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“Where Government Excels”: Recognizing The Reality That There Are Some Things The Government Does Better Than The Private Sector

As Republican presidential hopefuls trot out their policy agendas — which always involve cutting taxes on the rich while slashing benefits for the poor and middle class — some real new thinking is happening on the other side of the aisle. Suddenly, it seems, many Democrats have decided to break with Beltway orthodoxy, which always calls for cuts in “entitlements.” Instead, they’re proposing that Social Security benefits actually be expanded.

This is a welcome development in two ways. First, the specific case for expanding Social Security is quite good. Second, and more fundamentally, Democrats finally seem to be standing up to antigovernment propaganda and recognizing the reality that there are some things the government does better than the private sector.

Like all advanced nations, America mainly relies on private markets and private initiatives to provide its citizens with the things they want and need, and hardly anyone in our political discourse would propose changing that. The days when it sounded like a good idea to have the government directly run large parts of the economy are long past.

Yet we also know that some things more or less must be done by government. Every economics textbooks talks about “public goods” like national defense and air traffic control that can’t be made available to anyone without being made available to everyone, and which profit-seeking firms, therefore, have no incentive to provide. But are public goods the only area where the government outperforms the private sector? By no means.

One classic example of government doing it better is health insurance. Yes, conservatives constantly agitate for more privatization — in particular, they want to convert Medicare into nothing more than vouchers for the purchase of private insurance — but all the evidence says this would move us in precisely the wrong direction. Medicare and Medicaid are substantially cheaper and more efficient than private insurance; they even involve less bureaucracy. Internationally, the American health system is unique in the extent to which it relies on the private sector, and it’s also unique in its incredible inefficiency and high costs.

And there’s another major example of government superiority: providing retirement security.

Maybe we wouldn’t need Social Security if ordinary people really were the perfectly rational, farsighted agents economists like to assume in their models (and right-wingers like to assume in their propaganda). In an idealized world, 25-year-old workers would base their decisions about how much to save on a realistic assessment of what they will need to live comfortably when they’re in their 70s. They’d also be smart and sophisticated in how they invested those savings, carefully seeking the best trade-offs between risk and return.

In the real world, however, many and arguably most working Americans are saving much too little for their retirement. They’re also investing these savings badly. For example, a recent White House report found that Americans are losing billions each year thanks to investment advisers trying to maximize their own fees rather than their clients’ welfare.

You might be tempted to say that if workers save too little and invest badly, it’s their own fault. But people have jobs and children, and they must cope with all the crises of life. It’s unfair to expect them to be expert investors, too. In any case, the economy is supposed to work for real people leading real lives; it shouldn’t be an obstacle course only a few can navigate.

And in the real world of retirement, Social Security is a shining example of a system that works. It’s simple and clean, with low operating costs and minimal bureaucracy. It provides older Americans who worked hard all their lives with a chance of living decently in retirement, without requiring that they show an inhuman ability to think decades ahead and be investment whizzes as well. The only problem is that the decline of private pensions, and their replacement with inadequate 401(k)-type plans, has left a gap that Social Security isn’t currently big enough to fill. So why not make it bigger?

Needless to say, suggestions along these lines are already provoking near-hysterical reactions, not just from the right, but from self-proclaimed centrists. As I wrote some years ago, calling for cuts to Social Security has long been seen inside the Beltway as a “badge of seriousness, a way of showing how statesmanlike and tough-minded you are.” And it’s only a decade since former President George W. Bush tried to privatize the program, with a lot of centrist support.

But true seriousness means looking at what works and what doesn’t. Privatized retirement schemes work very badly; Social Security works very well. And we should build on that success.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, April 10, 2015

April 13, 2015 Posted by | Federal Government, Medicare, Social Security | , , , , , , , | Leave a comment

“Hating Good Government”: We’re Living In A Political Era In Which Facts Don’t Matter

It’s now official: 2014 was the warmest year on record. You might expect this to be a politically important milestone. After all, climate change deniers have long used the blip of 1998 — an unusually hot year, mainly due to an upwelling of warm water in the Pacific — to claim that the planet has stopped warming. This claim involves a complete misunderstanding of how one goes about identifying underlying trends. (Hint: Don’t cherry-pick your observations.) But now even that bogus argument has collapsed. So will the deniers now concede that climate change is real?

Of course not. Evidence doesn’t matter for the “debate” over climate policy, where I put scare quotes around “debate” because, given the obvious irrelevance of logic and evidence, it’s not really a debate in any normal sense. And this situation is by no means unique. Indeed, at this point it’s hard to think of a major policy dispute where facts actually do matter; it’s unshakable dogma, across the board. And the real question is why.

Before I get into that, let me remind you of some other news that won’t matter.

First, consider the Kansas experiment. Back in 2012 Sam Brownback, the state’s right-wing governor, went all in on supply-side economics: He drastically cut taxes, assuring everyone that the resulting boom would make up for the initial loss in revenues. Unfortunately for his constituents, his experiment has been a resounding failure. The economy of Kansas, far from booming, has lagged the economies of neighboring states, and Kansas is now in fiscal crisis.

So will we see conservatives scaling back their claims about the magical efficacy of tax cuts as a form of economic stimulus? Of course not. If evidence mattered, supply-side economics would have faded into obscurity decades ago. Instead, it has only strengthened its grip on the Republican Party.

Meanwhile, the news on health reform keeps coming in, and it keeps being more favorable than even the supporters expected. We already knew that the number of Americans without insurance is dropping fast, even as the growth in health care costs moderates. Now we have evidence that the number of Americans experiencing financial distress due to medical expenses is also dropping fast.

All this is utterly at odds with dire predictions that reform would lead to declining coverage and soaring costs. So will we see any of the people claiming that Obamacare is doomed to utter failure revising their position? You know the answer.

And the list goes on. On issues that range from monetary policy to the control of infectious disease, a big chunk of America’s body politic holds views that are completely at odds with, and completely unmovable by, actual experience. And no matter the issue, it’s the same chunk. If you’ve gotten involved in any of these debates, you know that these people aren’t happy warriors; they’re red-faced angry, with special rage directed at know-it-alls who snootily point out that the facts don’t support their position.

The question, as I said at the beginning, is why. Why the dogmatism? Why the rage? And why do these issues go together, with the set of people insisting that climate change is a hoax pretty much the same as the set of people insisting that any attempt at providing universal health insurance must lead to disaster and tyranny?

Well, it strikes me that the immovable position in each of these cases is bound up with rejecting any role for government that serves the public interest. If you don’t want the government to impose controls or fees on polluters, you want to deny that there is any reason to limit emissions. If you don’t want the combination of regulation, mandates and subsidies that is needed to extend coverage to the uninsured, you want to deny that expanding coverage is even possible. And claims about the magical powers of tax cuts are often little more than a mask for the real agenda of crippling government by starving it of revenue.

And why this hatred of government in the public interest? Well, the political scientist Corey Robin argues that most self-proclaimed conservatives are actually reactionaries. That is, they’re defenders of traditional hierarchy — the kind of hierarchy that is threatened by any expansion of government, even (or perhaps especially) when that expansion makes the lives of ordinary citizens better and more secure. I’m partial to that story, partly because it helps explain why climate science and health economics inspire so much rage.

Whether this is the right explanation or not, the fact is that we’re living in a political era in which facts don’t matter. This doesn’t mean that those of us who care about evidence should stop seeking it out. But we should be realistic in our expectations, and not expect even the most decisive evidence to make much difference.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, January 18, 2015

January 21, 2015 Posted by | Climate Change, Federal Government, Health Care | , , , , | 1 Comment

“The Government Problem”: The Central Issue Is Whom The Government Is For

Some believe the central political issue of our era is the size of the government. They’re wrong. The central issue is whom the government is for.

Consider the new spending bill Congress and the President agreed to a few weeks ago.

It’s not especially large by historic standards. Under the $1.1 trillion measure, government spending doesn’t rise as a percent of the total economy. In fact, if the economy grows as expected, government spending will actually shrink over the next year.

The problem with the legislation is who gets the goodies and who’s stuck with the tab.

For example, it repeals part of the Dodd-Frank Act designed to stop Wall Street from using other peoples’ money to support its gambling addiction, as the Street did before the near-meltdown of 2008.

Dodd-Frank had barred banks from using commercial deposits that belong to you and me and other people, and which are insured by the government, to make the kind of risky bets that got the Street into trouble and forced taxpayers to bail it out.

But Dodd-Frank put a crimp on Wall Street’s profits. So the Street’s lobbyists have been pushing to roll it back.

The new legislation, incorporating language drafted by lobbyists for Wall Street’s biggest bank, Citigroup, does just this.

It reopens the casino. This increases the likelihood you and I and other taxpayers will once again be left holding the bag.

Wall Street isn’t the only big winner from the new legislation. Health insurance companies get to keep their special tax breaks. Tourist destinations like Las Vegas get their travel promotion subsidies.

In a victory for food companies, the legislation even makes federally subsidized school lunches less healthy by allowing companies that provide them to include fewer whole grains. This boosts their profits because junkier food is less expensive to make.

Major defense contractors also win big. They get tens of billions of dollars for the new warplanes, missiles, and submarines they’ve been lobbying for.

Conservatives like to portray government as a welfare machine doling out benefits to the poor, some of whom are too lazy to work.

In reality, according to the Center for Budget and Policy Priorities, only about 12 percent of federal spending goes to individuals and families, most of whom are in dire need.

An increasing portion goes to corporate welfare.

In addition to the provisions in the recent spending bill that reward Wall Street, health insurers, the travel industry, food companies, and defense contractors, other corporate goodies have been long baked into the federal budget.

Big agribusiness gets price supports. Hedge-fund and private-equity managers get their own special “carried-interest” tax loophole. The oil and gas industry gets its special tax subsidies.

Big Pharma gets a particularly big benefit: a prohibition on government using its vast bargaining power under Medicare and Medicaid to negotiate low drug prices.

Why are politicians doing so much for corporate executives and Wall Street insiders? Follow the money. It’s because they’re flooding Washington with money as never before, financing an increasing portion of politicians’ campaigns.

The Supreme Court’s decision this year in McCutcheon vs. Federal Election Commission, following in the wake of Citizen’s United, already eliminated the $123,200 cap on the amount an individual could contribute to federal candidates.

The new spending legislation, just enacted, makes it easier for wealthy individuals to write big checks to political parties. Before, individuals could donate up to $32,400 to the Democratic or Republican National Committees.

Starting in 2015, they can donate ten times as much. In a two-year election cycle, a couple will be able to give $1,296,000 to a party’s various accounts.

But the only couples capable of giving that much are those that include corporate executives, Wall Street moguls, and other big-moneyed interests.

Which means Washington will be even more attentive to their needs in the next round of legislation.

That’s been the pattern. As wealth continues to concentrate at the top, individuals and entities with lots of money have greater political power to get favors from government – like the rollback of the Dodd-Frank law and the accumulation of additional corporate welfare. These favors, in turn, further entrench and expand the wealth at the top.

The size of government isn’t the problem. That’s a canard used to hide the far larger problem.

The larger problem is that much of government is no longer working for the vast majority it’s intended to serve. It’s working instead for a small minority at the top.

If government were responding to the public’s interest instead of the moneyed interests, it would be smaller and more efficient.

But unless or until we can reverse the vicious cycle of big money getting political favors that makes big money even bigger, we can’t get the government we want and deserve.

 

By: Robert Reich, The Robert Reich Blog, December 23, 2014

December 28, 2014 Posted by | Dodd-Frank, Federal Government, Wall Street | , , , , , , , , | Leave a comment

“Tidings Of Comfort”: On Multiple Fronts, Government Wasn’t The Problem; It Was The Solution

Maybe I’m just projecting, but Christmas seemed unusually subdued this year. The malls seemed less crowded than usual, the people glummer. There was even less Muzak in the air. And, in a way, that’s not surprising: All year Americans have been bombarded with dire news reports portraying a world out of control and a clueless government with no idea what to do.

Yet if you look back at what actually happened over the past year, you see something completely different. Amid all the derision, a number of major government policies worked just fine — and the biggest successes involved the most derided policies. You’ll never hear this on Fox News, but 2014 was a year in which the federal government, in particular, showed that it can do some important things very well if it wants to.

Start with Ebola, a subject that has vanished from the headlines so fast it’s hard to remember how pervasive the panic was just a few weeks ago. Judging from news media coverage, especially but not only on cable TV, America was on the verge of turning into a real-life version of “The Walking Dead.” And many politicians dismissed the efforts of public health officials to deal with the disease using conventional methods. Instead, they insisted, we needed to ban all travel to and from West Africa, imprison anyone who arrived from the wrong place, and close the border with Mexico. No, I have no idea why anyone thought that last item made sense.

As it turned out, however, the Centers for Disease Control and Prevention, despite some early missteps, knew what they were doing, which shouldn’t be surprising: The Centers have a lot of experience in, well, controlling disease, epidemics in particular. And while the Ebola virus continues to kill many people in parts of Africa, there was no outbreak here.

Consider next the state of the economy. There’s no question that recovery from the 2008 crisis has been painfully slow and should have been much faster. In particular, the economy has been held back by unprecedented cuts in public spending and employment.

But the story you hear all the time portrays economic policy as an unmitigated disaster, with President Obama’s alleged hostility to business holding back investment and job creation. So it comes as something of a shock when you look at the actual record and discover that growth and job creation have been substantially faster during the Obama recovery than they were during the Bush recovery last decade (even ignoring the crisis at the end), and that while housing is still depressed, business investment has been quite strong.

What’s more, recent data suggest that the economy is gathering strength — 5 percent growth in the last quarter! Oh, and not that it matters very much, but there are some people who like to claim that economic success should be judged by the performance of the stock market. And stock prices, which hit a low point in March 2009, accompanied by declarations from prominent Republican economists that Mr. Obama was killing the market economy, have tripled since then. Maybe economic management hasn’t been that bad, after all.

Finally, there’s the hidden-in-plain-sight triumph of Obamacare, which is just finishing up its first year of full implementation. It’s a tribute to the effectiveness of the propaganda campaign against health reform — which has played up every glitch, without ever mentioning that the problem has been solved, and invented failures that never happened — that I fairly often encounter people, some of them liberals, who ask me whether the administration will ever be able to get the program to work. Apparently nobody told them that it is working, and very well.

In fact, Year 1 surpassed expectations on every front. Remember claims that more people would lose insurance than gained it? Well, the number of Americans without insurance fell by around 10 million; members of the elite who have never been uninsured have no idea just how much positive difference that makes to people’s lives. Remember claims that reform would break the budget? In reality, premiums were far less than predicted, overall health spending is moderating, and specific cost-control measures are doing very well. And all indications suggest that year two will be marked by further success.

And there’s more. For example, at the end of 2014, the Obama administration’s foreign policy, which tries to contain threats like Vladimir Putin’s Russia or the Islamic State rather than rushing into military confrontation, is looking pretty good.

The common theme here is that, over the past year, a U.S. government subjected to constant bad-mouthing, constantly accused of being ineffectual or worse, has, in fact, managed to accomplish a lot. On multiple fronts, government wasn’t the problem; it was the solution. Nobody knows it, but 2014 was the year of “Yes, we can.”

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, December 25, 2014

December 26, 2014 Posted by | Christmas, Federal Government, Public Safety | , , , , , , , , , | Leave a comment

“Undermining The Sacred Right To Lie”: More Fun With Ben Carson’s Idea of “PC”

Back in October I stared at enough Ben Carson remarks to begin to grasp the man’s very unusual definition of “political correctness,” a term he uses constantly. To him, it basically means the practice of contradicting or mocking right-wing conspiracy theories in a way that “intimidates” people into no longer articulating them, which in turn suppresses political debate and thus makes America no longer America or something. So I wasn’t surprised when Carson went into full anti-PC mode after Wolf Blitzer (among others) called him on comparing the United States to Nazi Germany (per David at Crooks & Liars):

Possible Republican presidential candidate Dr. Ben Carson on Wednesday lashed out at CNN host Wolf Blitzer for “focusing on the words” that he used when he compared the United States to Nazi Germany.

Earlier this year, Carson had told the conservative news outlet Breitbart that the U.S. was “very much like Nazi Germany” because President Barack Obama was using the government to “intimidate the population.”

“What I heard the comparison of the United States of America — the greatest country in the world, the greatest country ever — to Nazi Germany, I said, what is he talking about?” Blitzer told Carson on Wednesday.

“See, what you were doing is allowing words to affect you more than listening to what was actually being said,” Carson insisted. “Nazi Germany experienced something horrible. The people in Nazi Germany largely did not believe in what Hitler was doing, but did they say anything? Of course not. They kept their mouths shut.”

“The fact that our government is using instruments of government like the IRS to punish its opponents, this is not the kind of thing, as far as I’m concerned, that is a Democrat or Republican issue. This is an American issue. This is an issue that threatens all of our liberty, all or our freedom.”

Blitzer, however, wasn’t satisfied: “But to make the comparison, Dr. Carson, to Nazi Germany, the slaughter of six million Jews by the Nazis, the devastation that erupted in Europe and around the world to the United States of America, I want you to reflect on what that means.”

“Well, again, you are just focusing on the words Nazi Germany and completely missing the point,” Carson replied. “And that’s the problem right now, that’s what PC-ism is all about: You may not say this word regardless of what your point is because if you say that word, you know, I go into a tizzy. We can do better than that.”

Read that through a couple of times and you get there’s no reasoning with people like Carson. Anyone who doesn’t accept his planted axiom that the IRS is being used as a political weapon by Obama (you know, through that well-known totalitarian tactic of slow-walking applications for a phony “social welfare” tax exemption designed to hide the identity of political donors) is smothering his argument with “political correctness.” Anyone hung up on the meaning of “words” like “Nazi” is undermining the sacred right to lie and make outrageous false analogies. Carson sees no obligation on his own part to be slightly more careful in his characterization of political opponents as akin to slave-drivers and Nazis. And so until people like him are, God forbid, fully in charge of America, any expression of dissent from his bizarre world-view is in fact oppressive, and any debate is the suppression of debate.

Yeah, the more I listen to him, the more it’s clear Dr. Ben Carson is the true and perhaps ultimate leader of the Post-Modern wing of the conservative movement, where “facts” are just an inconvenient artifice.

 

By: Ed Kilgore, Contributing Writer, Political Animal, The Washington Monthly, December 4, 2014

December 7, 2014 Posted by | Ben Carson, Federal Government, GOP Presidential Candidates | , , , , , , | 1 Comment

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