To Krugman, on "Worried Wonks."

(Posted in comments on Krugman's article, "Worried Wonks.")

Kraw…I think you are right. These are not minor figures, or conservative cranks.

Problem is, this now fits the narrative we've seen from so many conservative economists, the "nothing can be done about inequity, or unemployment, or health care, or anything that is not of interest to the very wealthy." Naturally, Sanders supporters are suspicious. I think, to answer that claim, liberal economists have to make the case by providing an alternative.

Let's start with health care. You recently asked "Who hates Obamacare?" One of the answers is "an awful lot of people on the Exchanges." For some people, the Exchanges are a godsend. For lot of them, though, they offer insurance that can barely be afforded on such terms that it can only be used at great need. In addition, the insurance companies who operate the system make more profits if care is more expensive, so there is no financial incentive to reduce the high costs of the US system.

So propose a realistic alternative: let's see something that doesn't hammer the working poor, who are often young (and Sanders supporters, funny thing about that) and takes the cost-raising incentives out of the system. It would be nice if brought insurance industry profits down to something reasonable as well; 15-20% gross, near-guaranteed by the government, is a bit much.

Sanders: Asking For A Pony

First politician evah to promise more than he can deliver? Oh, noes!

There are complaints from credible sources that Sanders economic proposals are over-optimistic, and not just from a few cranks. They probably are, but, hey, if you ask for a pony you just might get something good, even if you don't get a pony.

Look at what the other candidates will deliver. Clinton, we may reasonably expect to deliver war and nothing on employment, health care, and housing. The Republicans will deliver even more wars, a police state, and an economic collapse or else military Keynesianism. I'll take a Sanders compromise any day, though I will admit that Clinton is likely to fight the good fight for women's rights and against the radical right, which she has every reason to hate. Still, I don't want to vote for a candidate who defends that war criminal Kissinger. Is there no point at which the lesser evil is too evil to abide?

Lawrence Summers thinks we are in  a prolonged period of low growth and high unemployment — what economists call "secular stagnation" — is real and advocates fiscal policy to fight it. This major mainstream economist is now advocating redistribution as policy.

Returning to the subject at hand, which of the Presidential candidates is most likely to support non-military fiscal policy as a response to secular stagnation?

(Adapted from my remarks in comments at Balloon Juice.)

Who Hates Obamacare?

Most of the people who buy insurance from the exchanges. (You've got to stop handing us straight lines, Professor Krugman.) At the low end, people are required to spend scarce cash on insurance; at the high end people are required to buy insurance and then pay for most of their care anyway. It's a miserly system and a much better deal for the insurance companies than for most of the people in the system.

The way I explain it is that a tent and and a place to pitch it is infinitely better than sleeping on the street, but most of us would really rather have a house with walls, heat, and insulation.  And then you get the supercilious misers who tell us that they themselves are wonderful for giving us a tent and we should be grateful for it!

If Clinton would campaign for, say, more regulation on health insurance companies and real price controls, she would probably have a case for preserving the privatized system. It would be a sensible market reform to outlaw the mergers that are making health insurance  a national oligopoly. But her funders would abandon her in a shot. I remember the process of the writing of the PPACA, and how any cost-control measures that might have cut into the profits of the health insurance industry were removed from the final bill.

There is a central contradiction in relying on private insurers to in the US system: insurers get a percentage of health care spending, so they have no incentive to reduce those expenses, and every incentive to encourage price rises.  There are reforms that could improve matters, but will they go anywhere in a political system so heavily influenced by the financial services industry?

[Minor changes 2016.02.16]

False Hope in Democratic Politics

I do not believe that Clinton will suddenly turn into a liberal when elected any more than Obama did. There is false hope in that. She has a record of supporting conservative measures in both economics and foreign policy and solid Wall Street support in her Presidential candidacy. Her feminism, at least, somewhat leavens her conservatism. She seems to be Wall Street's Democratic candidate; their hedge if someone like Rubio does not become President.

Sanders, on the other hand, cannot possibly deliver on his policy proposals unless somehow the whole Congress is overturned. I think he knows it, too, and will compromise when push comes to shove. But how will the public react to that? Senators are expected to compromise; Presidents are expected to lead. Still, Sanders, with his 25 years in Congress pushing for incremental reform has a damn good record as a liberal reformer, while Clinton, with much more history as an appointed than elected official, has a poor one.

It may not matter. Foreign policy and domestic immigration policy may dominate both the election and the next Presidency, making all these issues moot. But there is much false hope for liberals. Clinton supporters hope she will turn into an economic liberal, which seems unlikely, and Sanders supporters hope he will somehow be able to get sweeping reforms through a Congress that has charged off a cliff to the right, which also seems unlikely.

Maybe the best possible outcome is for Hillary Clinton to become President, the Republicans to self-destruct, and the Sanders campaign to go on to found a new liberal party.

We created the Jobs

[Notes to defenders of the Obama administration's record on job creation]

Basic Stance

Let's give ourselves credit for creating the jobs and finding our way in a new, tougher economy. This administration hasn't done nothing.

If the economy had fallen over, if the banks had been let to fail, things would have been much worse; it would have been 1930 over again. At least the Administration acted on that. But the banks which made the problem got bailed out. One banker, I think, was prosecuted. And all the while the rest of us were left to scramble for a living. A lot of us lost our homes, especially a lot of blacks, who were targeted by the mortgage fraudsters.

Unh-unh. There's been good things about this administration. But not going to give them cred for the employment recovery; they did the minimum, not anything that deserves accolades.

Followups

On claims that employment is good

Oh, you mean like the claim that employment is good, when 5% of the public still wishes it could find work? (Just mouse over the chart, subtract U-3 from U-6.) And that the Obama administration somehow created jobs when it did almost everything possible to avoid doing that? And that doesn't even count the people who are working the s..t jobs that are most of what have been created since the depression started.

(Then there's minority and youth unemployment, which is awful. The numbers for black youth are heartbreaking.)

The definition of U-6

Where you get that s..t from? Here's the definition of U-6, straight from the horse's mouth: "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force."

The standard definition of unemployment, also known as U-3, is a measure for good times, not during a deep depression.

Thoughts on race, class, and wealth

What else is white supremacism if not the ideology and practices of a class system? 

What else was US white supremacism founded on if not the desire to gain wealth by enslaving Africans? Because people didn’t just say, “Oh, yes, let’s go capture some slaves.” Oh, hell, no. They made money at it. Nor did this end with the formal abolition of slavery.

Social insurance undermines class systems. Social insurance programs are so effective that they have to be dismantled, and huge efforts have been made to persuade the public that they would gain from shutting such systems down. (“Put on those chains. You will be much safer wearing them.”)

Do I believe that an end to poverty would be an end to supremacism? I doubt it. The impulse to supremacism seems to be pre-human, and perhaps will turn out to be post-human. But we do not need to governed by it, and it is certain that impoverishing is one of the great strategies and tactics of supremacism.

Everyone Is Watching

About a month back, people were rightly outraged by the Cruz campaign hiring a sleazy data miner to scrape Facebook for information about millions of users. But … but … back in 2011 the Obama campaign put together a database containing information about every registered voter. The Romney campaign couldn't match it, and the database probably won the Democrats the Presidency. Then we had the recent squabble over the Sanders campaign accessing Hillary Clinton's version of the Democratic Party's voter database. And it turns out that one of these databases has been published online, and who knows how may people and groups have read and copied it. And there are the credit reporting agencies, the NSA's PRISM, and who knows what else.

Building a database of personal information about, literally, everyone is within the reach of any moderately wealthy person or group, and it is entirely legal in the USA. The paranoid nightmare of someone watching has been realized. Not only is someone watching, everyone is watching.

Shoulda listened to the cipherpunks when they warned us.