Wednesday, June 28, 2017

Read All About It.

Unagidon: Capitalism Without Tears.

Can It Be Done?


  1. Yes, Kathetine, he cuts through the mind numbing Repub talking points. Like having fresh air blow through one's brain.

  2. unagidon here.

    I hear people on the Right, in more or less sophisticated ways, say that the "market" would solve all of our problems if only the government would get out of the way. In the case of healthcare, I have been particularly interested in the question, because I have worked in the "free market" for twenty years and have seen it not work (except for the people growing fat off of it). So I have gone to the source, to the actual libertarian economists that explain the whole thing in terms of their basis theories, which they like to call "science".

    It is true that healthcare (like everything else) is bound up in lots of regulations. Some support consumers and the general public and some support one interest against others. At the bottom of it all is a marginalist economic theory that goes like this:

    The goal of any business is to maximize profit, but the social value of businesses maximizing profit is the maximization of efficiency in the service of driving down prices. Anything that keeps this "efficiency" from driving down prices is probably some extraneous force (meaning a non-market force where the market exists in order to maximize efficiency and drive down prices). This includes things like regulations and also includes things like labor unions. When a business can produce the lowest possible prices, society is rewarded by.... low prices.

    While this is all true, and can be backed up with the economist's endless demonstrations about price efficiency, it contains, I believe, a fatal flaw. The flaw is that in order to serve (and I do mean serve) at the altar of this efficiency one has to use all possible means to suppress wages. And the problem here is that the suppression of wages offsets the suppression of prices.

    At a local level, this may not matter to the population at large, because the suppression of wages in one industry does not suppress their wages and so they themselves get to benefit from lower costs. And perversely as their own wages come to be suppressed, they want lower costs in any case.

    But several things happen with this wage suppression. First, what also happens is that the owners of capital start to take an ever larger share of the economic pie. It's one thing when the rich just get richer. It's another thing when the rich both get richer and also take absolute control of a larger portion of the economy. The suppression of wages suppresses both the economic and the political power of the working class, in the name of the reduction of prices that they can't enjoy because their wages have been reduced.

    It also, ironically, undercuts the internal market for good for the capitalists themselves. And in doing this, the rate of profit falls, which leads the capitalists to look for new markets outside of the United States. It also turns price into a political tool that can be used by the rich to divide everyone else.

    I think that the modern pseudo-science called economics has managed, in the name of "science" and rationality, to pull the economic order into a false amorality and "objectivity" that does not consider the wider affects (read moral affects) of political economy as a moral order. I think that most people would say that lower prices are a good thing. But what has happened over the last 40 years is that one by one businesses have pursued wage suppression "in the interests of the stockholder" and in the process of doing this have generated stagnant wages and massive inequality. And the pity of it is that these stockholders are often the same people whose wages are being suppressed.

  3. Unagidon, as usual, comes in loud and clear. Speaking of insurance, whenever I have taken out a mortgage to buy a house, the bank has imposed a burdensome rule that I must take out insurance on the property. Lemme tell you, in a Randian moment, that bank-controlled housing is inefficient housing. In fact, it is bank interference in the housing market that drives up prices, forces people out of the market and makes communities have fire departments instead of letting houses burn themselves out, as they would in a free market. Remember, capitalism means some people win, and you lose. But unelected bank bureaucrats have changed all that. I think that people should be allowed to choose whether they want to insure their houses. If we got back to a free market, I am sure the cost of insuring would be cheaper as companies vie for the teeny bit of business no houses would ever burn or have trees fall on them, and the economy would grow by 3.5 percent. Plain common sense.

  4. Unagidon's analysis of the health care vicious circle puts me in mind of the "EpiPen" scandal, much in the news last year when its price skyrocketed. Some newstory's had it up to $600 for a two pack of auto-injectiors, each with a small dose of epinephrine, to treat anaphylaxis, a sudden and drastic allergic reaction that closes the airways.

    The drug itself is a standard issue treatment. It's the auto-injection delivery system that is the novelty and apparently a life saver. The device is in the hands of one manufacturer, Mylan. Its monopoly of the device led to large price increases.

    It got regulatory help from the FDA, which found competing injectors wanting. Add to that parents panicked over the potential allergic reaction in a child. Then school districts were required in some places to keep the EpiPen on hand for such an incident. Since they have a short shelf life (use by date), they have to be replaced regularly.

    Multiply all of that by $600 or whatever it costs today. If there was a real market, schools and parents would stop buying the devices, but they can't do that for fear of watching a child suffocate.

    One glaring irony in all of this (at least to my mind) is that the CEO of Mylan was the daughter of West Virginia Senator Manchin, one of the poorest, if not the poorest state in the Union. How did the citizens and school districts of West Va. handle this? And I wonder what Senator Manchin did to relieve the economic shortfall.

    One of many stories here.

    1. That last line is my first "hyperlink" in comments. I would be patting myself on the back except that I got tennis elbow toggling back and forth to the directions for doing it! But thanks to all for the formula.