Public Policy and Governance – Page 254

The Problem Isn’t Capitalism

‘Tis the season to bemoan crass capitalism. But we should think before joining that chorus.

Markets are wonderful things; as Adam Smith explained many years ago, the “invisible hand” channels self-interest toward socially desirable ends. Market competition has given us better goods at lower prices, and has demonstrably been a “rising tide” lifting many boats.

Why, then, is America’s capitalist economy generating so much criticism? What is the cause of the country’s growing and very worrisome inequality?

Two reasons are pretty apparent.

First, the system we currently have in the U.S. is not market capitalism. It is corporatism. Corporatism has been defined as the organization of society by major interest groups, specifically corporations. It isn’t exactly a secret that the last thing many of our captains of industry want is genuine competition. The legions of lobbyists sent to Washington and state capitals are not arguing for open markets; they are vying for competitive advantages and taxpayer subsidies.

The second reason is less obvious, but no less consequential. Markets don’t work for everything.

In the areas of the economy where market competition is appropriate—in the production of consumer goods and services, most obviously—markets operate as Smith’s theory suggests. But as every student of economics learns, there are areas where competition is unworkable.

Historically, for example, America has regulated utilities, and (at least since Teddy Roosevelt) tried to prevent domination of a market through monopolistic practices. (As technologies and markets change over time, these categories may shift, and it isn’t always clear that our governing institutions keep pace, but that is a subject for another day.)

What doesn’t change, however, is a foundational premise: In order for a market to function, there must be a willing buyer and a willing seller, both of whom are in possession of the necessary relevant information. When there is a significant and unavoidable asymmetry of knowledge or information, a true market cannot exist.

Health care is the poster child for that asymmetry. Not only does the consumer lack the information and expertise necessary to “shop” for a seller/provider, the realities of illness make it likely that she will lack the time needed to evaluate her options. Add to that the way in which the health insurance industry has developed, with “in network” and “out of network” providers, and you don’t have to be an economist to recognize that market principles are simply inapplicable.

Most Western nations came to that conclusion many years ago, and most have national health care systems. Here in the U.S., even the modest movement toward government-insured access to health insurance has met with hysterical resistance—and lots of rhetoric about creeping socialism and the superiority of markets.

The immorality of this refusal to make important distinctions was most recently highlighted by the actions of one Martin Shkreli, who bought the rights to a drug and raised its price 5500%. As several commentators noted, America is the only developed nation that lets drug-makers set their own prices — maximizing profits the same way that sellers of chairs, mugs, shoes, or any other seller of manufactured goods would.

Shkreli’s behavior underscores the irrationality—and yes, the immorality—of America’s healthcare system, where corporations set our public policies and insist upon market principles in an area where, by definition, genuine markets cannot function.

The moral of this story: don’t blame capitalism. This isn’t it.

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Bosma: The Grownup in the Room

Well, the usual suspects are all ganging up on Brian Bosma, the Speaker of the Indiana House, who has had the temerity to suggest that, if we want roads we can drive on, we probably need to pay for them.

As the Indianapolis Star reported

Hoosiers could pay more for gas and cigarettes under a road funding proposal being crafted by Indiana House Republican leaders.

The proposal also would provide for a study about turning I-65 and I-70 into toll roads.

House Speaker Brian Bosma provided some details about the proposal during a legislative conference Downtown on Wednesday. The funding plan would index the state’s fuel tax to inflation and gradually shift all of the 7 percent sales tax on gasoline to the motor vehicle highway fund, which is used for state and local road projects.

Bosma said the plan would create a sustainable, long-term solution for maintaining Indiana’s roads and bridges, but he acknowledged that some would consider it a tax increase.

Now, it’s perfectly reasonable to argue for alternative ways to raise the necessary revenues, or to ask for assurances that funds raised will be prudently spent– but those aren’t the arguments being mounted by Bosma’s opponents. They are opposed to anything that looks remotely like a tax. No matter what.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, said the proposed tax adjustments would be a tough sell in the legislature, where many Republicans have pledged never to increase taxes.

This impasse is a stark reminder that there are two kinds of Republican in Indiana (as elsewhere): those interested in actually governing, and those (like our embarrassing Governor) interested only in pulling down a public paycheck for posturing and pontificating. And there are more of the latter than the former.

News flash, ideologues: there is no free lunch. There is no way to provide necessary public services, no way to maintain critical public infrastructure, without adequate funds. Taxes are “user fees”–they are the price we pay for civilization, our social “membership dues.”

Grownups understand that.

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A Wake-Up Call Too Late?

Finally, the alarms are going off in what is left of the rational GOP. The question is: is it too late? Has the party slept through earlier signals and bells, hitting the “snooze” button too often?

Okay, enough with the strained analogy.

Bill Brock recently wrote a “must read” column for the Washington Post. For young people and those with bad memories, Brock, from Tennessee, served as both a Representative and a Senator from that state, and for four years, was Chair of the Republican National Committee.

I am just as concerned about the destructive tone of the Trump campaign as I am about its demagogic content. How can you hear what someone else is saying, no matter how important, when you’re shouting? How can you bring people into a constructive search for solutions to our national problems when you do nothing but belittle them, and even suggest they are stupid, weak or corrupt?

A truly free society, one that gives its citizens the responsibility of participation, can function only to the extent there is civil discourse. We can engage in a mutual search for solutions only to the extent that we agree a problem exists. That can never happen unless we talk to each other, listen to each other and respect the fact that honorable people can reach different conclusions. When that sense of comity is missing, we are at risk.

Before readers dismiss Brock’s column as just one more heart-felt but ultimately feckless appeal for civility, I would call attention to an important paragraph in which he identifies the structural elements—what he calls “root causes”— that have brought us to this (very unpleasant) place in our national life:

Shouting is only part of it. There are also root causes. They include, but are not limited to, the ever-widening gap between our two parties caused by redistricting abuses and the undeniable sense that the election process itself is being swamped by unlimited and too often undisclosed funds from a select few. There is one more I fear — the too-often cable-TV-driven sense that only the dramatic, only the negative, only the ad hominem attack can garner sufficient attention to assure electoral success. The public disgust is palpable, and rightly so, but in a more fundamental sense, the results are disastrous.

Redistricting. Unlimited and unreported money. The rise of sensationalist, propaganda radio and TV.

We can and should do something about these causes of our political pain. It won’t be easy, but we need to move from today’s pervasive gerrymandering to nonpartisan redistricting. We need a Constitutional Amendment to overturn Citizens United, and far more transparency about political funding.

And–most difficult of all, but also perhaps most important–we need to reclaim what has been called the journalism of verification. We need a journalism that fulfills its constitutionally-protected function of acting as government’s watchdog, a journalism that is trusted because it has demonstrated that it is trustworthy.

Let’s take Brock’s wake-up call seriously—and hope that it isn’t too late to restore both civility and a government that functions.

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The Real Lesson from Oregon

Recently, the Guardian ran an article about Oregon’s successful effort to tighten its gun laws. It was interesting to learn about the state’s strategies and players–but the real lesson wasn’t about controlling access to guns.

It was about enabling democracy and facilitating–rather than suppressing–the vote.

In 2014 during Oregon’s midterm elections, the NRA poured cash into the coffers of pro-gun candidates, and a coalition of opponents poured money into the campaigns of anti-gun candidates. According to Everytown, which is backed by billionaire Michael Bloomberg, it alone funneled $600,000 into the state. The NRA made phone calls, sent mail, urged its members to contact their legislators. In the meantime Everytown bought ads on television and online.

That’s when the effort in Oregon reached its third step. “If you ask people about ‘gun control’, they might say they don’t like it. But if you ask people about specifics, like assault rifles or background checks, they’re overwhelmingly for it. People want change,” Okamoto said. “So we put the vote in their hands.”

It’s simple to vote in Oregon, which holds all elections by mail. When residents apply for drivers’ licenses they are automatically registered to vote, and about three weeks before an election they receive a ballot in the mail. They fill it out at home and send it back. “It’s so easy,” Okamoto said.

For years, pundits and politicians alike have bemoaned the reality that the NRA can–and does–prevent legislators from responding to the huge majorities of Americans (including a majority of NRA members) who favor stricter controls over gun purchases. But they’ve never connected the dots.

If we want policies that reflect public sentiment, we have to allow the public to express that sentiment at the ballot box.

In a constitutional democracy, there are certainly things we don’t vote on. We are not a pure democracy, and “majoritarianism” is–and should be–tempered by the protections of the Bill of Rights and the Rule of Law.

But in those areas where legislation should reflect the public will, we should be facilitating the expression of that public will–not suppressing it.

Oregon’s vote by mail system and other measures making voting easier rather than more difficult deserves to be emulated elsewhere.

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A Lesson from the Chanukah Story

Chanukah has just ended. In honor of the holiday, a Buddhist cousin sent me a story from the Huffington Post titled “The Real History of Chanukah is More Complicated than you Probably Thought.”

It actually was.

In Sunday School, we were basically taught that Judah Maccabee led a successful revolt against Antiochus, whose Seleucid empire had taken over Judea and was forcing the Hellenization of the Jewish people. (I dimly remember something about pigs in the Temple…). The Maccabees won, and when they commenced clean-up of the Temple, discovered that there was only enough oil to light the holy menorahs for a day—but a miracle happened, and the oil lasted for eight days, just long enough to allow a runner to obtain more.

If my recollection is hazy (it is), my defense is that Chanukah (spelled however you like) was a very minor holiday until Christmas, celebrated around the same time of year, became so commercialized, and we Jews didn’t want our children to feel left out. The lesson of Chanukah was the importance of religious liberty, which was duly noted, and then we moved on….

According to the Huffington Post, real history was a bit more complicated. Initially, a number of the Jews embraced aspects of the Seleucids’ Hellenic culture.

“The initiative and impetus for this often came from the locals themselves,” said Shaye J.D. Cohen, professor of Hebrew literature and philosophy at Harvard and author of From the Maccabees to the Mishnah. “They were eager to join the general, global community.”…

The rising influence of hellenism was not immediately a source of open conflict within the Jewish community. In fact, hellenism permeated even the most traditional circles of Jewish society to one degree or another. A typical Judean would have worn Greek robes and been proficient in the Greek language whether he was urban or rural, rich or poor, a pious practitioner of the Mosaic faith or a dabbler in polytheism.

“Becoming more hellenized didn’t mean they were less Jewish as a result,” said Erich Gruen, an emeritus history professor at Berkeley and author of Diaspora: Jews Amidst Greeks and Romans. “Most Jews didn’t see hellenism as the enemy or any way compromising their sense of themselves as Jews.”

The rebellion came only when Antiochus pushed the more pious Jews too far, engaging in a campaign of radical hellenization–prohibiting fundamental Jewish practices, and introducing foreign rites and practices in the Temple.

“They actually rebel only when the religious persecution reached a level they could no longer tolerate,” said Cohen, who also chairs Harvard’s department of Near Eastern languages and civilizations. “The line in the sand seems to have been the Torah and the [commandments], and the profaning of the ritual of the Temple.”

Cohen characterizes these Jews not as zealots, but as “realists.” Until then, they had embraced many hellenistic norms in their own lives and accommodated the spread of practices to which they objected — such as foreign worship — among their co-religionists.

There certainly is a lesson here, and it actually goes well beyond the importance of respecting religious differences/liberties in a diverse society. Ironically, it is a lesson taught by the early Greeks—the importance of moderation, of aiming for the “mean between extremes.”

These days, we might say “Don’t push your luck,” or “Pigs get fed; hogs get slaughtered.”

When will working Americans decide that they are being pushed too far? When the Walmarts and their ilk continue to resist paying a fair wage? When their wholly-owned politicians work tirelessly to deny medical care to those who are struggling financially? When their lobbyists argue for cutting social programs in order to give the rich greater tax breaks? When the bankers who precipitated the Great Recession continue awarding each other obscene bonuses…???

How far is too far?

Happy Chanukah…..

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