Thursday, December 5, 2013

Leaving It All to Market Forces

Remind me again why we have cracks in the system for people to fall through.

Paul Krugman has an insightful blog post today called "Unacceptable Realities," in which he lays into those who refuse to accept Obamacare and the Fed's monetary policy as workable initiatives that might just make things better. Not perfect, but better.
On both the healthcare and inflation fronts, what you have to conclude is that there are a large number of people who find reality — the reality that governments are actually pretty good at providing health insurance, that fiat money can be a useful tool of economic management rather than the road to socialist disaster — just unacceptable. I think that in both cases it has to do with the underlying desire to see market outcomes as moral imperatives.
That last line just grabbed me. First, it's a defensible position that markets are innately efficient and, left alone, with find their own levels. It's gospel to the libertarians, gold bugs, and laissez-faire capitalists. I don't buy it, but it's defensible.

Liberals, in general, believe that markets are not efficient and, in fact, are easily manipulated by those who know how. For us --I'm in this camp -- markets have to be regulated, in some cases, made to do right, in order to function on behalf of societal goals. Conservatives, in general, believe that government is not to be trusted with these things -- in fact, can make things worse -- and since markets are efficient, just let things get decided by them.

As I said, I don't buy this efficient-markets nonsense because there's plenty of proof unregulated markets can completely implode, i.e. the mortgage market between 2002 and 2008. But a case can be made. Fine.

When evidence shows that markets can fail, efficient-market advocates can only say, "Yeah, but government would be worse!" So Obamacare can never work for them. It'll always be evil.

And that's the point here: For the hard-right, it's a moral imperative that drives them. Markets are great because they do create winners and losers by their very design. If we don't have underpaid poor people, then it's a market failure. Poor people prove that the marketplace made its decision. The only way, in fact, a developed and quite rich country has any poor people is because we've devised our markets to produce them. And, yes, if we wanted to defeat poverty, we'd have to mess with the labor market indeed, or augment it so much by tax and/or safety-net policies that government accomplishes the same thing.

And that thing is to redistribute wealth. And that makes conservative heads explode. Why? Is it defensible to allow human suffering when it's avoidable? I don't think so. That's my moral imperative.

Here's a general outline of my proposition:
  1. Establish a higher minimum wage, say $15. Schedule it to be enacted in stages, if you want, so as not to cause undo chaos.
  2. As a nation, embrace labor unionization. That will raise wages, benefits.
  3. Structure the earned-income tax credit in such a way that every man, woman, and child in the U.S. gets enough money to be at 125% of the poverty level.
  4. Structure unemployment insurance such that an unemployed person who can work is at that same 125% of the poverty level.
  5. Disabled people will be provided with an income of 125% of the poverty level.
Require people to work or be looking for work if they are capable of working. I have no problem with that. Now, how do we pay for this? First, if the level of guaranteed income is high enough, we can eliminate both unemployment insurance and food stamps. There are other forms of welfare that can be folded into the pot to pay for this, as well. I could imagine many state and local aid programs for the homeless could be ended. Perhaps WIC isn't necessary if all families have the money to provide proper diet for themselves and their infants. Free and reduced lunch programx might no longer be needed. All this, of course, only if the level of guaranteed income is high enough.

There's a lot of bureaucracy that will then become unnecessary. Add those savings in, too. Now let's say that there's still more funding needed for this set of interacting programs. Just tax wealth enough to make up the difference. If the top 1% or the top .1% feel ripped off, so be it. They have acquired an inordinate amount of the total wealth of the U.S., and they can afford to spread some of it around. As a liberal this is what I call a moral imperative.

Imagine what happens when we undertake such a program of wealth redistribution.
  1. The economy gets stimulated as the velocity of money increases.
  2. Imagine the impact on the homeless situation. People literally can come in from the cold.
  3. People will spend more on housing and furnishings.That's good for the economy.
  4. Imagine a society with a vastly reduced misery index. Just imagine it.
  5. When matched with an effective healthcare program -- Obamacare is a nice start -- we can begin to see an end to the deleterious effects of stress and bad diet on the poor, with declining IQs and learning capabilities. This will help end to cycle of generational poverty.
Who loses? The super wealthy take a hit, one they can afford. Otherwise, I'm trying to think who else loses. The middle class? No, because the main effect on it will be an expansion, as fewer people slip out of the middle class and more have a chance to join it from below.

And just what is the moral hazard here? That some surfer somewhere is going to get over on us, or some lazy African-American figures out how never to work? Aside from the stereotypes involved -- surfers and African-Americans are no more lazy than you and I -- so what? So what if a few people get something they haven't earned or have no intention of trying to earn? We can just add them in as the rare few who have decided to find their own level and not seek to improve themselves. At least they'll be consumers.

You know, Denmark works a lot like what I just described, and the Danes are not a bunch of lazy ne'er-do-wells. They're a prosperous and hard-working nation who are dedicated to establishing and maintaining a successful -- and humane -- society. We can do it, too. It's the right and moral thing to do.

Those nasty Danes. How dare they be healthy, happy and hard-working, cycling
to work and all (55% of Copenhagen commutes by bicycle). Tough life.
I'm going to post this now and add links later that support my position and/or stupify my opponents. But I will add that I just heard Barack Obama on Chris Matthews saying that we have a great tradition of rugged individualism in this country, which makes it a place where, if you work hard, you can make it, or, if you're lucky, really, really make it. But that's only part of the picture, Obama reminded us. The government is us, and there are things the government can do better than we can ourselves. We can't, as individuals, put a man on the moon, win a war like WWII, or clean up after a major hurricane. We need some real scale for those things, and that's what government provides.

And there's another part of our great nation that we are currently have a hard time with, and that's a sense of community. A community is made up of individuals united by commonality. My feeling is that community is the basis for most of what mankind can produce. None of us does much on our own. We need each other. If that's the case, the better everyone in our community does, the better off all of us are.

That's what I'm saying.

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