A quick recap
I believe that conservative healthcare proposals are going to involve some type of “vouchers.” For instance, we might end Medicare as a direct payment from the government to your doctor. Instead, we give everyone 65 and older a voucher to purchase health insurance. The theory is that when ordinary people, acting as healthcare “consumers,” buy health insurance, they will negotiate the best deal possible, which will reduce the costs of healthcare and increase its quality. In order to argue against this approach, you have to first understand why it might work.
So, in Part 1, we looked at a market for hats, and we found that each individual trade results in more net happiness, because the win/win trades that happen in markets make each trader happier, without increasing the goods needed to trade, the hats. Our measure of success comes from adding up the individual happiness for each individual. When the change in the sum of individual utility is positive, then you have a morally good thing. Your people, at the level of the individual, are happier.
In Part 2, we looked at the dark side of this result. Poor Ed, with his head condition, is going to die because no one will trade with him for a protective hat, no matter how much we want this to happen. That is because there is no “we” in the marketplace.
And when someone gets dealt an untradeable hat, of solid lead, there is nothing they can do to trade their way out of their poverty. That is because markets overweight the prevailing distribution of resources.
In Part 3, we identified the third fundamental flaw of markets – they turn the intrinsic into the instrumental. There is a difference between driving a friend to the airport or being a taxi driver and doing the same thing. In other words, motive counts. For instance, in healthcare, there is a difference between taking care of people in order to make money, as do for profit hospitals, or making money in order to take care of people, as do mission driven not for profit hospitals.
We are getting closer to our conclusions, but we still need to understand something important about how markets work. For that, we propose a market for bicycles.
Two bicycle producers
Assume we live in a marketplace that has exactly two bicycle producers, Afshan and Gabby. Afshan produces a very good bicycle, and sells them for $800. Gabby produces an absolutely wonderful bicycle for the same $800. Afshan is a good producer, but Gabby is more efficient, because she produces a great bicycle for the same amount of money.
Which bicycle would you buy, the good one or the great one?
Right, even Afshan would probably buy a bicycle from Gabby. So, very quickly, Afshan is removed from the market, as everyone buys their bikes from Gabby. Now, what does Gabby do? Well, she has control over price, which is the technical definition of “monopoly.” There is no price pressure on her anymore. As would anyone, Gabby raises her prices.
In fact, since she is now making so much money from each bicycle, she decides to open up other factories, because it is worth her investment to double or triple her production.
This is a good thing, because it increases production by the high efficiency, high quality bicycle producer. Gabby hires lots of people to work in these new factories, and we all benefit from having better bicycles available. Ii is a good thing for the society as a whole when efficiency and quality are rewarded.
If you follow the story so far, you now have gotten to the point of understanding the underlying theory of “trickle down” economics. When we reward the productive people at the top, the benefits accrue to us all as they trickle down.
Of course, the story might have ended there if we were talking about America in the Fifties. Rewarding the “job creators”of the 1950's with special deals and tax cuts made work in manufacturing for many, many people, and the middle class (thanks, in part, to unionizing) grew in size and wealth. This is what Obama means when he says we grew the country outwards from the middle, rather than from the top down.
It’s not the Fifties anymore
But this isn’t the Fifties. At some point, Gabby’s brother-in-law comes to her and says “Why are you doing your manufacturing in Chicago? The union wages are killing you. You should move to Tennessee.” A couple of years later, the brother-in-law talks Gabby into moving again, this time oversees. The wealth might be trickling down, but it is doing so in sweat shops in China or Viet Nam, not in Illinois or anywhere in America. The people at the top continue to make millions, but the benefits are no longer “on shore.”
It doesn’t stop there. A couple of years ago, Gabby’s brother-in-law tells her that she is a fool for trying to make money in manufacturing. The big money, he tells her, is in derivatives. He convinces her to sell her bicycle factories to a foreign entity and put her money into the financial market.
So, now the riches made from bicycles accrues to the foreign owners, and the jobs go to poor Chinese. And Gabby is now making more and more money trading paper fantasies, which make her richer and richer, and provide no benefits for the rest of us.
Three concepts
This story illustrates three important concepts: “the invisible hand,” “consumer sovereignty,” and “voodoo economics.”
Note that we didn’t need a study or a committee or a bicycle commissar to decide who to reward with our bicycle purchasing. The free market allowed everyone to make their own choices, and we rewarded the high efficiency, high quality bicycle producer, “as if by an invisible hand.”
When people say that we should empower the marketplace in healthcare, this is what they intend. If patients purchased their care from the high efficiency, high quality medical providers, healthcare costs would go down, and healthcare quality would go up. No need for government intervention; the “invisible hand” takes care of this.
However, that only works if the patients are the ones paying for the care. “Consumer sovereignty” is the notion that the quality, price and quantity of a good or service in a market is determined by the demand for those services. In a well-functioning market, with consumer sovereignty, the consumer will purchase the goods they want from whom they want, and that will set the price for the goods, as well as the quality that the consumer demands. And smart providers will manufacturer enough goods to meet demand, but no more than that. In our bicycle market, we all exercised our consumer sovereignty, and we drove the low efficiency, low quality producer out of the market, and rewarded the high efficiency, high quality producer.
But who actually buys healthcare? Do you or I? Nope.
About 60% of the people with insurance in the US get their insurance from their employer. Almost all the rest get their coverage through government (e.g., Medicare, Medicaid, the VHA, or the Children’s Health Insurance Program). Almost no patients actually buy their healthcare directly. (Millions of people have purchased insurance on the ACA’s exchanges. But they represent only two or three percent of the entire population.) So, patients are not the “consumers” in the marketplace. The healthcare “consumer” is actually our employers and the federal government, because they buy the healthcare.
And from whom do they buy healthcare? Mostly from insurance companies (although some government programs, like Medicare not run through a Medicare Advantage program, make payments directly to the healthcare providers). So, the healthcare “providers” are actually the insurance companies. Then, they sub-contract out this demand by contracting with healthcare professionals and hospitals and the pharmaceuticals.
You and me? We are merely wards of this system.
And the promise of all of that “trickling down?” Well, that is the “voodoo economics” that George H. W. Bush warned us about before he tossed his lot with Reagan in 1980. Now that we are no longer in the Fifties, there is no evidence that cutting taxes and making sweetheart deals for the rich benefit us all. It benefits the rich. And it encourages them to play fantasy economics in the financial sector, which makes them richer, and then causes millions of us to lose our homes and jobs when the unintended but completely foreseeable consequences of their games are realized.
Markets work, but only for some things
Markets do work, and they work well. . . for some goods and services. Would I want a government sponsored distribution of hamburgers? No, that is perfect for the marketplace. Probably bicycles as well. But should we treat healthcare as a market commodity?
Well, 32 of the 33 industrialized countries have asked that very question. And they answered “No, healthcare is a right, not a commodity or a privilege. Therefore, we can’t use markets to allocate it.”
Rights only exist at the level of “the community.” We talk of “individual rights,” but these are a function of what rights are recognized by the community. And they are only guaranteed by concerted action on the part of the community. Therefore, they must be allocated by the community. And the standard agent of the community is government.
Therefore, healthcare, these 32 developed democracies decided, should be allocated by government.
But that turns out not to end the analysis. Because there are problems with government systems, too. In fact, just as there are three fundamental flaws of every market, there are three fundamental flaws for every government allocation system. We need to look at those before we are able to finally examine the promise of healthcare vouchers.
That is our next topic.
Sunday, February 28, 2016
Monday, February 8, 2016
My heart says Sanders. But so does my head.
We are being told that even though our hearts are attracted to Bernie Sanders’ message, we should vote with our head, and support Clinton. Herewith is my head’s response for why thoughtful people should support Sanders.
It all comes down to what you think is necessary to address the public policy problems we face:
• a policy debate that has shifted dramatically towards the right
• a dysfunctional Congress dominated by right-wing rhetoric and moneyed interests not acting in the face of climate change, economic inequality, institutionalized racism, the need for real healthcare reform
• campaign financing rules that give the rich way too much access to policy debates
• an economic system that purports to build from the top down but merely lifts yachts
• the making of district boundaries that assure conservative control over the House for the foreseeable future
• a mindless national press corps that parrots the talking points of the oligarchs
• a Supreme Court dominated by manipulative ideologues
• political discourse that presents no room for a positive role for government
My heart tells me that Sanders could lead us in addressing these problems.
Will Clinton solve these problems?
So, my head wants to know — What do you think Hillary Clinton will do to solve these problems? In spite of her protests to the contrary, she is, of course, utterly a creature of the establishment. Made rich by courting the rich. Playing the games of Washington. Carefully triangulating every position. Yes, she is the first woman to come this close, but she is not someone who will change the substance or the ground of political debate. More of the same, but in a pants suit.
Hillary proposes to right the country’s wrongs by doing pretty much the same thing as has President Obama, only better. We have no evidence that she will do things better than he, but more importantly, neither he nor she seems to understand that playing the game inside of Washington, only more exquisitely, is not the solution to any of the above problems. These are battles that can only be won out among the public, building a social movement that will trump the establishment and its rich, conservative benefactors. Obama never understood that; Clinton doesn’t either.
Maybe she will do less well
And I think there is evidence that Clinton would do less well than Obama. It has to do with how good you are at chess.
Me, I am not a good chess player. I have difficulty thinking that far ahead. Move, counter-move, counter to that, and so on, ten or twenty moves down the road.
Yet that is exactly the strategic capacity we need in a president. To understand the nature of the real domestic political fight ahead of us. And to represent America in foreign policy by thinking deep into the moves and counter-moves of international strategy.
So, there is Clinton, serving as Secretary of State, knowing full well that she is going to be running for President in a couple of years, and she decides to handle her email on her own personal account. She must know that this is going to be just the sort of thing that will plague her during her coming campaign, yet she does it anyway. Or worse, she hasn’t thought it through far enough ahead of time. How could she do that? I don’t think she needs to apologize for using her personal email. The apology she owes us is for not thinking more strategically about the implications of doing so.
And there is Clinton, having left the Administration, now actively planning her race for president, but also ready to work with her husband in his successful efforts to cash in on their cache. She takes $225,000 from Goldman Sachs for each of three talks. And she doesn’t realize that this will be a problem when she is running? She hasn’t thought that far ahead? Or maybe she is so deeply acculturated to the corruption of Washington that she doesn’t even see the problem? “Well,” she offers, “that is what they offered me.”
And she gets taken by surprise when a reporter asks to see the transcripts of these talks. Come on now – didn’t she see that coming? I mean, I didn’t see that coming, but I am not running for president, either. We need better.
I want a president who is a whole lot better than I am at thinking through the deeper moves in strategic analyses. I don’t think Clinton is that person.
But that is not the point
But actually, this is a digression. Because the real reason she isn’t the right person is because we don’t need more of Obama. We need to do what he wasn’t willing to do, which is create a movement that goes “over the head” of the corruption in Washington, that empowers politicians to reconstruct our institutions and actually address our problems. Barack Obama made the mistake of not seeing this necessity. Nor does Hillary Clinton.
What is wrong with America is not a new thing. It has been forming for more than 50 years. The conservative movement has been strategizing, planning, building for decades. The fact that the center of gravity of our political discourse has moved so far to the right didn’t just happen. It has been a concerted effort, executed over many years by thoughtful people on a mission. A mission to delegitimize government, to play off of the anger of people frustrated by a changing economy, a changing culture, and a changing world. And to exploit racism as a political tool, as Southern politicians became the leaders of the new Republican Party after Nixon’s successful “Southern strategy.”
Not sure that is what really happened? Yet, this is the story told by Jane Mayer in A Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right and E. J. Dionne in Why the Right Went Wrong: Conservatism from Goldwater to the Tea Party and Beyond.
And Hillary Clinton is part of the problem, not the solution. She was an integral part of this history. By working with her husband to pull the Democratic Party to the right in the 90's, allowing the rightward current to carry them along, rather than acting as a counter-balance to that trend. And as a favorite dart board target for conservatives, distracting us and the public from facing our real problems, a dynamic which won’t stop if she is elected President.
A counter-revolution
Bernie Sanders is almost right when he asks us if we are ready for a political revolution. But what he really is proposing to lead is a counter-revolution, an attempt to bring things back to an equilibrium where government is seen as a positive force in the lives of Americans, not by excluding the market, but by accompanying it. Yes, some things are best left to the market to allocate, like hats and bicycles. But other things should not be “marketed,” like healthcare and
protection of our common resources.
A respect for government. That alone would be enough. After all, some of our problems are problems that exist only at the level of “community,” like justice, racism and environmental decay. These aren’t problems of the individual. These are problems that will only be solved by the community acting upon them. And the legitimate agent of the community is the government.
Yes, the Declaration of Independence emphasizes the right to life, liberty and the pursuit of happiness. But the next phrase is too often ignored: “That to secure these rights, governments are instituted among [people], deriving their just powers from the consent of the governed.”
What is needed is a social movement that moves us toward more justice, less prejudice, a respect for “waging peace.” A respect for the legitimacy of collective action, made possible through government.
This counter-revolution is what will be necessary to go “over the heads” of Congress and the Washington press, to confront directly the oligarchs. To succeed, this social movement needs leadership and intensity. Leadership must be based on authenticity and intensity will come from rousing people’s frustrations with the corruption of the present and their spirited belief in a better future.
What Sanders is saying
And Sanders has been saying exactly what that would entail:
Returning to a progressive income tax
Recognizing the right to healthcare
Reforming our campaign finance system
Redistricting that is non-partisan
Restructuring our energy production system
Building prosperity by supporting the broad middle of the economy, not rewarding the rich and hoping it will “trickle down”
Preparing to keep us safe in a violent world, but also becoming a voice of peace and justice in that world
Electing progressive Senators, Congresspeople, Governors and State Representatives around the country
My heart and my head
My heart is lifted by this call. But, in addition, my head is clear that Hillary Clinton will never achieve any of these things, not because she is a bad person, but because she is utterly a creature of the problematic present, not someone who can lead us into that future. She has neither the authenticity nor the vision to rouse our spirits.
Let me be clear about something. If Hillary Clinton is the Democratic nominee, I will work for and pray for her success. It would be far worse to have any of the current Republicans as president. And I am not oblivious to the danger of supporting Sanders.
But my head tells me that Hillary is no more likely to win than Bernie. Democrats have a substantial Electoral College advantage. And Sanders has shown himself to be a powerful political force. Will he be attacked as a Jewish, non-religious, socialist? Of course. But won’t Hillary suffer from the brutalizing that has marked her continuous battles with the right-wing?
If neither Sanders nor Clinton win, woe to us. But if Clinton wins, we will not heal the gaping wounds of our body politic. There are not enough bandaids to apply.
So, there it is. My heart tells me that Sanders is speaking truths of great consequence. And my head says that following those truths is the only way to promote justice and fight corruption, to reverse the rightward movement of our policy discourse, to relegitimize a balance between government and the market, to allow me to be proud again of our policy making.
Bernie Sanders for President. Sounds right.
It all comes down to what you think is necessary to address the public policy problems we face:
• a policy debate that has shifted dramatically towards the right
• a dysfunctional Congress dominated by right-wing rhetoric and moneyed interests not acting in the face of climate change, economic inequality, institutionalized racism, the need for real healthcare reform
• campaign financing rules that give the rich way too much access to policy debates
• an economic system that purports to build from the top down but merely lifts yachts
• the making of district boundaries that assure conservative control over the House for the foreseeable future
• a mindless national press corps that parrots the talking points of the oligarchs
• a Supreme Court dominated by manipulative ideologues
• political discourse that presents no room for a positive role for government
My heart tells me that Sanders could lead us in addressing these problems.
Will Clinton solve these problems?
So, my head wants to know — What do you think Hillary Clinton will do to solve these problems? In spite of her protests to the contrary, she is, of course, utterly a creature of the establishment. Made rich by courting the rich. Playing the games of Washington. Carefully triangulating every position. Yes, she is the first woman to come this close, but she is not someone who will change the substance or the ground of political debate. More of the same, but in a pants suit.
Hillary proposes to right the country’s wrongs by doing pretty much the same thing as has President Obama, only better. We have no evidence that she will do things better than he, but more importantly, neither he nor she seems to understand that playing the game inside of Washington, only more exquisitely, is not the solution to any of the above problems. These are battles that can only be won out among the public, building a social movement that will trump the establishment and its rich, conservative benefactors. Obama never understood that; Clinton doesn’t either.
Maybe she will do less well
And I think there is evidence that Clinton would do less well than Obama. It has to do with how good you are at chess.
Me, I am not a good chess player. I have difficulty thinking that far ahead. Move, counter-move, counter to that, and so on, ten or twenty moves down the road.
Yet that is exactly the strategic capacity we need in a president. To understand the nature of the real domestic political fight ahead of us. And to represent America in foreign policy by thinking deep into the moves and counter-moves of international strategy.
So, there is Clinton, serving as Secretary of State, knowing full well that she is going to be running for President in a couple of years, and she decides to handle her email on her own personal account. She must know that this is going to be just the sort of thing that will plague her during her coming campaign, yet she does it anyway. Or worse, she hasn’t thought it through far enough ahead of time. How could she do that? I don’t think she needs to apologize for using her personal email. The apology she owes us is for not thinking more strategically about the implications of doing so.
And there is Clinton, having left the Administration, now actively planning her race for president, but also ready to work with her husband in his successful efforts to cash in on their cache. She takes $225,000 from Goldman Sachs for each of three talks. And she doesn’t realize that this will be a problem when she is running? She hasn’t thought that far ahead? Or maybe she is so deeply acculturated to the corruption of Washington that she doesn’t even see the problem? “Well,” she offers, “that is what they offered me.”
And she gets taken by surprise when a reporter asks to see the transcripts of these talks. Come on now – didn’t she see that coming? I mean, I didn’t see that coming, but I am not running for president, either. We need better.
I want a president who is a whole lot better than I am at thinking through the deeper moves in strategic analyses. I don’t think Clinton is that person.
But that is not the point
But actually, this is a digression. Because the real reason she isn’t the right person is because we don’t need more of Obama. We need to do what he wasn’t willing to do, which is create a movement that goes “over the head” of the corruption in Washington, that empowers politicians to reconstruct our institutions and actually address our problems. Barack Obama made the mistake of not seeing this necessity. Nor does Hillary Clinton.
What is wrong with America is not a new thing. It has been forming for more than 50 years. The conservative movement has been strategizing, planning, building for decades. The fact that the center of gravity of our political discourse has moved so far to the right didn’t just happen. It has been a concerted effort, executed over many years by thoughtful people on a mission. A mission to delegitimize government, to play off of the anger of people frustrated by a changing economy, a changing culture, and a changing world. And to exploit racism as a political tool, as Southern politicians became the leaders of the new Republican Party after Nixon’s successful “Southern strategy.”
Not sure that is what really happened? Yet, this is the story told by Jane Mayer in A Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right and E. J. Dionne in Why the Right Went Wrong: Conservatism from Goldwater to the Tea Party and Beyond.
And Hillary Clinton is part of the problem, not the solution. She was an integral part of this history. By working with her husband to pull the Democratic Party to the right in the 90's, allowing the rightward current to carry them along, rather than acting as a counter-balance to that trend. And as a favorite dart board target for conservatives, distracting us and the public from facing our real problems, a dynamic which won’t stop if she is elected President.
A counter-revolution
Bernie Sanders is almost right when he asks us if we are ready for a political revolution. But what he really is proposing to lead is a counter-revolution, an attempt to bring things back to an equilibrium where government is seen as a positive force in the lives of Americans, not by excluding the market, but by accompanying it. Yes, some things are best left to the market to allocate, like hats and bicycles. But other things should not be “marketed,” like healthcare and
protection of our common resources.
A respect for government. That alone would be enough. After all, some of our problems are problems that exist only at the level of “community,” like justice, racism and environmental decay. These aren’t problems of the individual. These are problems that will only be solved by the community acting upon them. And the legitimate agent of the community is the government.
Yes, the Declaration of Independence emphasizes the right to life, liberty and the pursuit of happiness. But the next phrase is too often ignored: “That to secure these rights, governments are instituted among [people], deriving their just powers from the consent of the governed.”
What is needed is a social movement that moves us toward more justice, less prejudice, a respect for “waging peace.” A respect for the legitimacy of collective action, made possible through government.
This counter-revolution is what will be necessary to go “over the heads” of Congress and the Washington press, to confront directly the oligarchs. To succeed, this social movement needs leadership and intensity. Leadership must be based on authenticity and intensity will come from rousing people’s frustrations with the corruption of the present and their spirited belief in a better future.
What Sanders is saying
And Sanders has been saying exactly what that would entail:
Returning to a progressive income tax
Recognizing the right to healthcare
Reforming our campaign finance system
Redistricting that is non-partisan
Restructuring our energy production system
Building prosperity by supporting the broad middle of the economy, not rewarding the rich and hoping it will “trickle down”
Preparing to keep us safe in a violent world, but also becoming a voice of peace and justice in that world
Electing progressive Senators, Congresspeople, Governors and State Representatives around the country
My heart and my head
My heart is lifted by this call. But, in addition, my head is clear that Hillary Clinton will never achieve any of these things, not because she is a bad person, but because she is utterly a creature of the problematic present, not someone who can lead us into that future. She has neither the authenticity nor the vision to rouse our spirits.
Let me be clear about something. If Hillary Clinton is the Democratic nominee, I will work for and pray for her success. It would be far worse to have any of the current Republicans as president. And I am not oblivious to the danger of supporting Sanders.
But my head tells me that Hillary is no more likely to win than Bernie. Democrats have a substantial Electoral College advantage. And Sanders has shown himself to be a powerful political force. Will he be attacked as a Jewish, non-religious, socialist? Of course. But won’t Hillary suffer from the brutalizing that has marked her continuous battles with the right-wing?
If neither Sanders nor Clinton win, woe to us. But if Clinton wins, we will not heal the gaping wounds of our body politic. There are not enough bandaids to apply.
So, there it is. My heart tells me that Sanders is speaking truths of great consequence. And my head says that following those truths is the only way to promote justice and fight corruption, to reverse the rightward movement of our policy discourse, to relegitimize a balance between government and the market, to allow me to be proud again of our policy making.
Bernie Sanders for President. Sounds right.
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