Tag Archives: Inequality

Finally, the Perfect Healthcare System!

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Breaking news from Washington:

House of Representatives Republican leaders ripped the Affordable Care Act, known as Obamacare, and Majority Whip Kevin McCarthy, R-Calif., urged a “patient-driven health care system, not a government-driven health care system.”

So, House Speaker John Boehner, R-Ohio, was asked at a news conference, what does that mean?

“Well,” he said, “When you look at “Obamacare,” what you see is a government-centered health care delivery system. That’s not what the American people want.

“The American people want to be able to pick their own type of health insurance; they want to be able to pick their own doctor; they want to be able to pick their own hospital. That’s what a patient-centered health care system looks like.”

Asked if that was likely to come to a vote next year, Boehner said, “We’ll see.”

Finally, no more in-network-out-of-network! No more we-don’t-accept-Blue-Cross-Medicare-or-Medicaid! No more United-Healthcare-is-no-longer-offered-by-your-company! No more if-I-get-this-job-I’ll-get-health-insurance! No more reasonable-and-customary-charges!

The American people will be able to choose whatever doctor they want and any kind of health care insurance they want. It won’t matter if you’re homeless, you’ll be able to go to the best doctors on Park Avenue. If you stock shelves at Walmart, you’ll be able to get high-quality care at the Mayo Clinic. If your company offers health insurance plans A, B and C, you’ll be able to choose D.

It won’t make any difference to anyone how much doctors, hospitals or insurance companies charge, because the Republicans now have a plan, the ideal plan that nobody else had the courage or insight to propose. In retrospect, however, it’s clearly the only way to guarantee everyone’s right to whatever health care they want without interfering with the free market: 

Every American citizen will have an unlimited supply of money to spend on healthcare! It’s the MONEY IS NO OBJECT plan! (MINO, for short.)

It’s the perfect “conservative” free-market solution, since everything for sale in the healthcare marketplace will be as good as free for consumers, while providers will retain the right to make as much money as possible.

(Note: Aside from replacing the words “government-centered” with “patient-centered”, details of the plan are, to be polite, “sketchy”.)

Meanwhile, here on Earth, there is an informative article in a recent New York Review of Books called “Obamacare: How It Should Be Fixed”. It’s by Arnold Relman, Professor Emeritus at Harvard Medical School. Unfortunately, you have to pay to read the whole thing (after MINO is in effect, we’ll all be able to afford it). But Dr. Relman concludes that our best hope of getting a high-quality, affordable health care system would be a single-payer system built on Accountable Care Organizations, i.e. private medical groups that would be paid by the government, not for every service performed, but for their patients’ overall care:

The only type of ACO [Affordable Care Organization] that has been proven to satisfy patients and physicians is multispecialty group practice. According to the American Medical Group Association, there are now well over 430 such group practices and their number is increasing rapidly as more physicians seek group employment….

Data from the Medical Group Management Association indicate that average staff earnings in groups are fully competitive with earnings in solo or small partnership practice, particularly if the generous fringe benefits that groups usually offer are also considered (for example, office expenses, malpractice insurance, paid vacation, pension plans). And judging from their low turnover rate, physicians who choose employment in successful, well-managed groups are usually satisfied with their job.

However, only a few medical groups currently avoid the inflationary incentives of fee-for-service by contracting with insurance plans that pay them on a per capita basis for comprehensive care of some or all of their patients; and even fewer pay their medical staff by salary….

… I have described in detail how a single-payer system sponsored by the federal government would function when coupled with a reorganized medical care system based on independent multispecialty group practices with salaried physicians. Replacement of all public and private insurance and elimination of itemized bills with a public tax-funded system that simply paid medical groups per capita for comprehensive care would avoid much of the expense and many of the other problems with the current system. The enormous savings could ensure adequate compensation for all the facilities and physicians needed for universal care.

The loss of jobs in the eliminated private insurance industry would probably be more than compensated by increased employment in a greatly expanded public-payer system, and by the new jobs created by the emerging business opportunities created when employers no longer need to pay the health costs of their employees. Government would be able to contain the rise in total health expenditures by its power to set prices and determine the level of taxation required to fund the system, but it need not micromanage medical care. Medical decisions should remain in the hands of physicians and their patients, where they belong.

Most important, this revolution in our health care system would make universal access to good care affordable. It is a revolution that seems inevitable, even though it is not yet on the political horizon.

I’d say it’s far, far beyond the horizon, but at least it’s on planet Earth. Meanwhile, we’ve got the ACA, which is significantly better than what we’ve had.

Pope Francis on Economic Tyranny and the “Deified Market”

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Pope Francis I has issued his first apostolic exhortation to the “bishops, clergy, consecrated persons and the lay faithful”. It’s called Evangelii Gaudium (“The Joy of the Gospel”). 

The most joyful part for many of us will be his comments on the global economy. He wants the world to say “No to an economy of exclusion”, “No to the new idolatry of money”, “No to a financial system which rules rather than serves” and “No to the inequality which spawns violence”.

Will his words affect those of us, Catholic or not, who would rather cut food stamps than regulate banks? Probably not, but it’s still great to hear the Pope talk like a Christian.

Quoted at length from the Vatican’s website:

53. Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills….Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

Human beings are themselves considered consumer goods to be used and then discarded. We have created a “disposable” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase; and in the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us. 

55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf … has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule. 

57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs”.

58. A financial reform open to such ethical considerations would require a vigorous change of approach on the part of political leaders. I urge them to face this challenge with determination and an eye to the future, while not ignoring, of course, the specifics of each case. Money must serve, not rule! The Pope loves everyone, rich and poor alike, but he is obliged in the name of Christ to remind all that the rich must help, respect and promote the poor. I exhort you to generous solidarity and a return of economics and finance to an ethical approach which favours human beings.

59. Today in many places we hear a call for greater security. But until exclusion and inequality in society and between peoples is reversed, it will be impossible to eliminate violence. The poor and the poorer peoples are accused of violence, yet without equal opportunities the different forms of aggression and conflict will find a fertile terrain for growth and eventually explode. When a society – whether local, national or global – is willing to leave a part of itself on the fringes, no political programmes or resources spent on law enforcement or surveillance systems can indefinitely guarantee tranquility. This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root. Just as goodness tends to spread, the toleration of evil, which is injustice, tends to expand its baneful influence and quietly to undermine any political and social system, no matter how solid it may appear. If every action has its consequences, an evil embedded in the structures of a society has a constant potential for disintegration and death. It is evil crystallized in unjust social structures, which cannot be the basis of hope for a better future. We are far from the so-called “end of history”, since the conditions for a sustainable and peaceful development have not yet been adequately articulated and realized.

60. Today’s economic mechanisms promote inordinate consumption, yet it is evident that unbridled consumerism combined with inequality proves doubly damaging to the social fabric. Inequality eventually engenders a violence which recourse to arms cannot and never will be able to resolve. This serves only to offer false hopes to those clamouring for heightened security, even though nowadays we know that weapons and violence, rather than providing solutions, create new and more serious conflicts. Some simply content themselves with blaming the poor and the poorer countries themselves for their troubles; indulging in unwarranted generalizations, they claim that the solution is an “education” that would tranquilize them, making them tame and harmless. All this becomes even more exasperating for the marginalized in the light of the widespread and deeply rooted corruption found in many countries – in their governments, businesses and institutions – whatever the political ideology of their leaders.

End Poverty and Bring Back the 90% Income Tax!

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If you’re feeling too optimistic about the future and want a bracing jolt of economic reality, you might want to read Paul Krugman’s latest column. It’s called “A Permanent Slump?“

Professor Krugman considers the possibility that the normal state of our economy is now mild depression (what psychiatrists call “chronic dysthymia” in another context). He describes it as “a persistent state in which a depressed economy is the norm, with episodes of full employment few and far between”.

Krugman points out that the economy hasn’t done especially well for most people in recent decades, even when we were in the midst of a housing bubble and consumers were taking on increasing amounts of debt. By now, the economy should have recovered nicely from the financial crisis of 2007-2009, but it hasn’t. As he puts it:

The evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing.

I went out to rake leaves after reading this. It was a beautiful fall day, very conducive to deep thoughts about politics and the economy. After ruling out the violent overthrow of the government, I concluded that there are a couple of things we need to do.

1) Establish a guaranteed minimum income, like Switzerland is considering. If too many people can’t find a decent job in this country, let’s at least make sure the worst off have a reasonable amount of money to live on. Maybe we don’t need as many people working as we used to, back before the “Information Revolution” and the “Global Economy”. Danny Vinik of the Business Insider makes a strong case here. He argues, for example, that most people would still want to work. I think one important result would be that the economy as a whole would benefit if people with low incomes had more money to spread around.

2) Bring back the progressive income tax, like we used to have when this country worked well for the majority of people. As recently as 1963, the highest tax rate was 90%. Of course, that doesn’t mean that someone making a million dollars a year (who made that kind of money back then?) had to pay $900,000 in federal taxes. The 90% rate applied to income above a certain threshold. As recently as 1980, the highest rate was 70%. Now, after the “Reagan Revolution”, it’s 35%. We’re still waiting for the wealth to trickle down. It might be the case that lots of billionaires and multi-millionaires would move to the Bahamas. (Good riddance.) But it would allow us to move away from being a “Winner Take All Society“.

Rentiers vs. Democracy

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The American political system is caught in a vicious circle (or cycle, or whatever you want to call it). The rich influence politicians, who then make it easier for the rich to influence politicians.

Economists call this process “rent-seeking”:

When a company, organization or individual uses their resources to obtain an economic gain from others without reciprocating any benefits back to society through wealth creation. An example … is when a company lobbies the government for loan subsidies, grants or tariff protection. These activities don’t create any benefit for society; they just redistribute resources from the taxpayers to the special-interest group. (Investopedia)

Joseph Stiglitz explains the effect of rent-seeking on inequality in an article about food stamps (being cut) and farm subsidies (not being cut):

As small numbers of Americans have grown extremely wealthy, their political power has also ballooned to a disproportionate size. Small, powerful interests — in this case, wealthy commercial farmers — help create market-skewing public policies that benefit only themselves, appropriating a larger slice of the nation’s economic pie. Their larger slice means everyone else gets a smaller one — the pie doesn’t get any bigger — though the rent-seekers are usually adept at taking little enough from individual Americans that they are hardly aware of the loss. While the money that they’ve picked from each individual American’s pocket is small, the aggregate is huge for the rent-seeker. And this in turn deepens inequality.

Economic rent-seekers are also known as “rentiers”, which can be confusing at first since “rentier” looks like “renter”. Rentiers, however, often own their own homes (in a nice neighborhood).

“Rentier” is an apt term, since it sounds classy (being French) and there is a rentier class. Earlier this year, Michael Lind wrote an interesting series of articles about America’s rentier class and what the rest of us should do about them: “Private Sector Parasites”, “How Rich Moochers Hurt America” and “Defeating Useless Rich People”. The titles are a little misleading, because not all rentiers are rich. Labor unions, for example, behave as rentiers if they use their position to extract unnecessarily high “rent” from the rest of society. But the rich rentiers are the ones wreaking havoc these days.

Lind points out that we need to distinguish between two different ways of making money:

Unfortunately, with the exception of some leftist and liberal economic thinkers who distinguish “rentier capitalism” or “financial capitalism” from “industrial capitalism,” conventional political discourse doesn’t distinguish between profit-earning “makers” and rent-extracting “takers.” Many progressives and populists indiscriminately denounce “big business” and “the corporations” as though a productive consumer electronics manufacturer were no different than a company that monopolizes the tolls from privatized municipal parking meters. At the same time, the center-left, whose upscale supporters tend to be credentialed upper-middle-class professionals, tend to ignore the antisocial aspects of the rent-extracting schemes of the professional guilds — medicine, law and the professoriate — as well as of their elite accomplices, the credential-granting universities.

On the right, the greatest triumph of the rentier interests has been to redefine “capitalist” to mean, not productive entrepreneur or successful industrial company executive, but “anybody who makes money” — a category that includes not only investors in productive enterprises but also rentiers and a third category of speculators in unproductive assets (Picasso paintings and Persian rugs, as opposed to machine tool factories). In today’s rentier-friendly conservative ideology, somebody who makes payday loans at usurious interest rates, gouges businesses with high insurance rates, or gets paid tolls from a privatized toll road is as much a “maker” and an “entrepreneur” and a “capitalist” as someone who puts together a team of inventors, engineers, workers and investors to apply [new technology].

It can be tricky, of course, to distinguish between producers and rent-seekers. Wealthy farmers provide an obvious service when they grow food that people need, but act as rentiers when they convince politicians to increase unnecessary food subsidies.

Lind argues for a variety of policies that would limit rent-seeking and foster productive economic activity, such as converting banks into low-profit, publicly-regulated utilities; making extraordinarily high interest rates illegal again; removing impediments to lower-cost health care; and increasing taxes on certain kinds of capital gains.

However, although he mentions campaign contributions in these three articles, Lind doesn’t emphasize how crucial it is to reduce the role of money in politics. Money, after all, is the principal resource small groups can use to get special treatment from politicians, because in our system of government anyone who wants to become a politician or remain one need lots of money.

But candidates and elected officials should not have to spend much of their time begging people for money to pay for their political campaigns. Voters should not be subjected to insane amounts of inane but expensive political advertisements. There should be greater restrictions on professional lobbyists. It shouldn’t be possible to leave Congress or a government agency and immediately take a high-paying job in the industry over which you had jurisdiction. Until our government isn’t for sale, it’s going to be extremely difficult to stop the vicious cycle (or circle) we’re in. We need to make it less appealing to be a rentier.

Now That That’s (Almost) Over

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(until the next time…)