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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

March 22, 2010 at 9:45 AM

How economics has come to trump morality, democracy in our debates

The most remarkable thing about the health-care reform debate has been its framing in largely economic terms. This is in keeping with American tendencies over the past 30 years, where economics is supposed to provide value-free, scientific guidance in every area — even though economics is rarely value free (this is why the discipline was once called “political economy”), there is much we don’t know (most economists missed the gathering Great Recession), and no discipline can provide all the answers for life.

This dominance of economics has coincided with America’s embrace of the neo-classical school (“the market will police itself,” etc.); the rise of a financial, rather than a productive, economy which has been looting the assets it took the nation a century to build, and the idea firmly locked in so many people’s minds that there’s a free lunch, e.g., taxes must always be cut. “It makes economic sense” therefore it must be true. In fact, our econ obsession has helped turn us from a creditor to a debtor, given rise to unhealthy gaps in income, etc. etc.

Where would we be if America had always been guided thus? It made no economic sense to break away from Great Britain — the colonies had a sweet deal from a business standpoint. Forget the Civil War — policymakers had even figured out the cost of reimbursing slaveholders for emancipation. The transcontinental railroad was foremost a way to link a continental nation; most investors went bust. Trust-busting, Social Security, the GI Bill, Medicare and voting rights were done for the common good, simple justice and fair play, not because they penciled out well at the CBO. Can you imagine Martin Luther King Jr.’s speeches revolving around how “the numbers work”?

The bill itself? We’ll see. Something had to be done — the current system of money-driven medicine is unsustainable. The power of the for-profit medical establishment was too great to enact Medicare for all. But such reforms as insuring 30 million Americans, elimination of preexisting conditions, ending the ability of insurers to arbitrarily kick sick people off their rolls and some rudimentary regulation are all to the good. We’ll see if the conservative-controlled Supreme Court let’s it stand. The victory may backfire on the likes of Jim DeMint, R-S.C., who said defeat would “break” Obama (unfortunate locution from a white Southerner), be “his Waterloo.” Former Bush speechwriter David Frum writes: “it’s Waterloo all right: ours.”

The Back Story: Financial types are going crazy today about a “hidden” provision passed by the House that largely eliminates fees paid to private lenders that act as go-betweens on student loans. This sector has been plagued by scandals and is a costly middleman between students and federal assistance. The government will expand direct lending. If the banks were opposed to the bill, you know what to do…

Today’s Econ Haiku:

Talk about Greek fire

Could the bailout divisions

Burn the EU bloc?

Comments | More in Eurozone


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