, Malcolm inhaled deep breaths and slowed to a jog. He tested the joints of his fingers. No resistance, no delay. Everything was in sync.
Malcolm jogged his way back to Camp Half-Blood, nodding in hello to some Demeter kids already planting trees by the New Athenian streets.
He paused for a moment at the city gates before joining the day's bustle. And with another intake of air, Malcolm simply stood, struck by the reminder that he was still alive.
Within the shipping container walls of makeshift City Hall, Malcolm sat at a round table with his fellow councillors, trying not to succumb to the heat, his lack of sleep, or, for that matter, the whiff of cologne sent his way by the swinging tower fans among them.
Two seats away to Malcolm's right, Will Solace tapped his pen in a staccato jitter, drawing too much attention from six people with ADHD. He was going to ruin it, Malcolm thought. The ink would get stuck. He'd need another one sooner than necessary. How inefficient.
Concentrate.
"—prepare for when they move here," Will said. "We should keep inviting those demigods here. The satyrs have been reaching out. Some have already expressed interest, so we need to set up those sites ASAP. You can't just switch over to nectar and ambrosia. It takes a while, and the amount you'd need would kill you."
"Um... how do we—I mean, not we, but the city—get access to... coke and stuff?" asked Rayel Perez, daughter of Harmonia. "I get that we've legalized everything..."
Screw federal law, Malcolm thought. They didn't have to know.
"But, like you said, Will. We need supply," Rayel said.
"We can make it," Will said.
Rayel gaped. "Who's we?"
Sitting on Malcolm's left, Chiara paused her hair tugging as she furrowed her brows. "Are we, like, building a meth lab or something?" she muttered as Will was saying, "We have... chemists."
Will updated them on the logistics he'd worked out with Malcolm a few days ago. The rehab center, they'd agreed, should be located east of City Hall to be on the opposite side of Camp Half-Blood and the New Athenian gates: away from the city center to maintain privacy, but still near a bus stop to maintain accessibility.
"But then my team and I thought that the center should also run our newly proposed initiative to address teenaged campers' use of e-cigarettes," Will said. "Because, apparently, vaping seems to be on the rise. So, maybe we could locate the center closer to camp."
"How often do they vape, do we know?" asked Malcolm. "Are they just trying it, or do they do it regularly?"
"We—thanks to Chiara and the stats team—found that a quarter of older teenagers at camp vaped nicotine within the previous thirty days of our asking," Will said. "And nearly half of them vape daily."
"Holy— That's a lot," Malcolm said. "Even if it's around 10% of the population, that seems like a lot. Wow."
"We've seen an increase in the share of youth who are physically addicted to nicotine," Will said. "And, judging by their— And this is self-reported, mind you, so who knows how high this actually is. Judging by their responses, they're four to five times more likely to experiment with cigarettes year over year."
"Who are these people?" said Pravir.
"And you know what some are turning to to kick their vaping habits?" Will said.
"Patches?"
"Cigarettes," Will spat, setting his pen down forcefully. "So, they're not just for experimenting. They're for using. And 'coping.'"
With a pulled face matching her colleagues' expressions, Rayel said, "Don't these kids know we didn't have the privilege of ruining our lungs and getting frickin' cancer, since we were preparing for war after war when we were their age? I, for one, do not want to pay for vapers' or smokers' healthcare."
Bit rich. "For fairness's sake, we'd have to do the same thing with alcoholism," Malcolm said. Had that been too much? He wasn't exactly—or he wasn't just—talking about seeing her pretty trashed last night. "And other things," he added, just to be safe.
"You know," said Pravir, "Frank once told me that the Canadian government views alcoholism as a disability. At least in the context of workplace discrimination and employers' duty to accomodate. Not sure if it's the same here, but... would that fly with our values and code of rights?"
"And how about people who don't exercise?" said Chiara.
"Or people with bad diets?" Pravir said.
"Couldn't we exclude all from our free healthcare program?" Rayel said.
"If someone has some pre-existing condition," Malcolm said, "like clogged arteries or heart disease or some cancer—"
"Then we can cover those people—" Rayel said.
"But how would we know," said Malcolm, "that those conditions didn't come from eating too much red meat or processed meat? Which, the WHO, by the way, classifies as carcinogens. And we don't know if people simply lacked the education. Or lived in food deserts outside camp."
"At the very least, we could do that anti-vaxx thing, can't we?" Chiara said. "If you don't vaccinate yourself—assuming you can be—you can't get free healthcare?"
"I mean, I think you should have to register as an anti-vaxxer," Pravir proposed. "Whoever is on the list should then be put in the back of the line for medical services. If you don't believe in medical science, you shouldn't need it."
"That is not how we treat our patients," Will sighed, even as he smiled. "Positive reinforcement is almost always the way to go. Punishing and shaming patients, even if they're wrong, tends to lead to worse outcomes. That's not a way to build trust."
"Well," Malcolm said, "we could just put people with better vaccination records in the front of the line. That's positive reinforcement. Right, Prav?"
"There you go," Pravir said to Will.
As Bae laughed beside Malcolm about framing effects, Will, meanwhile, took a long, hard look at Malcolm's face. "Are you seriously suggesting that?" he said.
Will gave the look Malcolm occasionally got from non-Athenians—one that prided or irked him, depending on the situation. The one that conveyed: You. You're a child of Athena. You should know better.
Blame his contrarian habits for offering that comment. Or his need to make peace with Pravir. Or maybe the fact that it wasn't actually a bad idea.
Malcolm thought some more. "On the off chance that there are shortages and all emergency cases are considered equal... then, sure," he said. "But you're the Chief Medical Officer, so if you have reason to believe that won't help, then obviously no. I'll side with your expertise."
"Have we thought about interaction effects, though?" Chiara said. "We could just have that sort of positive reinforcement along with bans on those religious and philosophical exemptions. Combined, we could see larger improved health effects."
"We have made those bans already, right?" said Rayel. "I know they work in Mississippi. I'm from there, and let me tell you, it's like the only thing we have going for us. A near-perfect school immunization rate that blows every other state out of the water. Whereas, last I checked, 48 states have these stupid religious and philosophical and conscientious exemptions. Seriously, how does Mississippi of all states beat everyone on something like school immunization? Mississippi!"
"We're putting those bans in place for schools, sure. But affecting access to healthcare is a bit much," Will said. "We'll monitor the situation and consider the front-of-the-line thing if we have a problem. But I don't think it would matter in practice the way Malcolm suggested. We can maybe find other ways to instill personal responsibility for the collective good."
"If I could add something," Ainsleigh said. "I saw a comment in our survey about how we should think about safety. If I could read it out?"
Ainsleigh turned on her tablet and read aloud, "'I hope that safety means physical and mental. Many demigods have trauma, addictions, and/or mental illnesses, and a good mental wellbeing is essential to a just society. Therapists and psychiatrists should be available to residents of New Athens (and preferably all of Camp Half-Blood).'
"I really liked that," she said, receiving nods and hums. "One, the point that we can frame health as a safety issue and think of it as important as other kinds of safety. And two, it would probably be a violation of our values and ethics code not to have universal healthcare. Not having it would deny people safety and the freedom to live. And also, three, I don't think we would think of charging a higher price for public safety services to people more likely to need those services."
"Thank you, Ainsleigh," said an exasperated Will.
"I second that," said Bae. "I think I saw that comment. Someone else just put down, 'Socialism'," he snorted.
Rayel grinned. "Succinct. I like it."
"A bunch of us also ran with universal healthcare as a campaign promise," Bae said.
"And," Will argued, "in this country, there are an estimated 26,000 to 45,000 deaths annually linked to lack of health coverage. Working-age Americans who are uninsured have a 40% higher death risk than those who have private insurance. Public health researchers found this seven/eight years ago. This is a safety issue, like the constituent said. So, no matter who the city residents are and what they might choose to do to themselves, we can't let them die on our watch."
The matter was settled—finally, and hopefully for the last time—and the councillors moved onto implementation and funding issues.
Here, Bae took the lead. "So, according to this prof at MIT, a healthcare economist who worked on setting up Romneycare and Obamacare—"
"Wait. Sorry. Romneycare?" Chiara said.
"In Massachusetts," Bae nodded.
"It was the basis for Obamacare," Malcolm added. "Passed four years before the ACA was a thing."
"Yeah," Bae said. He faced his solid musculature towards him, and smiled with dazzling eyes. "You know this, right? So—" Bae turned back to the rest of the group, and Malcolm tore his gaze away to do the same. "—healthcare systems need three things so that they don't collapse. A three-legged stool, if you will."
"Another three-legged stool?" Pravir muttered. "We already have the three Ps of sustainability."
"There are a gazillion three-legged stools. We should get used to them," Bae said. "Okay, one: insurance regulation, which should make insurance providers offer insurance to everyone at the same price. Two: the individual mandate, meaning everyone is required to buy insurance; no one can opt out. And three... three... Gods, what's three?"
Bae snapped his fingers repeatedly. Brown eyes locked on gray ones for a moment—or two. Or three.
"Insurance subsidies," said Malcolm.
"Insurance subsidies," Bae nodded. "So that money isn't a barrier for anyone," he explained to their fellow councillors. "All three are needed. If we're missing a piece of the three, the whole system will collapse. For example, if there's no individual mandate—if not everyone is required to get insurance—that means we'd only have people who need insurance most."
Adverse selection.
"And the average cost would go way up," Bae continued. "Whether the insurance system is single-payer or a public-private combo, the costs would be super expensive per person. There are states that have offered health insurance to everyone at the same price without an individual mandate. People could just get the insurance when they got sick, knowing they'd get more healthcare than they'd pay for. Payouts exceeded premiums, which was obviously unsustainable, so those markets collapsed.
"Second, if there's no insurance regulation—which, again, refers to offering the same price for everyone, no matter how little or how much healthcare they get—then some people would be charged an unholy amount of money for their insurance. That's why we need, as Malcolm mentioned, subsidies for people who can't afford it.
"So, we should follow that model. But budget-wise... transparency-wise," said Bae, turning to Malcolm with mischief in his gaze, "how 'bout let's not go the 'stupidity of the American voter' route."
Malcolm did his best to rein in a shit-eating grin. "Well, let's not make those comments in the first place." Turning to Chiara, he said, "I'm curious. Have we found anything on whether there'll be enough support here for our proposed coverage—emergencies, routine checks, pharmacare, dental care, and all? If we are transparent enough to say it'd cost residents more?"
Chiara shrugged. "We haven't collected that data yet."
"But regardless," Bae said, "I don't think we have to hide the fact that it'll actually cost residents at the end of the day, instead of companies. Honesty creates trust, right?"
"Wait, why? " said Pravir. "Why can't we just charge companies? Obamacare does that. And if Americans already pay more for healthcare than, say, Europeans and Canadians do..."
"Because that's not how taxes work at the end of the day," Bae said. "So, we have public-private insurance, right? Which… who knows? Maybe we'll change someday. Well, anyway, with Obamacare, fancy accounting by the Congressional Budget Office hides the fact that it's people ultimately paying extra for what superficially looks like added costs meant to be borne by companies. On paper, companies pay. In reality, it's people. Because the demand curve for healthcare has a high slope—it's pretty inelastic—and the supply curve is elastic, consumers will be the ones paying the added costs. Yes, even if charged to the companies. You know, let me draw it out." Bae headed over to their smartboard.
Gods, Malcolm loved this part of his job.
(1) He didn't have to tell people shit.
(2) There were people who'd have his back—not that they were exactly there to have his back, but it was a comfort nonetheless.
(3) What a delight just to wa—
No. Nope. This was work, he thought as he observed Bae draw two sets of axes, side by side.
"First, compare these two graphs," Bae said. "Here are the axes. Price on the vertical, quantity on the horizontal. And here are the supply curves—what companies can sell."
Bae drew a diagonal line, making each of the identical graphs look somewhat like very wonky arrows facing southwest, with the (0, 0) origin as the pointhead.
"Now, here are hypothetical demand curves."
On the left graph, Bae drew a downward-sloping line, creating an X with the supply curve.
"This is elastic demand. If it's flatter, it's more elastic," he said, while drawing perpendicular dashed lines from the intersection of the X to reach each axis. After labeling on the axes the price and quantity associated with the equilibrium (P₀ and Q₀), Bae continued.
"And this on the right," he said, stretching the horizontal dashed line to the identical supply curve on the graph on the right, "is inelastic demand. If it's steeper, then it's more inelastic. So far, the prices and quantities are the same. Let's see what happens when we raise the price, say, by a tax."
To indicate the new price, Bae drew a new horizontal dashed line, parallel to and several inches above the dashed line representing the old price.
"Here's the new price for both graphs. So with elastic demand, when prices change a bit, quantity demanded changes by a greater proportion. Here's the new quantity, Q₁. See that?"
Bae used a green marker to shade in a right triangle underneath the demand curve, whose height equaled the distance between the parallel price lines and whose base spanned the difference in quantity. He did the same for the graph with inelastic demand.
"If we compare these triangles, the heights of the triangles are the same, but the bases are different. On the left, the base is larger than the height. On the right, the base is smaller than the height. Geometrically, that's what determines elasticity."
"Alternatively," Bae said, "we could see what happens to the price on either graph if we change the quantity by the same amount."
Bae erased some markings to revert the graphs to their initial equilibria stages. After reconfiguring the settings of the smartboard, he rotated the board to portrait mode so that the graphs were stacked one on top of another: left now on the top, right now on the bottom.
"Here, we're looking at the same change in quantity. In the graph above, with elastic demand, the equilibrium price barely budges. The price is almost the same. In the bottom graph, we see a big increase in price. When it comes to healthcare, we're on the bottom graph: with inelastic demand.
"So, that was demand elasticity," Bae said, as he spun the board again to landscape mode. "We can also look at supply elasticity, but I think you get it. With an elastic supply curve, given a 1% increase in price, quantity supplied decreases by more than 1%. With an inelastic supply curve, quantity supplied decreases by less than 1%.
"So, elasticity is important because it determines who bears increases in taxes. We can look at two situations: one, the tax is levied on people instead of firms, and, two, firms pay instead."
"The prices will be different," Rayel said.
"Yes!" said Bae. "The prices will be different. But let's break down the tax burden."
Bae cleared the board and redrew two sets of axes and a pair of identical inelastic demand curves and elastic supply curves.
"If we levy a tax on consumers, the demand curve shifts left. Basically, people can get less quantity for the same amount of money at any price. So, we get this new demand curve, D₁. The vertical distance between the two demand curves is equal to the per-unit tax. Following so far? 'Kay. Good.
"Given the shift in demand, the quantity supplied then adjusts: we move along the supply curve, toward the left, causing a little decrease in price and a slightly larger decrease in quantity. As we'd expect. This is, after all, an elastic supply curve. So, now let's analyze the tax."
Bae drew three red, solid lines: a horizontal line from the new equilibrium to the y-axis, a vertical line from the new equilibrium up to the old demand curve, and a horizontal line from that spot on the old demand curve to the y-axis.
"This rectangle," he said, "represents the total cost of the tax. Height is, of course, per unit. And then we multiply that with the quantity, which is the base. That's the total tax. Right? But who pays what share? For that, we look at the old equilibrium.
"Everything above the old price line—this dashed line, P₀—and below the old demand curve, D₀, is what consumers basically paid. And everything below P₀ and above the supply curve is what suppliers basically paid to cover the tax. So, here, even though the tax is levied on consumers—i.e., consumers have statutory incidence—producers actually pay a portion of the tax. That's economic incidence. Moving on—"
"Wait. Question!" said Chiara.
"Yup?" Bae paused.
"If the price dropped..." Chiara said. "Like... I just don't get how that rectangle shows that consumers are paying. Just in relation to the curves."
Bae nodded. "Good question. It's easiest to just look at the size. So, if we think about it in accounting terms, consumers pay the whole tax, right?"
"Right."
"So that should be the whole rectangle. They pay the per-unit cost—this height—this many times," he said, now gesturing to the base of the rectangle.
"Okay."
"It should be the whole rectangle. But what happens is that producers don't get to charge as much money—precisely, this much money, this little gap between the old price and the new price. And for each unit they sell, they now charge less this many times, Q₁times, equal to the base of the rectangle. The tax decreased price and quantity, right? Well, the drop in price is a benefit to consumers."
"Oh."
"What we'll see later," Bae said, "is when the price increases because producers' costs rise—"
"That part would be consumers bearing the tax," Chiara said.
"Exactly."
"So, in that case," said Rayel, "the consumers bear some of the tax? But less than the previous case?"
Bae's eyes lit up. "Well, let's see," he said, stepping over to the graph on the right. "What happens when the tax is levied on producers?
"So, the same tax is levied with the same height in the shifts, remember?" he said, illustrating his points as he spoke. "The supply curve then shifts left. We get a new equilibrium: higher price, lower quantity. Let's break down this rectangle. Again, there are two parts: above the old price and below the demand curve, and below the old price and above the supply curve.
"Boom! On each graph, we end up with the same tax burden."
"Yoooo," said Chiara.
"So, it doesn't matter… whom we tax," Bae said. "It's the same outcome either way. And in any situation in which supply is elastic and demand is inelastic, consumers will bear more of the tax, no matter whom the government taxes."
"Even though the prices are different," Rayel said, transfixed.
Watching the other councillors was like witnessing Alicia watch Leo's magic tricks. Malcolm remembered his father drawing out the same gobsmacked expression out of him all those years ago.
"That," Bae concluded, "is the tax burden. Also known as tax incidence."
"And that," Malcolm added, "is how governments can hide taxes ultimately paid for by taxpayers."
Pravir narrowed his eyes. "You mean the Democrats have been lying?"
"It's a white lie," Malcolm said, shrugging.
"To get public support for the ACA, yeah," Bae said. "So it could get passed. I mean, doesn't it sound great to say, 'Oh, our new and improved health insurance policy won't cost you more! We're having insurance companies pay for it! As if they won't charge more for their services. And let's pretend that your employer, who's helping to provide you the insurance plan, won't deduct more wages for the insurance or won't raise prices on goods and services to cover their increased costs.'
"But," Bae said, "I say we try it out honestly here. With transparency. Without saying, 'Oh, free for you, because companies are paying.' I mean, if you all agree. But I really think we should try that here and get people used to the mentality of paying taxes to get services without us having to cover it up."
And having to rely on the 'stupidity of the American voter'.
"Not saying I disagree, because I'd honestly prefer what you're suggesting," Malcolm said. "But I think we'd first have to be sure residents here would be okay with all the extra costs and with that much redistribution from rich to poor. In general, Americans aren't okay with that. And we're adding a lot more services, requiring even more redistribution. Worst case scenario, we implement the policy with insurance subsidies for low-income residents like Romneycare, instead of messing with our tax code the way Obamacare did, and then we get voted out and have our policy axed. Even if we implement a single-payer system, which we still need more funding for, especially considering that we can't rely on any state or federal funding, there's still that risk that it'll be politically infeasible to expand coverage as much as we want to, even if it's a great policy."
"I don't think residents here are as opposed to a single-payer system as the rest of the country is," Pravir said.
"Yeah, but they've never had to have their incomes deducted or had to pay inflated prices for goods to pay for Will and others' care," Chiara said.
"It really could be a problem," Ainsleigh said. "The Demeter cabin's already getting complaints that produce now comes with a non-zero price. Like farmers don't deserve fair wages."
Malcolm faced Bae once more. "Yeah, so we don't have enough information to be certain we won't encounter those political issues. Until Chiron manages to get more funding from the gods, we'll need the public-private system. And even then, we need to set relatively high sales taxes or property taxes. Income taxes are still a bit tricky. Our tax department's still working with New Rome to figure out how to covertly coordinate all that stuff with the IRS. We should anyway try to be as self-reliant as possible. So, before we publicly make statements about how we're doing this so transparently, we can have a backup plan."
The awkward silences were thankfully getting less awkward. No one cringed this time at the content or the volume of such confidential conversations that were muffled from all outside by sound-proofing devices courtesy of Cabin Nine.
Pravir was the first to speak. "Yeah, and how 'bout we keep the tax incidence card and play it later on if necessary? For other sorts of policies. If we need to."
Set on the plan, the seven at the table brainstormed some general messaging.
Bae offered an idea: "If we show the similarities in services and expected results to those of Romneycare and Obamacare, and also the benefits compared to those programs, pretty much everyone could agree with our program."
"Pretty much no voter here is right-leaning, though," said Chiara. "I think if we mention something like that, it'd just open a can of worms that'll get some people to devalue the policy. 'Romney agreed with this? Yeah, I don't think so. We need to do more.' Ya know?"
"How 'bout we leave party and ideology out of this and stick with evidence and expected results?" Malcolm suggested. "'X fewer dead residents per Y years'?"
Rayel appeared unconvinced. "Party, sure, but we can leave in ideology. It's not like we can ever actually avoid it when using an evidence-based approach. So, we could still use some Rawlsian veil-of-ignorance type argument, which complements the 'fewer dead residents' messaging."
The seven then decided it made sense to argue from both utilitarian and deontological standpoints. The health team could figure out the details.
What the councillors still needed to confirm, however, was what to do with the vaping issue. Leave it be? No, they agreed. What policies could they then implement?
Twirling his pen, Will said, "In addition to offering services in the rehab center, or even in a pop-up location at camp, the city could do some information campaign. My team can coordinate that with Prav, since that fits within the education mandate."
"Maybe we could connect the hazardous waste problem and whatever emissions caused by e-cigarettes to environmental destruction and climate change. We know at least teenagers care about those things, too," Chiara said.
Rayel plastered on a grimace. "We could just ban 'em."
"And create a War on E-Cigarettes, like how the War on Drugs worked so well?" Pravir said.
"And among adults who do use them, they could just turn to cigarettes. That's just worse," Malcolm said.
"Well, we don't need cigarettes here either," Rayel said.
"As good as that sounds, I don't think we need total prohibition. We're just against teens using it. They're minors," Malcolm said.
"Yeah, it's like alcohol, right?" Bae said. "We're not banning alcohol. Like, I know it's nice to black out occasionally with some wine."
Well then. That made things easier for Malcolm. How disappointing.
Whatever. It changed nothing anyway.
In the lull of their discussion, Ainsleigh spoke up. "I'm not really sure, but there's this interesting study proposed by some researchers at the University of Chicago," she said, immediately causing Malcolm's ears to perk up. "They're going to run an experiment to find out if teenagers can avoid eating junk food if they're just told about the predatory tactics that marketers use to hook young people on their crap. Because maybe the teenagers would rebel and refuse to consume junk food."
Malcolm's mind raced with ideas as he let out a "huh."
"And this approach could work," Ainsleigh said, "because, while so many other methods haven't been effective in getting kids to care about long-term health, this would, in Chiara's speak, circumvent the high discount rate… or something like that?"
"Because they wouldn't need to think that far ahead in the future!" Chiara said. "It's about claiming victory in the present… to people who think they're stupid."
Ainsleigh smiled. "Yeah. So, the randomized controlled trial hasn't been run yet. So, it's not certain what the effects are right now. But we might see the results of the study in… 2019 or something. But, anyway, we could maybe try the same for vaping?" she said with a shrug. "I don't know. There might be a better idea. What do you think?" she said to Malcolm.
"I think that's a great idea," said Malcolm. "It'd be cool if it works. Thank you."
Maybe someday she'd stop turning valuable points into questions.
Just as he was thinking how to get more out of her, Chiara exclaimed, "Another experiment! Ainsleigh, I can work with you and Will on that."
Ainsleigh beamed as she agreed, and she and Chiara immediately began jotting away some notes.
Much better.
The rest of the team began to draft a communiqué of their policy proposals, and signed off their names on it after conducting a final values check based on the Bill of Rights and the most recent draft of the New Athens Values and Ethics Code.
The councillors then resumed their killing spree, eager to commit death by Millennial.
Part 2 of chapter 4 to come...
