Entries from March 2010
A few weeks back I posted about the nine different political alignments represented by this chart:
A recent article by a friend of a friend got me thinking again about the differences between the political alignments and I came to a personal conclusion: I find the alignments along the axis to be far more appealing than the ones at the corners. I respect Straight Libertarians as being against both the Progressive Totalitarian Democrats and the Conservative Totalitarian Republicans. I understand the desire to glorify the past (however imperfect it may have actually been) and try to live up to the goals and aspirations of our forefathers. I can even understand the desire to say, “Screw it, the people are idiots! Let’s have some people in charge that know what they’re doing and make them take care of it! (The fictional Lord Vetinari from Terry Pratchett’s Discworld comes to mind as the kind of pragmatic, cynical leader who could do Totalitarianism without falling into Either Communism or Fascism.) Most of all, I think I resonate with the progressive causes. I want a government that is invested in making the country more fair for everyone. But I also want a government that is more efficient, less wasteful, and less intrusive. I want a government that works in the background and is there when you need it, but unobtrusive in your day to day life.
This would put me ever so slightly in the Progressive Libertarian camp. AKA Hippie. Which in the 60s would have put me in a popular group, but now it’s fairly lonely. All the hippies from that era have grown up and become Conservative Libertarians, affectionately referred to as “Tea-baggers.” In fact, across the board, It’s lonely at the top. The Straight Libertarians have been largely co-opted by the Conservative Libertarians, who have largely been co-opted by the out of power Conservative Totalitarians. (You could make the argument that an out-of-power totalitarian becomes a libertarian by necessity, although the majority of them switch back as soon as they return to power. Yet another reason why I think Republicans make a much better opposition party than a leadership party. Although lately they’ve been doing a bit too good a job at opposing damn near everything, including their own ideas.)
The main problem I have with Libertarians is the blind belief in the free market. It is the same as the Conservatives’ blind belief in past glories, a Totalitarian’s blind belief in Authority, and the Progressive’s blind belief in the goodness of human nature and their ability to build a glorious future where everyone is enlightened and gets along without offending anyone else. In the case of the Libertarians, the myth of the free market makes it difficult for me to support them since human nature has shown time and again that any market run by humans will invariably not be free for long. In a perfect world, a fair and free market (fair being in the best interest of the market itself) would prevail because taking advantage of the market would, in the long term, lead to catastrophic failure. This implies that humans are capable of self-policing, long-term planning, and have the ability to ignore large short-term gains that may be offset by long-term losses. While this may be true of SOME humans, it is certainly not true of them all. Enron and AIG being just two recent examples. I prefer my free market to be policed by competent watch-dogs. The Washington regulators haven proven to be anything but competent. I would call for a third-party group to regulate wallstreet in true free-market fashion, but that would be the ratings agencies that were either duped or complicit in giving triple-A ratings to junk.
While I share the Libertarian desire for a smaller, simpler, and more efficient government I can’t agree that the Free Market always provides by the might of its invisible hand. There are some things that I think the Government can do and do well and maybe even should do well. In these areas, we should be fighting to make it work correctly, not to gut it or to get rid of it. I for one would not want to return to a completely deregulated Jungle of unregulated food production.
In fact, I think regulation of all commodities on which people’s lives depend should be in place. Food, housing (up to code), energy production (avoid another Enron induced brown-out session), water purity, financial markets, working conditions, and maybe even health care. What I don’t think should be put in place is stupid regulation that causes more harm than good. It shouldn’t be an undue burden on industry, just enough to prevent the natural human impulse to let things slide. The founding fathers went to great lengths to protect the American people from tyranny by dividing power into multiple branches of government in the hopes that by so doing they would frustrate the human impulse to crave power. In the same way, I would like Government to be a check against the worst parts of the citizenry’s all too human nature. Unfortunately, many of our representatives (or as they refer to themselves, “Leaders”) exhibit the worst parts of human nature. This would lead the cynical to declare game over, there’s no point in supporting either party, or being involved at all. Principle will never win out over greed. I say that it just means we need to work harder to vet our prospective representatives and give our full support to the principled, honest fellow citizens who wish to represent us, regardless of which party they find themselves in. And we need to learn that agreeing with our stances on issues is not the same as being honest or principled. The corrupt “Leaders” from both sides of the aisle show us that much.
I recently received the following email forward from a conservative.
An economics professor at a local college made a statement that he had never failed a single student before, but had once failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich… “a great equalizer”.
The professor then said, “OK, we will have an experiment in this class on Obama’s plan”.
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A…
After the first test, the grades were averaged and everyone got a B- (B minus). The students who studied hard were upset and the students who never studied were happy. As the second test rolled around, the students who never studied didn’t even open their text books and the ones who had before studied hard, decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.
As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.
So a couple observations about this.
1) The above story is not about socialism at all, it’s about communism. If the students think that “Obama’s Socialism” means that there won’t be any poor people or rich people, they’re stupid on several levels. For starters, socialism does not mean there are no rich or poor people. Look at socialized Europe. No rich people or poor people there! No wait, that’s completely wrong. The only difference between the poor here and in socialist Europe is that their situations are slightly better. They may not have any money, but they at least have access to things like health care. Secondly, while Obama may or may not have some socialist views, he’s certainly no communist. He hasn’t put forth an plans for actual government takeover of anything. (The health care reform bill mandates people buy health care but they’ll be forced to get it from private insurers.)
2) The above story seems to be about a class of Young Republicans. The students cut their nose off to spite their face. Seriously, who would give up a passing grade just because a few free-loaders are taking advantage of the system? Also, they must have been trying pretty hard to flunk everyone else because I went through college barely studying and got mostly “A” grades. I can’t think that everyone in the class would completely fail (F average) unless they were actively trying to.
3) The above story has a very, very low opinion of human nature, and the social skills of those students must have been nigh non-existent. Has anyone here worked with someone who wasn’t pulling their weight? I’m certain we all have. What happens? They become universally unpopular and people within the majority of the group bring them back into line, with beatings if necessary. This isn’t so much a story about the failure of socialism/communism as it is the failure of people who are only looking out for themselves to work together towards a common goal.
4) I could come up with a more compelling story with the same scenario where a teacher decides to average the grades of the class and give everyone the same grade. The smartest students in the class still want to pass, so they spend extra time with the dumbest students, tutoring them. Everyone comes together to study hard and in the end everyone passes the class with an A. Life lessons are learned. The real breakthrough happens when the female class nerd convinces the bad-boy slacker student who wasn’t studying to try hard, even though he doesn’t care about the class. The slacker goes on to ace the last test, bringing the class average above the threshold for an A. Everyone cheers. Then he teaches the nerd how to love. It’s very touching.
5) The kind of people who find the above story compelling are likely the same ones who would react like the “smart” students did in the story. “Oh, if someone’s free-loading, that means I’m not going to try. Screw them!*” (*And by “them” we mean everyone else in the class, myself included. The slackers were going to fail anyway so they haven’t lost anything.) It’s the kind of people who would shut down their business to avoid paying an extra 3% in taxes.
6) If the professor “Once failed an entire class,” because they were fans of “Obama’s Socialism,” it must have been recent. Obama’s been in office for a little over a year, yet the professor is telling this story as a “Once upon a time.” I’m starting to think this never actually happened! (Actually I started to think that when I first started reading it.)
Socialism isn’t “The Great Equalizer” that conservatives paint it as, but what is it? It’s difficult to answer that question for two reasons. The first is that socialism has been stigmatized in the United States for years now and like Communism and Fascism seems to have taken on the meaning “Bad System of Government,” or “Style of Government that we don’t like.” Secondly, socialism is a broad band of ideas stretching from light communism to hippie. In it’s most common form however, and the way it would likely appear if it ever took hold here in America (which it won’t any time soon) would be Limited Capitalism.
Capitalism is great because it allows people upward mobility, and for the most part people who work hard can make a decent living for themselves and their families. The problem with Capitalism is the ability of greed and selfishness by a few to negatively impact a large group of people. The goal of Limited Capitalism is to keep all the good that comes about from the Capitalist system but smooth out the outliers. Make the poor a bit less poor and the rich a bit less rich. Unlike Communism which would take everyone’s income and divide it “Equally” (some are more equal than others), socialism aims to provide fairness to a system that can at times become seriously out of whack.
The hallmark of a socialist agenda is not government takeover of business (that would be communism) but employee-owned businesses and non-profits. On a national scale, Socialism puts strict regulations on banks and businesses to protect the country, the employees, investors, customers and even to protect the businesses from themselves. (A lot of people would be better off if the government had been paying attention and stopped the likes of Enron and AIG from destroying themselves. Wouldn’t have required a bailout if they’d nipped it in the bud.) There’s still capitalism, there’s still winners and losers, the winners still are richer than the losers, but it’s not a zero-sum game.
The founding fathers of our country knew that human nature was prone to greed and lust for power, so they separated the government into three branches with checks and balances to prevent too much power being placed in the hands of too few. Socialism is that in economics, trying to prevent the unchecked greed that has run rampant in wall street. (Just look at the AIG execs who are throwing a fit about not getting their bonuses.) Optimally, socialism is not hamstringing the good players, it is merely leveling the playing field. Some aspects of socialism would do well for America, and some would not work so well. One thing I would like is for people to argue the pros and cons of the system with the actual pros and cons instead of importing cons from other systems to prop up a straw man.
The few aspects of socialism I’d like to integrate into our current system are some enforced regulation on wall street for the banks who have proven time and again that they cannot police themselves. Too-big-to-fail banks should be broken up into smaller, non-life-threatening banks, and some limits should be placed on executive pay (Maybe ten or 100 times their lowest paid employee. If their lowest paid employee makes $30k a year, they’d be capped at $300k or $3 million not $300 million.) I’d like to see non-profit hospitals who pay their employees well and roll any extra they make into expanding the hospital’s services. I’d like to see non-profit insurance companies. In short, I’d like to see more companies who were dedicated to their customers and employees instead of their bottom lines. That’s socialism I can live with. Compared to this mild socialism, straight capitalism with no checks or balances seems a little anti-social.
With all the talk of national debt and deficit spending lately, I can’t help be reminded of the awful truth of the American economy: The economy runs on debt, or as it’s called by the savvy marketing types: credit. If everyone were to pay off their student loans, mortgages, car loans, and credit cards the American economy would collapse. While it is good for individuals to pay off loans quickly to be in a better financial position for the long term each dollar that you pay back on the principle of your loan shrinks the economy. What the hell am I talking about, you ask? Leverage.
If I went to the bank tomorrow and was granted a loan to buy a house, a mortgage, the bank would give me many thousands of dollars in bank credit to go out and purchase a house. They are not giving me actual money that they have in the vault. In fact, for each dollar they have in the vault they may have loaned out 10 or 20 dollars. Our government allows banks to give out bank credit in the form of US Currency. This means, that when I get a loan, the bank is conjuring into existence money. It is theoretical, ephemeral money but I will pay that money to the home owner who will likely take that money and put it towards a new house. An actual monetary transaction will have occurred but with money the bank created this morning! And the more that banks do this, the more money is flowing in the system. This is what was happening in the years leading up to 2008 and the crash.
Leverage is the ratio of actual money to credit that a bank has. If a bank has one dollar and they loan out 9 dollars, they are said to be leveraged at 9:1. If instead, they loan out 30 dollars and they have 1 dollar, the are leveraged at 30:1. Where this becomes a problem is if someone is unable to pay back the money. If I have $10 and give three people an IOU for $10, I’m fine until more than one of them tries to collect at a time. If a bank has given 30 people $100,000 mortgages based on them having $100,000 on hand, they’re screwed if more than one person is unable to pay them back. During the real estate bubble, banks thought nothing of giving nearly anyone a mortgage loan because the value of the property would likely increase and even if the borrower couldn’t pay back the loan, the bank would be able to seize the house and sell it for a profit. Once the bubble burst and they were no longer able to sell the house at a profit, or possibly even at all, the whole house of cards came close to collapsing. All that ephemeral bank credit in the form of US Currency went poof, and the economy contracted. The result was less less money in the system.
Which brings us to the United States National Debt. While deficit spending and increased national debt are a problem, having less money in the system (banks are wary of giving credit to people after getting burned) is more of a problem. While many people liken the US Government to a family that has to tighten the belt and balance the checkbook, the US is in actuality more like a business. Many businesses run on credit. Many were hurt badly or were closed down when they were no longer able to get credit to make payroll. The US Government runs on credit as well. Aside from a brief couple years in the 1830’s when we paid it off, the nation has always been in debt. (Oddly enough for those who think the national debt is purely evil, after Andrew Jackson paid off the national debt the country entered a huge recession.)
While skyrocketing national debt is worrisome, so long as we can afford the interest payments, debt on a national level is not as horrifying as many would have us believe. Again, we’ve been in debt since 1836 and the country hasn’t imploded yet. The debt allows us to add currency to the economy without as much risk of inflation. The government could simply print more money, conjure it into existence much like the banks do, but without the value that comes from having to pay it back, it would cause the currency as a whole to drop in value, diluting the value of the dollar. This is important because unlike the banks which have $1 to back the several dollars they loan out, the currency of the United States is backed only by the good faith of the American Government. Comforting, I’m sure to those who have no faith in the American Government.
And to the idea of balancing the nation’s checkbook, there are two ways to reduce deficits just as there are two ways to pay off debt in your household. You can cut your spending on everything else, subsist on Ramen and put all your money into paying off your debt. It isn’t a pleasant way to live, but may pay off long-term. The other way you may have little control over, but it’s to increase your income. Get a better paying job, or a second (or third) one. In the Government’s case, this would involve raising taxes. Those who are hell-bent on reducing the national debt never seem to be open to this idea, for some odd reason or other. (It also seems strange that I didn’t hear a peep out of them about the deficit spending and increased national debt during the Bush administration, but that’s another post.) And there’s no reason you can’t do both. Cut unimportant programs and remove tax cuts. It’d be wildly unpopular, but if you’re truly in favor of reducing the national debt, that’d be the way to go. Of course, in so doing you would be removing 13 trillion dollars from the nations economy. I imagine with money being scarce enough as it is, we may want to rethink that plan until the banks are once again in the conjuring mood. Perhaps once we have some regulation in place to make sure they don’t go too crazy with it again.
There’s been a lot of debate for months now on the health-care reform bill in congress. A lot of groups on both sides absolutely hate it. Those on the right call it “Socialist” despite it not coming anywhere close to actual socialized medicine. Those on the left call it a gift to the health insurance corporations. What it is really is a gutted compromise that will be better than nothing, but certainly won’t solve the problem long-term. In order to better understand the debate, let’s look at some health care options.
The basic idea behind health insurance is that you take a large group of people and pool their resources so that if one of the group gets sick, the others pay for their treatments. It’s a bad deal for the healthy people but pays off once it’s their turn to get sick or injured. A simple example would be 10 people who pool together and each one pays $100 a month. One of them gets sick, there is $1000 per month available to pay for their treatment. If two of them get sick, there’s $500 for each of them. As long as the number of sick people do not overwhelm the pool all at once, there’s plenty of money for their treatment, and in the long term the pool gains in value. If more are sick than are well, it becomes necessary to either have each individual put more into the pool (raise rates) or increase the size of the pool to include more healthy people who contribute more than they take out of the system. By increasing the pool from 10 to 100 people each paying the same $100, you then have $10,000 to work with for covering those 100 people. If a low enough percentage of the people need actual care, the pool makes money. If one person is taking up too much of the resources of the pool, it may be necessary to kick them out of the pool or risk taking the entire pool down or forcing the pool to raise the rate people are contributing.
What we have seen recently is people leaving the pool. Due to unemployment and loss of income many more people are without healthcare, many of which are the relatively healthy who pay into the pool more than they take out. This requires those that remain to pay more. Hence the rate hikes we’re seeing across the board. So how do we solve this problem? There are a number of different ways to do it.
1) Single payer. The actually socialist option. Not that socialism is necessarily a bad thing. In this model, everyone in the country is in the same massive pool. Because it requires healthy people to join the pool as well as the sick, individual costs go down. Since everyone has the same health coverage, you can go to any doctor in town and it will cost the same. Instead of the current medicare and medicaid payments being removed from your check each month, you’d have the government taking out your healthcare payment from your wages. Canada, England, and Germany all do healthcare this way and are quite happy with it overall. This is perhaps the most fair plan, but requires government management of the system and will cause hurt to the current health care companies.
2) Public Option. The not quite socialist option. In this plan, if the privately owned pools are not able to keep prices low enough to be affordable to the general populace, the government steps in sets up their own pool but without taking anything out for profits. The corporations hate this because many people will chose the public option, and they will lose customers. The Public Option must thread the needle of pools however because if they just admit the sick people, their pool will become unsustainable. By requiring the healthy to join they can make it more solvent but that requires a mandate that will be a bad deal for the healthy, forcing them to pay into a system and not getting any real benefit.
3) The current bill in congress. This does NOT (as of this writing) contain a public option, however it does require everyone to get health insurance in a similar way to the way we require all cars to be insured, with the exception that people can chose not to drive a car. This will force the young, healthy people who currently forgo health coverage into the pool in the hopes that this will lower costs overall. In the case of the poor who cannot afford the health coverage, it provides subsidies. It’s pretty much the same system as we have no except that nearly everyone will be required to buy health coverage or pay a fine. (Many people may opt for the fine since it may cost less than the health coverage they would be forced to get.) On the plus side, health insurance companies would no longer be able to kick people out of the pool.
4) The current system. The current system allows insurers to kick people out of the pool if they are too much of a drag on the system, costs more than other options, and leaves many people locked out in the cold. Insurers will not invite someone already sick to swim in their pool. Despite being quite unfair, it is an option. It just requires that we ignore the suffering of those who aren’t allowed in. It seems heartless (okay, it IS heartless) but the world is not fair and the have-nots will just have to deal. We have a couple public-pools but being eligible for memberships is not guaranteed (medicare and medicaid.)
5) The libertarian plan. Basically this involves getting rid of the public pools, medicare and medicaid, and letting everyone fend for themselves. While the left may call this akin to throwing the wounded to the sharks, it would save a lot of money and reduce the deficit by a ton as spending on Medicare and Medicaid currently makes up nearly 20% of government spending. (Factor in Social Security and it’s over 40%.) With this plan, those who can’t afford coverage will drop out of the pool, leaving less people to spread the risk, further increasing prices, causing more people to drop out.
6) My wishful thinking plan. Ban for-profit insurance companies and hospitals. Cut off the need for profit from hospitals and require anything they make in profits be invested back into the hospital to improve the quality of care. Insurance companies would be straight pools to balance risk amongst people to keep costs affordable. This will never happen and if it actually did, there would probably be a drop in quality based on smart people no longer going into the field since they will no longer be making obscene profits. On the other hand, maybe only those who are legitimately concerned with making people well would enter the field and it might just balance out. Oh, and make for-profit drug companies illegal too.
So which of these actual options (1-5) is best? That depends on the person. I would like the socialist single-payer plan provided it could be administered efficiently. Public option has some definite issues, although popular with progressives. The current bill is not socialist at all, but doesn’t really go far enough in either direction to make much of a difference. It’s better than nothing, but not anything to get excited (or worked up) over. Despite the right calling it communism, it’s pretty much middle of the road. The current system is broken, but still provides excellent service for those who can afford it. I can’t in good conscience support the current system or the libertarian plan since they would leave many, many people consigned to a level of care below what wealthy people donate to third world countries. Single-payer may be progressive totalitarianism, but I can’t see that being worse than the de facto anarchy we have now. This is one case where the center may not be the best location, although if I’d have to pick I’d say the health care legislation currently in congress is not far from it.