According to top Republican operative Larry Kudlow, “Stock markets are the best barometer of the health, wealth and security of a nation”
So what did the stock market think of the passing of the Democrats' socialist health care program?
The Dow closed up 44 points.
Wow, the stock market must like socialism, or communism, or fascism!
Yeah, I guess they must, because according to this major study published in finance's most prestigious journal:
The excess return in the stock market is higher under Democratic than Republican presidencies: 9 percent for the value-weighted and 16 percent for the equal-weighted portfolio. The difference comes from higher real stock returns and lower real interest rates, is statistically significant, and is robust in subsamples. The difference in returns is not explained by business-cycle variables related to expected returns, and is not concentrated around election dates. There is no difference in the riskiness of the stock market across presidencies that could justify a risk premium...Using data since 1927, we find that the average excess return of the value weighted CRSP index over the three-month Treasury bill rate has been about 2 percent under Republican and 11 percent under Democratic presidents -- a striking difference of 9 percent per year! This difference is economically and statistically significant.
No wait, didn't we already lay the cornerstone of the socialist utopia when we passed Medicare in 1965 – universal single payer health insurance for all seniors?
No, we did it when we passed Social Security for our seniors in 1935.
No wait, we've been socialist for at least 100 years with the passing of free schooling for our children.
Boy, the Republicans really have a lot of work repealing stuff to make us no longer socialist.
As for the prescription drug benefit? The prescription drug benefit didn't go through reconciliation. It was passed through the normal order.
Brooks is simply wrong on this.To recap, Brooks argued that reconciliation is being used more frequently, and that past reconciliation bills, like Bush's tax cuts and prescription drug benefit, were significantly bipartisan. Reconciliation is, in fact, being used less frequently, past reconciliation bills like the tax cuts were not significantly bipartisan by any stretch of the imagination, and the prescription drug benefit did not go through reconciliation.
Wow, I wonder if this column would have ever been published in anything like its current form if the New York Times had mandatory careful, thorough fact checking of columns by a well paid, well staffed, large, highly expert force. Of course, I guess that's too expensive for them to do and stay in business (or make their profits as large as possible). But what if it wasn't? Hmmm.
Former executive editor of the New York Times, Howell Raines, writes in a Washington Post op-ed today:
Why has our profession, through its general silence -- or only spasmodic protest -- helped Fox legitimize a style of journalism that is dishonest in its intellectual process, untrustworthy in its conclusions and biased in its gestalt? The standard answer is economics. Some prominent print journalists are now cheering Rupert Murdoch, the head of News Corp. (which owns the Fox network) for his alleged commitment to print, as evidenced by his willingness to lose money on the New York Post and gamble the overall profitability of his company on the survival of the Wall Street Journal...
Under the pretense of correcting a Democratic bias in news reporting, Fox has accomplished something that seemed impossible before Ailes imported to the news studio the tricks he learned in Richard Nixon's campaign think tank: He and his video ferrets have intimidated center-right and center-left journalists into suppressing conclusions -- whether on health-care reform or other issues -- they once would have stated as demonstrably proven by their reporting. I try not to believe that this kid-gloves handling amounts to self-censorship, but it's hard to ignore the evidence. News Corp., with 64,000 employees worldwide, receives the tender treatment accorded a future employer.
Wow, look at that last line. Former New York Times editor Howell Raines appears to believe there's a reasonable case that reporters at the mainstream outlets are, "suppressing conclusions -- whether on health-care reform or other issues -- they once would have stated as demonstrably proven by their reporting.", at least in part because they fear losing their jobs due to inadequate profits, and then needing a job at the highly profitable Fox, which, like the rest of the right wing machine, holds a grudge, intimidates with revenge, and generously rewards loyal cronies.
How would this affect the profit equation, and the relative profit equation?
First, it would make it much more profitable for serious, unbiased (relatively, and the bias that exists is towards the right, with the mainstream media constantly not calling them on their lies and misleading) news organizations to not lay off serious reporters, editors, and related staff (as has been happening en masse), and to, in fact, hire many more – I'm talking about a tax credit of 50 to 80 percent that's refundable (with sensible limitations), something big enough to have a huge impact, not a tiny little effect around the margins.
Second, this tax credit would benefit serious unbiased (relatively) news outlets more than Fox type news outlets. This is because at Fox it's not about serious investigation to find the truth and be accurate. It's much more about selling opinions, disinformation, and outright fabrication. They therefore have a much lower relative expense for research, fact checking, expert help, and serious investigation.
The result then, is that with such a tax credit reporters at serious news outlets would be a lot less fearful of losing their jobs and having to get new ones at Fox, or similar outlets, greatly allaying Raines' fear. I would like to note here that Raines' conjecture is stunning, but he is a former executive editor of the New York Times, so we should think about it seriously.
And, of course, in addition to greatly decreasing any intimidation of reporters by Fox, such a tax credit would address positive externalites that are simply colossal. A tremendous amount of good would come from greatly increased spending on journalistic research, investigation, fact checking, debunking, expert support, etc. For more on this see here.
We spend about $100 billion per year on medical research, public and private combined (see here).
We spend about $2 trillion per year on health care delivery, the doctors, hospitals, administration, etc. If we adopted a European style system, cutting our spending per person in half, as in European countries (that I think the evidence shows have about as good or better health care and results anyway; see for example here), then we would save about $1 trillion per year.
Now, what if we spent that $1 trillion in savings on medical research? It would increase medical research spending more than 10 fold.
Even if delivery did get a little worse, even if we did get a little bit less of our brightest and best becoming doctors due to lower pay, it seems like this would be totally outweighed over the long run by tremendously more advanced medical understanding and treatments due to the 10 fold increase in medical research spending (or more, as some advanced universal healthcare countries provide comparable health care to the US at about a quarter of the cost per person) .
So it looks like if you want better medical results, better treatment, breakthroughs in rejuvenation, better odds of surviving cancer, you name it, you should support going to a European style system, and using the immense savings to increase medical research more than 10 fold.
So if our health care system really is more efficient than the Europeans, then why is it possible to make such a vastly favorable trade?
If the Republicans really care about our children and grandchildren so much why don't they do this, so in 50 years they could have medicine as advanced as it would take perhaps 150 years to achieve with our current system. I don't care how bad you imagine European health care to be, you cannot think a European medical center of today is less effective than even the Mayo Clinic of 100 years ago, when penicillin and polio vaccines hadn't even been invented.
Adam Smith believed that competition was the best regulator of economic behavior. You can't trust government to intervene and protect people because the rich and powerful will bend government to satisfy their needs [although Mark himself favors finance regulation].
Ok, this is a point you often hear from anti-government people. But if it's really a good enough excuse always, we should have no government at all. Obviously, sometimes the good of government outweighs this cost.
And why does it sometimes, and in fact often, outweigh this cost in America. Because we have a highly democratic country, so the vast majority does have a strong say with their ability to vote. Obviously, we aren't completely democratic. The fact that Wyoming gets as many senators as California (and the District of Columbia gets none with a population larger than Wyoming's) means that a bill desired by representatives of 90% of the population can be stopped by representatives of 10% of the population. But we still are a highly democratic country, so there still is a strong incentive to not do anything that looks too bad to the public.
And we've seen that regulation and government can work very well for generations. Post World War II through the 70s we had effective banking regulation that led to the Great Moderation and a golden age of extremely high economic growth evenly spread that built the great middle class. But then we elected a party that didn't want government to work, and we've paid a very high price for that over the last generation (see here, here, here, and here).
So regulation can work in spite of the oversized influence of the wealthy and corporations. We saw that it could for decades. But how to make it work better? Two crucial steps are needed, and both would make our country far more democratic:
1) Eliminate the filibuster, which has not been with us as a de facto supermajority requirement since inception. It's only very recently that it's been used that way.
2) Greatly increase public campaign finance and/or corporate donation limits. If limits don't work because of Republican Supreme Court Justices and/or loopholes, certainly the government giving candidates and parties more campaign money than they could ever raise from corporations and private parties would destroy the incentive to cater to them for donations (they get the government money only if they decline private money). This is the idea behind (large) public campaign finance.
Some would say they support (2) but not (1), but it will be extremely hard to get a strong (2) without doing (1) first. In fact, it will be extremely hard to do any great good, from truly strong climate change action to truly strong finance reform, without doing (1) first. For more on why I support (1), please see here.
A large stimulus can be done through reconciliation, and therefore need only 50 votes plus the Vice President, if it's deficit neutral. But how can it be deficit neutral and still be a stimulus? One answer is that for reconciliation it must be deficit neutral over a period of 10 years (see here and here), so put in the spending now, and the tax increases, on the very wealthy, to more than pay for it 5 or more years later. If unemployment is still high by then, do another one of these stimuli at that time.
Yes, the Republicans will howl. They can't say it will explode the deficit (with much traction), because it's deficit paying. And, in fact, if the tax increase is a large permanent one on the wealthy, as it should be, the CBO score could show it paying down trillions in debt over 20 years to satisfy the deficit hawks. Nonetheless, the Republicans will, of course, say that the economy, and civilization as we know it, will end because taxes are being raised, despite the fact that Bush had massive tax cuts for the rich and brought us to the brink of a depression and trillion dollar deficits, while Clinton raised taxes and turned record Republican deficits into record surpluses, and had the longest economic expansion in U.S. history. I sincerely hope that if this happens Obama will end his harmful aversion to touting the achievements of the last Democratic president. The constant reply to Republican claims of disaster whenever taxes are raised should be Clinton, Clinton, Clinton (and in California Pat Brown, Pat Brown, Pat Brown).
And it's crucial for the Democrats to understand that any negative at the ballot box from the Republicans screaming tax increase, will be swamped many, many times over by passing a stimulus, and jobs programs, that will make unemployment and the economy far better by election time. A bad economy at election time, that's improving very slowly if at all, will hurt the Democrats immensely more than the Republicans screaming about tax increases which will be only on the very wealthy. Unfortunately, it may be too late for great improvement by the 2010 midterms, but strong action now would also greatly improve prospects in 2012, when not only much of congress, but also you know who, is being voted on.
Having a Nobel Prize winning economist (and in my opinion one of the greatest in history) writing a popular newspaper column has done tremendous good. Before Paul Krugman we had no one who was a great expert on economics writing a weekly popular newspaper column for the general public on economics and political economy. The result was that far too many people learned harmful, or extremely harmful, misconceptions from Robert Samuelsons posing as economists.
Wouldn't it be great if we could have a Paul Krugman for the physical sciences? In fact, we have what looks to be an excellent candidate, Nobel Prize winning physicist Burton Richter. Dr. Ricter is a finalist in the Washington Post's America's Next Great Pundit Contest.
It's extremely important in today's far more advanced world that the public and politicians understand scientific and technological issues and how they relate to politics, economics, and society in general. Ricter's two contest columns show an exceptional ability to meet this need. The first one is especially good, "Separating partisanship from technology". Here is a sample:
So many things in front of our Congress involve science and technology issues, including limiting greenhouse gases, renewable energy programs, equal treatment for all on the Internet, nuclear weapons reliability, computerizing medical records, computer vulnerabilities, etc. It is odd that Congress has no organization of its own to analyze these sorts of things. It has a trusted Congressional Budget Office to referee arguments on program costs, as was done recently on the cost of the Senate health-care reform bill, but Congress has nothing to analyze the impact of technology.
It was not always so. In 1972 Congress decided that knowledge was power and created the Office of Technology Assessment, so that it would have its own nonpartisan organization to look into the effects of technology on legislation and on the country. In 1995 it decided that ignorance was bliss and abolished OTA as part of the Gingrich revolution, in order to save about $20 million out of a congressional budget of $2 billion. It has been blissful ever since, getting its information on science and technology issues from outside organizations that too often have serious conflicts of interest.
And I would add that that $20 million the Republicans "saved" was just 1/350,000th of our $7 trillion GDP in 1995. The smarter science and technology related policy, legislation, and spending that $20 million could have contributed might easily have resulted in an increase in GDP of $20 billion, 200 billion, or much more, and then there are externalities and international benefits. It was an incredibly high return investment. Talk about being penny wise, pound foolish. This was stupid even by Republican standards.
Wouldn't it have been valuable if we had a columnist like Burton Ricter writing about this at the time. Like Paul Krugman, a columnist like this could do tremendous good.
