Monday, June 30, 2008

Democrats turning record Republican deficits into record surpluses is valuable even if Republicans turn them right back again, for learning alone

With regard to Mark Thoma's excerpt of Brad DeLong's article, "The Democrat's Line in the Sand":

It's important to point out here that just because Republicans more than un-did all of the good of Clinton in turning their record deficits into record surpluses, in just 8 years, that doesn't mean that Clinton didn't do a very good thing, with lasting benefits.

He gave a stunning demonstration of how much better Democrats were in this important regard, that was glaringly obvious to almost all voters. If Obama again turns record Republican deficits into record surpluses, and a booming economy, just like Clinton did, will it all have been for nothing if a successive Republican administration just turns them right back again into record deficits? No way.

The first time that happened it severely discredited Republican brain dead economics. If it happened yet again, it would rightly devastate the credibility of Republican alchemy economics with the voting public. This learning would be very valuable to protect us in the future against the great economic inefficiency and costs of their ideology.

However, the biggest and most important thing Democrats can do is to pass universal health care. This would be like when the Democrats pushed through, over the Republicans, old age Social Security and Medicaid. The programs were enormously popular once they were enacted and people got a chance to see the truth of how good they were, rather than the Republican lies. They greatly improved our quality of life and now can (probably) never be taken away.

The same would be true of universal health care. Once it was enacted people would see just how much better, and less expensive it was, due to vast free market imperfections in this area, such as externalities, asymmetric information, great economies of scale and monopoly power, inability to patent, inability to price discriminate well (a very important market inefficiency, especially for products with a large idea/information component, that doesn't get enough attention), and more.

The Democrats gained enormous political -- and ideological -- capital after they passed the new deal and the vast majority of voters saw how much better it made their lives and the country. This moved the country, and thus by necessity, the Republican party, far in the progressive direction. The momentum lasted for decades, and some of the most important changes made are so embedded and clearly demonstrated to be of great value, like old age social security (of at least some substantial kind), that they will (probably) never be undone .

Likewise, the political capital Democrats would get from bringing universal health care to the American people, greatly increasing their security, wealth, and quality of life would be vast. It would greatly increase their ability to do good in any area. Global Warming may be the most important issue, but the best way to fight it is to pass universal health care. That would give Democrats the political capital necessary to pass far more ambitious projects to combat it, maybe even a Manhattan Project, or Moon race, to replace fossil fuels with alternative energy and nuclear.

There's nothing more important for Democrats than passing universal health care (which is not at all incompatible with running a budget surplus), and it's very doable...Stay tuned for my next post.