Whither the Democrats?

In this post I will  offer some reflections on the current state of Democratic Policy proposals, with reference to the debates on Tuesday and Wednesday. Given that there are 20 candidates, I will not make any effort in this post to analyze them individually or to rank order the candidates. At present, I see no reason to endorse any candidate.

The first issue I think we need to consider is the goal. My own lifelong political identification has always been with the democratic (non totalitarian) left. If I were to attempt to articulate my own vision of the “good society” , it would, be along the lines of  democratic, mixed market and planning, socialism (by which I mean democratic worker control of production). Having said that, as a pragmatic matter, if in the forseeable future we could achieve wisely managed capitalism, I would regard that as a great advance. I will leave discussion of the tension between ultimate goals and vision of a good society, and pragmatic politics to a different today. In this entry, my focus is on politics in a much more limited sense.

What can a Democratic President, with a Democratic majority reasonably propose and accomplish for 2020? It is one thing to advocate socialism. If that is where your politics are, I’m open to the discussion. If you are not a socialist, or if your policy proposals are well to the right of  Clement Atlee then nothing is gained by painting yourself as a socialist other than confusion of terms.

As I have written elsewhere, any actual, concrete policy proposal should do at least two things: it should clearly articulate the goal and it should also be clear as to how the proposed reform will have the result of achieving the desired goal. The latter condition, is IMO, particularly problematic in the Social Sciences given that we face the problems of a  knowledge gaps and uncertainty. That noted, I disagree with Hayek’s argument: I think that we can usefully apply scientific methods in  order to make pragmatic improvements in human societies. Good policy is difficult: it is not impossible.The policy of leaving it all to the market to resolve, is in the end, a utopian policy in and of itself that requires conscious, coordinated and ongoing state intervention to achieve. As Karl Polanyi argued, laissez faire is a myth.

As far as our goals are concerned, the economist Amartya Sen has provided a well grounded way with which to articulate what in my view are desirable goals for any economy or policy regime. Given that the goal is to improve human functioning, we are left with the question of what is the best way to achieve those goals?

As we consider the possible policy options of a Democratic majority for 2020, we should keep in mind the broader structural economic and political obstacles that will be faced. For multiple reasons, I believe that we can expect a significant slowing of economic growth with a strong likelihood of another recession. The need to constrain deficits while maintaining economic growth will present an obstacle to any legislative agenda. And I fear as well that we will be in a situation where the FED is out of ammo. As should be clear, I am not a proponent of Modern Monetary Theory (MMT). Secondly, unless the next recession has clearly begun in the next 16 months, Trump and the Republicans will be hard to beat. Barring the clearly evidence failure of Trumponomics in the mind of the American public, any Democratic majority will be thin. It is possible for us to run as Democrats, defend progressive values, and accomplish some real good. Doing so however will require that the Democrats step up their game on policy discussions and honestly face the costs and redistribution impacts that will come as a result of different policy proposals.

On this latter point, the Democratic candidates as a group have frankly, IMO, failed. It is not a “Republican talking point” to raise legitimate issues about the costs and distribution effects of policy. It is however, a logical fallacy to to dismiss the validity of your opponent’s arguments by labeling their arguments as such.

For the sake of a meager effort at keeping this post to a reasonable length, I will confine my discussion to two exemplars as to how I think the policy discussion might be improved.

Climate Change and the Green New Deal

We live on Spaceship Earth . The recognition of the need to have serious action on climate change and that the Paris Agreement is inadequate is IMO, correct. We need more discussion on the Green New Deal. There are two premises underlying the Green New Deal to which I am deeply sympathetic: the prioritizing of climate change as an issue and the need for green infrastructure spending. Done properly, the impact of a Green New Deal could be both short and long term stimulus to the economy. That said, even in an economy the process of money creation is linked to credit, we cannot have a Green New Deal and everything else without being clear, open and honest about what the price tag is and how we will pay for it.

Health Care

If it were possible to design a health care system from scratch, my actual preference would be for the British system, rather than the Canadian System , and clearly, for the Canadian system over our current system. The political conditions under which Britain’s  system was created  however, were exceptional.  In contrast, the Canadian system was put together over time on the basis of existing provincial plans. In both instances, the systems were created at a time when significantly less was expected from the medical system.

Put simply, the proponents of single payer are underestimating the potential costs, redistribution of burdens and potential dislocation in the health care system: then again, so might everyone else. If four years from today everyone can indeed have truly affordable, quality medical care and we can end medical bankruptcies, we will have made a huge advance. I agree that in principle “medicare for all” could, **on average** result in a net cost reduction by swapping tax payments for deductibles, co-pays, co-insurance etc. However, the tax has to be high enough to cover for the employer/employee total contribution and the necessary increase in medicare payments. And it *could* result in efficiency savings. It could also end in complete disaster, create disruption, redistribute costs and be widely unpopular. And it will mean that this system will have to make some difficult choices about what is, and is not paid for.

Having said that, there are also some points that those who advocate a more limited expansion of medicare are not addressing. There are some real potential benefits to such a move: by lowering the age of medicare, allowing medicare buy in, and making it free at specific income levels, we would guarantee coverage, eliminate expensive COBRA payments, improve access and make government the insurer of last resort. That said, we would still need to raise medicare payments. It is not clear either that employees will make the choice of keeping their plan or going to medicare. If we allow employer buy in to medicare, then there will be winners and losers in that process for non-unionized workers, which are the overwhelming majority of workers in the economy. You can’t necessarily say that workers can “choose” their current plan.

With respect to Unionized workers, I have myself participated actively in the bargaining of health care plans. If you had asked us 10 years ago if we would accept Medicare over our health care plan, we would have said no. But as deductibles and co-pays have risen we are at a point where such a transition might serve both parties. Though some Unions still have negotiated better plans, the direction is clearly in the opposite direction. It is not guaranteed that for either Unionized or non-Unionized workers that wages will rise to fully compensate the transition.



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