fixer-upper economics

It's the car of your dreams since you were in high school, a 1960 Cadillac Eldorado convertible.  The previous owner put a lot of money into restoration, and the only thing that it needs to get back on the road is a new generator.  Piece of cake.  You track down the replacement generator on ebay, spend a weekend in your garage getting it installed, and you're behind the wheel on the way to the Seven-Eleven to pick up a celebratory six-pack.

A couple blocks down the road you notice that the steering pulls to the left, there's quite a lot of black smoke coming out of the tail pipes, and the transmission is making an odd grinding sound every time you shift gears.  You are wondering if you are going to actually make it all the way to the corner store, much less all the way across town to your job on Monday morning.  What to do?

Go read Dean Baker's analysis of the U.S. health care system.  I think you'll agree that the analogy is apt, and the solution is clear.

A couple excerpts to steer you in the right direction:

... Getting universal Medicare would require overcoming opposition not only from insurers and drug companies, but doctors and hospital administrators, both of whom are paid at levels two to three times higher than their counterparts in other wealthy countries. There would also be opposition from a massive web of health-related industries, including everything from manufacturers of medical equipment and diagnostic tools to pharmacy benefit managers who survive by intermediating between insurers and drug companies.

... in the case of prescription drugs, economists seem content to ignore the patent monopolies granted to the industry, which allow it to charge prices that are often ten or even a hundred times the free market price. (The hepatitis C drug Sovaldi has a list price in the United States of $84,000. High quality generic versions are available in India for a few hundred dollars per treatment.) In this case, we are effectively looking at a tariff that is not the 10-20 percent that we might see in trade policy, but rather 1,000 percent or even 10,000 percent.

And then he says:

In this context, Bernie Sanders’ push for universal Medicare can play an important role in energizing the public and keeping the pressure on.

Baker also asserts that "Krugman is largely right" in backing Hillary Clinton's incremental approach to fixing what ails the health care system, but he offers no explanation of that seeming contradiction to the evidence he has presented.

The article's analysis of a broken down system is still excellent in spite of that one inexplicable contradiction.  Perhaps Baker will sort out the issues better in subsequent installments.  In the meantime, it stll looks to me like the only practical way out of the dilemma is to dump that old Cadillac.

The Real Bernie Sanders

Opponents of Bernie Sanders on both the left and the right seek to paint him as a wild-eyed idealist.  One of the latest to take that stance is the economist, Paul Krugman.  He has posted several opinion pieces on his blog and in the NY Times editorial page recently which take their inspiration from the Clinton playbook.  In the latest NY Times piece Krugman asserts that Bernie resembles candidate Obama, while Clinton looks more like President Obama.  The point seems to be that Obama had to learn how to deal with political realities after he took office, and scale back his aspirations for his progressive agenda.  The implication is that Clinton knows the lay of the land already and is more prepared to move a progressive agenda forward in small, achievable increments.

There are quite a few problems with Krugman's interpretation of the careers and positions of those three politicians.  The biggest and most questionable is the assertion that Sanders does not know how to negotiate political realities.  Bernie has enjoyed a long career as an elected official at the local and national levels, and he has shown himself very adept at getting results while working with Dems and Republicans alike.  Most significantly he has crafted those legislative compromises and successes without abandoning his principles.

A lot of progressives can easily sympathize with Obama's dilemma of trying to govern  in the era of big money politics -- up to a point.  While many will applaud his leadership toward better health care, a lot of those who initially supported him see him coming up short in regard to environmental concerns, immigration, financial reform, trade negotiations and resistance to waging endless war.

Clinton in the last Dem debate sought to connect herself at the hip to Obama, while promising that she would advance the progressive agenda at an increasing rate.  The issue she failed to address in any meaningful way at the debate or elsewhere was the contradiction between the her populist agenda and the compromising acceptance of campaign money from the bankers and financiers that agenda purports to regulate.  Her changing positions on many issues throughout her political career also raise red flags about her credibility (and her electability) with people throughout the entire political spectrum.

So, Krugman's political campaign narrative seems to me and other Bernie supporters to be distorted by inattention to facts, very unlike his masterfully presented economic analyses.  It is interesting to read the comments left in response to his recent attacks on Sanders.  Normally, the commenters include a very large number of right-wing trolls who have nothing substantive to offer in rebuttal to Krugman's expertise.  The last column, by contrast, is followed by many well-reasoned, polite arguments against Krugman's postion, and supporting Bernie's candidacy.  I think that says a lot about Sander's and his supporters.  It also seems likely to diminish a lot of people's confidence in Krugman's judgment.

Back to Basics

I am reminded by a friend that establishing some common ground for discussion is an important part of the political process.  As we become enmeshed in the details of partisan campaigning it is easy to lose sight of the fact that not everyone has seen the same information about the issues.  Establishing context is a vital preliminary step to a productive exchange of views.  Here is my context:

What this chart from the work of Piketty and Saez illustrates is the share of national income that has been allocated to the top earning ten percent of the U.S. population between 1917 and 2012.  From 1942 to 1980 inequality in income distribution remained at an historic low level.  Beginning about 1980 the share of income going to the upper ten percent began to shoot upward like a rocket.

Looking at that chart, there are two obvious questions to be asked of politicians seeking to lead the country forward:

1. Why and how did the scenario portrayed by the chart take place?

2.  What needs to be done to reverse the direction of that graph line to move the country toward a fairer distribution of financial benefits?

My perception from listening to the presidential candidates is that Bernie Sanders has made the clearest analysis of the why and how, and he has made proposals for countering the soaring inequality that address the issues the analysis has identified.  The thirty second sound bites that are the building blocks of tv debates do not offer the opportunity examine the factual underpinnings of allegations, but I tend to believe Bernie's version of things because he has avoided acceptance of the compromising financial contributions from the 10% which all the other candidates in the race have succumbed to.

Unasked Questions

A few more thoughts on the last Democratic Party Debate.

Questions which might have been asked, but weren't:

1. Why should the American people accept a health care system that is more expensive and less effective than that of any other developed country?

Clinton didn't really answer that question.  She denigrated Sanders' health care proposals and averred that  the American political establishment is deeply divided and incapable of coming together to support a reasonable alternative to the present system.  She opined that trying to impose a single payer system would entail insurmountable complications and endanger the gains made by the Affordable Care Act.  To my dismay, Paul Krugman echoed Clinton's position in a recent column.

So, here's the thing: Clinton in her argument also misrepresents Bernie Sanders' health care proposals.  Sanders supported the Obamacare and still does.  Sanders is not saying that he will take out his magic pencil and scribble in a new health care system the day he takes office.  He is saying that there are a lot of political, social and economic reforms that are necessary to open a road to making health care a guaranteed right in America.  He is saying that a majority of American voters need to come together to create a new reality by supporting programs and candidates at all levels of government who will create a rational environment in which health care for all is achievable.  He is saying that if the American people do that, he will support their aspirations and their efforts with the power of the Presidency.

2.  Why is Martin O'Malley taking up space at the Democratic Party Debates?

O'Malley has never met a platitude he didn't like.  He spouts a liberal mantra of platitudes along with a list of accomplishments as a governor that is unsupported by facts.  He doesn't seem to have a single genuinely original idea about foreign policy.  In the last two debates, O'Malley has said he believes the big problem in the middle east conflicts is that we don't have good sources of human intelligence.  He doesn't appear to want boots on the ground any more than Sanders, but he would like to see more spies, I guess.

Well, here's the thing about O'Malley's analysis:  Reforming NSA and CIA tactics gets batted around every other election cycle by pols who are either clueless or deceitful.  America has a vast spy network that eclipses any the world has seen before.  What America has lacked are political leaders capable of evaluating the reports from their intelligence directors and putting them into a context informed by a knowledge of history and a perspective based on social justice.  The really important facts about foreign governments and political movements are not locked up in diplomats' safes; they are available in the historic record and in the daily news.

Of course, there are a lot of other questions that need to be asked and answered; questions about the environment, racial injustice, gun violence, inequality, and a lot more.  Hopefully, we'll get to them before time runs out in this election cycle.  If not, at least Sanders has pointed out a way forward.

Unanswered Questions

The Democratic Debate of 1/17/16

Clinton is a slick campaigner.  She doesn't get flustered by attacks.  She has a large store of experience that she brings into play as needed.  But, she doesn't have answers to the big questions posed by Bernie Sanders.

The biggest, of course, being Clinton's receipt of big money from Wall Street.  Her only response in this regard was to point out that O'Malley had at some point in the past also been a recipient of Wall Street money.  Is there really anyone who thinks that those big contributions don't carry an obligation to keep hands off any major reform of the banking and financial systems?

The other big question came from one of the debate moderators.  Clinton was asked why young voters overwhelmingly supported Bernie Sanders.  Clinton didn't even try to offer an explanation.  She said she hoped that group of voters would come around to supporting her.  To be sure, it was not a question that can easily be answered in thirty seconds, which is about all the debate format allowed.  However, one could make a start on the answer by putting yourself in the place of those voters. It is pretty clear to them, I imagine, that their future is bleak compared to what their parents and grandparents expected -- and got -- in many cases.  A lot of young people won't go on to higher education for lack of funding.  A lot who start won't finish, and yet will be saddled with massive debts.  Many who do make it all the way to a degree won't find meaningful or rewarding work in their field.  People with a high school degree or less will be trapped in jobs that are often short term, without health or pension benefits, and without power to bargain for better treatment.  They know the score.  They won't vote for Clinton.

News and Opinion

In political discussions with individuals it is often pretty easy to guess what their sources of information are based on the topics they focus on and the slant they give them.  I usually spend several hours daily on line visiting a long list of web sites.  Many are focused on personal interests such as photography, but most of those I visit in the early morning hours offer up news and opinions on the news of the day.  Below are listed links to the news and opinion sites I go to on a regular basis in the order that I read them.

1. New York Times
2. The Guardian
3. Slashdot
4. El País
5. FiveThirtyEight
6. Economist's View
7. New Mexico Politics with Joe Monahan
8. Research Blogging
9. Gizmag
10. Daily Kos
11. The Nation
12. eldiario.es
13. La Vanguardia
14. Boston Review

The Nation

Bernie Sanders today received the endorsement of The Nation, the oldest U.S. weekly magazine.  I'm skeptical as to the effectiveness of such media statements of support; I think they mostly just confirm people's predispositions.  However, the article announcing the endorsement is very well written to explain why Bernie is the better choice.

Bernie I hardly knew ye

This was the the picture illustrating the NY Times article about the MoveOn endorsement of Bernie Sanders:

The article itself was buried in a backpage column on the web site.  The Washington post gave the announcement similar treatment.  Seems like a pretty good illustration of the major media effort to ignore the challenge to the establishment candidate.

MoveOn members cast 340,665 votes.  78% went for Bernie.  15% went for Clinton.  O'Malley got 1%.

The Nation site reported the endorsement with a headline story very shortly after the results of the MoveOn vote was announced.