Solving Which Problem of Inequality?

by Dave Schuler on December 9, 2013

In Mickey Kaus’s analysis of President Obama’s speech on inequality last week his primary conclusion appears to be there’s a lot less there than meets the eye. Mickey’s solution to social inequality would be social levelers like a universal draft or a universal health care system like the BNH (although he confuses Medicare, a system of insurance, with universal care). He doesn’t miss the great irony of the Obama Administration:

That’s why it’s unfortunate that at every turn the Obamans seem to have opted for a cheaper, more stratified health insurance system–with poor people actually banned from the exchanges like an inferior caste and the less-rich generally relegated to crappier hospitals and crappier doctors–instead of an inclusive, socially equalizing system good enough for both poor and affluent. (Some governors, fortunately, are moving to remove some of Obamacare’s more vicious class divisions by merging Medicaid into the exchanges, which should help … if the exchanges survive.)

That’s been my complaint about the Obama Administration. Every proposed solution is drawn solely from the Democratic congressional caucus’s Box of Approved Solutions. Raise the minimum wage! Even though it would affect only a relatively small number of workers and, at the levels that might tenuously make it through Congress, wouldn’t do much about income inequality and might even reduce the number of minimum wage workers while increasing the size of the black market in labor. Provide more services! Even though somehow, mysteriously that always means paying more to people who are already in the top quintile of income earners, aggravating the problem it’s purported to solve.

The greatest mystery is why income inequality is always looked at from the point of view of those in the top 1% of income earners gazing jealously at the top .1% rather than from the point of view of the bottom 80% looking at the top 20%.

O wad some Pow’r the giftie gie us
To see oursels as ithers see us!

{ 4 comments… read them below or add one }

PD Shaw December 9, 2013 at 10:14 am

I’ve enjoyed reading Kaus for a long time, but I’m not quite sure where he’s coming from. First of all, I don’t think conscription in the U.S. has ever been universal, particularly as to exemptions for essential services, usually professional or managerial. But anyway, Kaus seems to believe:

a. healthcare is the great social leveler; we all have bodies, existing in various stages of breaking down, and we take them with us into social space. To be able to stand aside someone without one’s limbs falling off, while waiting for the same doctor promotes social equality in a way that focusing on jobs, which take place in private space cannot.

b. We need to spend more on healthcare. There is no rule that says an advanced economy should not spend most of its GDP on healthcare. We used to spend a lot on food, now we don’t.

c. Not all doctors/hospitals are created equal. Social equality is not advanced by elites going to a place where better caregivers are paid more and the rest go to second or third tier facilities. At the very least, government should not reinforce those tiers.

d. Therefore, additional government spending should be directed towards allowing everybody to go to the elite caregivers.

Woooh, isn’t there a big scarcity problem here? I get the sense that Kaus thinks there is a great doctor in Beverly Hills (we’ll call him Dr. Feelgood) that everybody would agree is the best and everybody would go to if they could. What’s Dr. Feeelgood supposed to do about this demand? Clone himself? Can he raise prices? Is he required to do a lottery? And what if Dr. Feelgood is not all that good at medicine, he’s just good at marketing and other intangibles? Or maybe he’s actually Dr. Feelgood III, from a long line of skilled physicians.

Dave Schuler December 9, 2013 at 10:31 am

An enormous problem with that line of thought is that the supply of healthcare is relatively inelastic. That’s another way of saying what I’ve characterized as a “supply bottleneck”.

It’s a basic problem with the PPACA, too, so he’s not alone.

... December 9, 2013 at 10:39 am

we’ll call him Dr. Feelgood

His friends call him Rat-tailed Jimmy.

... December 9, 2013 at 10:42 am

The greatest mystery is why income inequality is always looked at from the point of view of those in the top 1% of income earners gazing jealously at the top .1% rather than from the point of view of the bottom 80% looking at the top 20%.

One can assume it is a mystery, or that it is the top 1% of income earners using the bottom 90% to further the end of the top 1%. But then that’s me assuming bad intentions again. I mean, the fact that it works just about 100% of the time for predicting the policy positions of the Democratic Party (and it’s well-healed and wannabe well-heeled minions) is mere coincidence.

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