At DKos this morning, Mark Sumner (aka Devilstower) has a pretty good piece, "The free market is anti-American". It's actually excellent in one respect--it historically corrects the notion that America was founded on free market market principles. In fact, as Mark notes:
Those who worry that we've wandered too far from the vision of the founding fathers might want to remember that in George Washington's first term, the government was involved in:
selectively restricting imports
bailing out debts of states
being the majority owner of a private company
clamping down on fiscal speculation
executing a "stimulus plan" of infrastructure projects
And all of this goodness was paid for by new taxes.
The American school of economics was founded on these ideas: selective tariffs, government regulation of banks, and strong investment in infrastructure. Under later presidents a fourth plank was added to this platform -- investment in public education.
I downgrade it to "pretty good" because it oversimplifies, which we can see quite clearly in in this passage:
The American economic system -- the system defined by George Washington and Alexander Hamilton -- came directly out of the challenges faced by our nation. America, as a new country, was at a huge disadvantage to Europe when it came to the ability to produce manufactured goods. American-made goods at the time were often lesser quality, more expensive, or both when compared to products coming from European factories. Both men were well aware of free market principles (On the Wealth of Nations was published in 1776) and there were those among the founders that pushed Washington to run the country along a purely market-driven philosophy. An unregulated free market backed up by the gold standard was the basis of the "English System," and the British had enjoyed more than a little success.
There are two problems with this passage. First is that the "English system" in 1776--or even the 1790s--was definitely not free market. When Smith wrote The Wealth of Nations he was considered a radical, and he was writing as a critic of the existing English system (as well as the rest of Europe) that was dominated by royal charters and grants of monopoly. Remember the Boston Tea Party? The British East India Company? That was a royal charter company--the most important in British history, to be precise.
As explained quite wonderfully by Emma Rothschild in Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment, Smith and Condorcet were proponents of the free market as part of a broader vision of much wider human freedom. It wasn't until 50 years later, after the Napoleonic Wars, that the British trading class--buoyed by Britain's indisputable naval superiority--emerged as politically dominant, and rediscovered Smith's work as a legitimating ideology for its trade-based ambitions. The irony of the state power backing up this rediscovered--and reinvented--"free trade" philosophy should not be neglected. But it was not the "English System" as it existed when the United States was being established.
The other problem with the passage above is that it described the Federalists' Northern, trade and manufacturing-based economic vision, which was generally--often bitterly--opposed by the Democratic Republicans, for reasons both good and bad. While my own view is that the federalist policies were generally good for the country, they certainly weren't good for a lot of less prosperous folks trying to gain a foothold. Jefferson and Jackson spoke for those folks--and, directly or indirectly, for slavery and the genocide of Native Americans as well. Neither economic vision was anywhere near as pure as it claimed.
In short, our history is morally conflicted in a multitude of ways, and there is no single clear and shining pristine past for us to appeal to. Our politics, economics and democratic ideals have always been deeply contested, and we cannot understands ourselves and/or our history if we do not acknowledge that contradiction and struggle have been with us from the very beginning... if not before.
The story of the golden calf in Exodus is the perfect allegory for the conservative movement's rapturous worship of the free market uber alles. In their religious fervor, the free market is always good, and therefore corporations- no matter their size, power, or history of malfeasance- are always good too, and all government is always bad, all of the time, no matter what. They worship their idol of gold no matter what actually happens in the world around them, and nothing can change their religion. The economy can collapse in a terrible financial panic on their watch, and it still doesn't shake their faith in their golden idol. The big banks can commit fraud and create massive bubbles they know will pop and it still doesn't shake their faith- they still don't want financial regulations. Mine accidents can kill people, and they still don't want more safety inspectors. Toys with lead in them can kill toddlers, and they still don't want stronger consumer protections. The number of people killed from E Coli can rise to record levels, and they still don't want stronger food safety rules. Bridges can collapse, and the still don't want to raise taxes to pay to rebuild our infrastructure. 40,000 people a year can die from a lack of health insurance, millions can be denied coverage because of pre-existing conditions, Medicare can prove to be a popular and effective way of delivering health care to people, and they still don't want government involved in health care. Social Security can lift generations of senior citizens out of abject poverty, and they still want to get rid of it.
I could go on and on and on, because heaven knows conservatives do. But the government is always bad, corporations are always good, religion is going to cost them politically on the banking issue. Republicans are threatening to filibuster a bill to regulate the big banks and hedge funds that trashed our economy and that would be the greatest gift they could possibly give Democrats. Filibuster to your heart's content, Sen. McConnell. Let's have this debate go on and on and on. Let it drag on for weeks, or even better, months. I know you will keep repeating Frank Luntz's talking points word for word about how reining in the power of these mega-banks would lead to more bailouts, but voters are already seeing through the act. Even tea partiers, as anti-government as they are, hate the big banks, so go ahead and do your ritual incantations at your altar of gold, and we'll see how this debate plays out.
I'm happy to have this debate, I'm happy to have the debate over whether people want to repeal the ban against insurance companies not covering people with pre-existing conditions, and I'm happy to have the debate over whether to worship corporate America and the free market in all situations. Progressives understand that businesses, big and small, and entrepreneurs of every type, have a centrally valuable role in building our economy. But we also understand that government has a valuable role to play as well, and that sometimes corporations do abuse their power and hurt people. Conservatives want to leave each of us on our own to deal with corporate oligopolies without any help or support from our government. If we get hurt, so be it, because after all, as Glenn Beck puts it, in nature the lions will eat the weak. Progressives believe that power is corrupting- government power, yes, but also corporate power- and that government should be on the side of the little guy instead of on the side of the richest and most powerful in society.
So let's have this debate. Mitch McConnell wants to make the debate this week about big banks and whether government should play any role in holding them accountable and reining them in. I'm good to go on that debate- and I want to have it on all those other issues as well.
It's time to melt down the golden calf of the free market above all else. That golden calf has turned into golden bull, and it's time to stop worshipping it.
On Feb. 1, President Barack Obama unveiled his 2011 budget proposal. While conservative pundits reacted with predictable, yet preposterous, wailing about the federal budget deficit, the short-term U.S. budget outlook is just fine. If anything, Obama's budget doesn't dedicate nearly enough funding to create jobs.
As John Nichols notes for The Nation, Obama budgets just $100 billion for jobs in fiscal 2011. The amount is nowhere near enough to make a significant dent in the epic unemployment rate. The government's fiscal 2011 calendar begins in October of this year, and by that time, the stimulus package Obama pushed through in February of 2009 will have been exhausted, leaving the labor market without serious support from the federal government.
The free market isn't going to take care of the jobs shortage on its own. While the unemployment rate fell from 10.0% to 9.7% during January, the "improvement" is really just a statistical mirage-the economy actually lost 20,000 jobs during the month.
If we had pushed through a bigger, or as Nichols notes, a better stimulus package in the first place, we might not be facing the same situation today. Part of the problem is that Obama redirected about $326 billion of the $787 billion bill away from direct job-creation efforts toward a set of tax cuts intended to appease Republican senators.
Tax cuts do not equal job growth
But as Art Levine emphasizes for Working In These Times, the $100 billion that Obama sets aside for job creation in 2011 appears once again to take the form of relatively inefficient tax cuts. Giving money to businesses, even small businesses, isn't really going to make them start hiring unless there's a real demand for what those businesses produce. When everybody is broke and out of work, that demand doesn't exist, since people don't have money to spend.
If the government wants to create jobs, it has to do it directly by hiring people to help rebuild the nation's infrastructure through institutions such as schools, transportation and green energy. Just as important, the federal government can provide funding to state and local governments to make sure that jobs that serve our communities-teachers, cops, etc.-don't disappear.
Sure, these things cost money. But the short-term budget deficit is nowhere near the current deficits of many European nations, or the deficits the U.S. ran during World War II. The budget deficit only matters to economics insofar as it raises concerns that the government will not be able to pay back its debt. But despite caterwauling from the right, investors just aren't worried about a U.S. debt default. If they were, they would demand very high interest rates on Treasury bonds, and Treasury rates are at their lowest levels in decades.
If policymakers want to keep the jobs bill from running the deficit higher, they could always raise taxes on somebody. Financial speculation on Wall Street seems like a good place to start, but just about any tax on the wealthy would work fine. Rich people don't get hammered by recessions. After all, they're rich.
Overzealous tax cuts hurt communities
In a piece for AlterNet, David Sirota details the budgetary disaster that has already befallen the city of Colorado Springs, CO., a conservative enclave where anti-tax extremists have managed to slash just about every basic government service imaginable. Rather than impose some modest taxes on the wealthy, Colorado Springs is going to lay off cops and firefighters, let its parks go to waste, shut-down rec centers and museums and even allow its streetlights to go out. This is the Republican plan for fiscal responsibility.
But several state governments recognize that shredding the social fabric just isn't a good idea. In Oregon, Sirota notes, voters just approved two ballot initiatives to raise taxes on corporations and wealthy individuals rather than allow their state to slide into social decay.
How to deal with a deficit
There are two ways to increase a budget deficit: You can either increase spending, or cut taxes. If you want to decrease the budget deficit, you can either cut spending, or raise taxes. As Kevin Drum notes for Mother Jones, Republicans both increased spending and cut taxes during the George W. Bush presidency. Now those same so-called fiscal conservatives are feigning outrage over the prospect of the government actually spending some money to put people back to work. These are not serious economic arguments-conservative politicians are just hoping to gut progressive policy priorities.
But while the attacks don't hold any water, conservative media outlets are latching on to them, and Obama isn't pushing back.
What caused the current crisis
Writing for The American Prospect, Robert Kuttner notes Obama's recent support for a proposal from right-wing deficit hawks to create a commission to evaluate the causes of our so-called fiscal crisis. But we already know what put us in the current fiscal situation: Rising health care costs, a brutal recession, and the Bush era. The commission is being pushed by radical conservatives for a reason-it's part of an effort to gut Social Security. It's bad economics, bad public policy and it badly misreads the real source of public discontent. Kuttner explains:
"Public concern about deficits is really a proxy for broader unease that government is not delivering enough practical help . . . . The president should be helping citizens sort this out, not caving in to the fear-mongers."
Fortunately, as Steve Benen notes for The Washington Monthly, Senate leaders appear committed to passing at least some kind of legislation to help put people back to work.
Whatever right-wing pundits say, the U.S. fiscal crisis remains a totally theoretical problem. Someday, if the U.S. budget does not come down, it is conceivable that investors would be reluctant to purchase U.S. debt. For now, that is simply not the case. But the crisis in the job market is very real and requires direct action. Put simply, the deficit is no excuse for inaction.
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In my first diary yesterday, I questioned whether, as Chris argued, another wave election victory for Democrats, based primarily on the Iraq War, would be enough to produce a genuine realignment, and the overthrow of the conservative coalition. I picked up on David Sirota's diary about a three-country expansion of NAFTA, and agreed that this sort of politics had proven deadly for Democrats in 1994, but disagreed somewhat about why and how.
In my second diary, I looked at Naomi Klein's reframing of "free market" conventional wisdom in her new book, The Shock Doctrine, and a 7-minute trailer for it. The "free market" is not natural, inevitable, noncoercive and beyond politics-as, for example, neocon Frances Fukiyama argued in The End of History--but rather the product of deliberate anti-democratic interventions carried out when societies are helpless to resist.
This is, of course, one of the key dynamics in Iraq. Although Saddam was a brutal dictator, he kept Iraq's basic social contract intact. Iraq was a Western-style welfare state, based on its oil wealth, with a highly educated middle class. The oil law we are trying to impose is central to changing all that, transferring enormous wealth to oil companies, and leaving Iraq with a vastly impoverished public sphere. (Which, of course, opens the way for "faith-based initiatives" of the Hamas, Hezboolah, even bin Laden persuasions.) The oil law is a key requirement of the Iraq Study Group recommendations- recommendations which some have proposed should form the foundation of the Democrats' alternative to Bush's endless war.
The fact that this oil law could be nonchalantly accepted in such a manner is indicative of how poorly we understand the nature of the political struggle we are in. Stealing Iraqs oil wealth-for that is what the oil law does-should be anathema, morally repugnant to us. That it is not is a reflection on our general ignorance of the "free market" dogma and its impact on the rest of the world. We simply fail to focus on the oil law because we do not see that larger movement of which it is part-a movement to extract as much wealth as possible from the poor people of the earth, which is what "free trade" is actually all about.
One of the key political and social issues of the past 15 years has been the state of health care in this nation. The debate has largely been divided into two camps, those that think the free market will deliver and those that think the government should take a more active role through some form of social program(s). No one, however, has had any real success in effective reform of our nations health care system.
About 46 million people in the country lack any form of health insurance and would thereby be expected to pay out of pocket extremely high and rising medical costs. Most people claim that the private sector can solve this problem better and more efficiently than any state or federal government and under most circumstances, the private sector is more efficient than the government. Healthcare, however, is one of those few areas, where the private sector has had a chance to fix the problem and has failed to do so.
The major government funded health care programs, outside of the health plans provided to government employees, are Medicare, Medicaid and the State Children's Health Insurance Programs or SCHIPs. These programs are designed to help the segments of the population who can not afford private health care. Medicare and SCHIP provided health care to the elderly and to children, respectively, two groups that can not and should not be working to pay for their own health care. Medicaid is designed for low-income individuals and families. This includes parents, children, seniors and people with disabilities. Once again, outside of covering the parents, Medicaid covers people who can not be expected to go get a job to pay for the health care they already can not afford and thereby make up the group of Americans that would be considered outside the health insurance market.
Private health care is the best in country but with one caveat: not everyone can afford it. The private insurance companies that are pushing for free market solutions to health care are, in the end, businesses and like all businesses will only do something if it is profitable. That means health insurance will only be provided if the company providing it can make a profit. Private insurance companies have had free access to the majority of the population without federal competition for decades and still there about 46 million people in this country without health insurance (2004 US census). The private sector has not provided for these people and, outside of black balling attempts at covering this 16% of America, have shown no signs of trying to provide access to a level of health insurance that would remove the need for any federal program because they are the segment of the population for which providing insurance is not likely to turn a profit. In other words, the free market has failed.
Since federal law ensures public access to emergency services regardless of ability to pay, those without health insurance to help cover regular doctors visits will be more likely to wait till an emergency room visit is necessary. The cost of those ER visits are pushed onto the public and are far greater than the cost of providing a basic, federally funded, preventive and emergency health care insurance to the lower rung of society (those 46 million without insurance) that can not afford private health care and do not have access to employer provided health care. The private sector can stop complaining because the government will be servicing the section of the population that the free market has ignored for the past 60 years and those 46 million people without health care can actually go to the doctor for a check up or the dentist for a toothache.
Of course the rising medical costs are another aspect of health care that needs to be addressed. Many have suggested Tort reform as a way of combating frivolous law suits and while this will reduce the number of such lawsuits it is really not an option worth taking. Most of the proposed reforms to tort will require a plaintiff to pay the legal fees of the defendant if the defendant is found to be not guilty. In theory that sounds great, but if allowed to be law, it would make it very difficult for an individual or a small group of people to bring a lawsuit against a major corporation. In such cases, the corporation has a significant upper hand in the ability to afford the best lawyers available, making it quite the up hill battle for the plaintiff. (And you thought Rocky was an underdog.) A better alternative to tort reform is being proposed in Rhode Island right now. It is a "Best Practices Registry."
Many medical malpractice lawsuits are brought because there are multiple procedures for every ailment and because whatever procedure is selected by the doctor didn't seem to work properly. For the patient/plaintiff, they can always find at least a couple doctors who will say, under oath, that they personally find some other procedure to be better than the one used. For this reason, malpractice insurance is one the largest expense a doctor has. A Best Practices Registry (BPR) would be a record of what is considered to be the best procedure or practice for each ailment we know of. Hearings regarding the merit of each practice would be held and doctors would have the opportunity to argue medical issues there, not during a malpractice suit. If procedure A is decided by the greater medical community to be the best way to deal with Carpals Tunnel and is registered as such, then only the doctors who ignore this consensus of the medical community would be subject to malpractice suits, not every doctor in the country.
A move to preventive health care will benefit the country greatly. Allowing people access to regular doctor visits to help maintain a consistently healthy lifestyle will reduce the amount of treatments needed in the future and reduce the number of ER visits by people who have easily treatable ailments. This federally funded health care does, like Medicare, Medicaid, and SCHIP, have to be need based so as not to step too hard on the toes of the private sector. While universal, single payer health care is certainly an ideal we should strive for, to suddenly move towards is in the short term can potentially cripple a large part of our already faltering economy that rests on private health care and insurance. The problem in this country is not that health services are inadequate, its that for too long those controlling what services people have access too have been motivated by profit, not health.
