It’s the Policies, Stupid

by Dave Schuler on December 24, 2013

Dean Baker and I are on the same page on this. Globalization doesn’t mean that you must protect (and subsidize) the wages of physicians while hammering down the wages of factory workers:

There is nothing about the globalization process that necessitated this result. Doctors work for much less money in Mexico and elsewhere in the developing world than in the United States. In fact, they work for much less money in Europe and Canada than in the United States. If we had structured the trade deals to facilitate the entry of qualified foreign doctors into the country it would have placed downward pressure on the wages of doctors (many of whom are in the top one percent of the income distribution), while saving consumers tens of billions a year in health care costs.

In other words, the government quite deliberately structured our trade to put downward pressure on the wages of much of the labor force, while protecting doctors and other highly paid professionals from similar competition.

Preserving the financial system doesn’t require that bankers’ incomes be preserved:

The subsidy for too big to fail banks, which makes the Wall Street crew incredibly rich, is another way that the government redistributes money to the top. Bloomberg estimated the size of this annual subsidy for the Wall Street gang at $80 billion a year, more than the government spends on food stamps.

And there is neither anything natural or necessary about the strength and duration of our system of protection of intellectual property:

The longer and stronger patent protection the government has given pharmaceutical companies is another way that money goes from the rest of us to the rich. The annual size of patent rents in the drug industry is currently in the neighborhood of $270 billion, more than three times as much as the government spends on food stamps.

Don’t like the income inequality? Don’t like the slow growth of the economy? It’s the policies, stupid:

And the macroeconomic policy run by the government has also worsened inequality. Budgets are crafted by politicians, not the gods or nature.

Now, I suspect that Dr. Baker and I differ on what the best remedies are. But there’s no disagreement between us that policies have consequences and we’ve arrived at the results we’ve accomplished as a result of policies rather than despite them.

There’s a broad consensus in Washington over the general direction of policy. The political conflicts there have been described as a game of football fought between the forty yard lines.

And yet, somehow, year after year and despite Congress’s 18% approval rating and a majority of voters disapproving of their own Congresscritters in opinion polls, we elect the same people again and again and will no doubt do so in November 2014. 72% of Americans see the government as the biggest problem facing the country. What’s the solution?

{ 6 comments… read them below or add one }

Jimbino December 24, 2013 at 10:45 am

Though I generally agree with you, wouldn’t it be better to send Amerikans off to cheaper places like Mexico, Brazil, and Argentina for their health care instead of importing doctors from there?

Bringing in docs impoverishes the healthcare system in those poorer countries and doesn’t solve our overpriced hospital, clinic and drug problem. And sending Amerikans to Mexico would provide them funds to improve their own hospitals and clinics.

I have just arranged for cataract surgery in Rio de Janeiro. It costs less than half what’s charged here in the USSA. In Buenos Aires, it costs far less still, and I could fly RT from Texas to BsAs, stay to enjoy it for a couple of weeks and get the surgery, and return far richer and smarter than the Amerikan on Obamacare.

... December 24, 2013 at 11:28 am

Globalization doesn’t mean that you must protect (and subsidize) the wages of physicians while hammering down the wages of factory workers….

537 elected officials in Washington, DC believe otherwise.

... December 24, 2013 at 11:29 am

Bloomberg estimated the size of this annual subsidy for the Wall Street gang at $80 billion a year, more than the government spends on food stamps.

I think Bloomberg missed by an order of magnitude.

Red Barchetta December 24, 2013 at 7:16 pm

Speaking of subsidy……..The Oracle of Subsidy strikes:

http://www.zerohedge.com/news/2013-12-24/thanks-obamacare-warren-buffett-cuts-health-benefits-over-57-heinz

Now I know he wants to pay more taxes or make less profit…….if only he could. And I suspect this little prick gets no play in the press for his action – what is the term Reynolds uses? “Rapacious? Behavior – because, of course, he is the darling of the left for supporting higher taxes………..if only he could.

steve December 24, 2013 at 9:53 pm

According to Gallup,of those who have an opinion, most people approve of their own congressperson, while disapproving of Congress as a whole.

http://www.gallup.com/poll/162362/americans-down-congress-own-representative.aspx

Steve

Dave Schuler December 24, 2013 at 10:12 pm

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