Tim Taylor: Universal Basic Income: Preliminary Results from the Finnish Experiment [feedly]

I tend to favor the UBI approach, although the results are ambiguous in this first year study. However, I believe politically all guaranteed income has to be linked to work or service for able-bodied or able minded recipients.

Universal Basic Income: Preliminary Results from the Finnish Experiment
http://conversableeconomist.blogspot.com/2019/02/universal-basic-income-preliminary.html

The big selling points for a universal basic income are simplicity and work incentives. The simplicity arises because with a universal basic income, there are no qualifications to satisfy or forms to fill out. People just receive it, regardless of factors like income levels or whether they have a job. There are not bureaucratic costs of determining eligibility, and no stigma of applying for such benefits or in receiving them.

The gains for work incentives arise because many programs aimed at helping the poor have a built-in feature that as you earn more on the job, you receive less in government assistance. From one standpoint, this seems logical and fair. But economists have been quick to point out that if someone loses a dollar of government benefits every time they gain a dollar from working, the implicit tax rate is 100%. When there are a number of different programs aimed at the working poor, all phasing out on their own individual schedules as income rises, the result can be that low-income people face very high implicit tax rates--even in some situations close to 100%. But a universal basic income does not decline or phase out as someone earns more income. 

There are plenty of assertions about how a universal basic income would affect work incentives, but actual hard evidence is still accumulating. The province of Ontario announced that it would run a three- year experiment, but then cancelled it after one year. An organization called GiveDirectly is running a universal basic income experiment in Kenya, although results aren't available yet, but there is reason to be skeptical as to whether the cost and effects of such a program in a low-income country will offer natural lessons for high-income countries. A firm called YCombinator is planning to run a universal basic income experiment in two US cities starting in 2019, but details still seem sketchy. The city of Stockton in California has just started an experiment where 130 people will get monthly payments of $500 for the next 18 months.  The program in Alaska in which residents get a payment from the state based on oil royalties, typically $1000-$2000 per year, can be viewed as a form of a universal basic income, although it's clearly not enough to live on by itself.

Finland has been running an experiment with a university basic income for the last couple of years, and preliminary results on work behavior are now available. The report is  "The basic income experiment 2017–2018in Finland," edited by Olli Kangas, Signe Jauhiainen, Miska Simanainen, Minna Ylikännöand published by Finland's Ministry of Social Affairs and Health (February 2019). They write:

"[T]he amount of basic income was 560 euros per month. This corresponded to the monthly net amount of the basic unemployment allowance and the labour market subsidy provided by Kela (the Social Insurance Institution of Finland). Two thousand persons aged 25–58 years who received an unemployment benefit from Kela in November 2016 were selected for the actual experiment. They were selected through random sampling without any regional or other emphasis. ... Despite its deficiencies, the Finnish experiment is exceptional from an international perspective in that participation in the experiment was compulsory and it was designed as a randomised field experiment." 

The effects on employment during the first year of the experiment (that is in 2017) turn out to be essentially nonexistent

Of the persons who in November 2016 received an unemployment benefit from Kela, 57 per cent had no earnings or income from self-employment in 2017. The figures also reveal that the average income of those who had been in employment was only around 9,920 euros. ... [T]he experiment did not have any effect on employment status during the first year of the experiment. The number of annual days in employment for the group that received a basic income is on average about half a day higher than for the control group. Overall, receipt of any positive earnings or income from self-employment, either from the open labour market or the subsidised labour market, is about one percentage point more common in the treatment group. However, resulting earnings and incomes from self-employment turned out to be 21 euros smaller.

In other results based on phone surveys, those who received the universal basic income expressed greater confident in their own future, and they expressed a belief that it would be easier to accept a future job offer. It will be interesting to see if these attitudes lead to actually higher employment as the 2018 data becomes available .

It's important to note that like all practical experiments, the Finnish experiment was not a completely pure universal basic income. For example, the experiment targeted the long-term unemployed, not the working poor as a group, and those receiving the benefit still dealt with the government for other support programs, like housing assistance. In adidtion, the experiment would need to be considered in the context of Finland's overall labor market. So the results are preliminary in a number of ways. But it's hard to spin them as encouraging.

For those who would like a bunch of links to discussion of the Finnish experiment and broader recent discussions of a universal basic income, a useful starting point is the extended blog post at the Brueghel website byCatarina Midoes, "Universal basic income and the Finnish experiment" (February 18, 2019).

For a pragmatic discussion of how a true universal basic income--that is, a payment to everyone that does not phase out regardless of income--might work in a US context, interested readers might start with Universal Basic Income: A Thought Experiment" (July 29, 2014).  If one took all the money from US (nonhealth) antipoverty programs, as well as a number of tax breaks that tend to benefit the middle-and upper-class, one could fund a universal basic income for the US of about $5800 per year.  

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Prices Are Not Enough [feedly]

From triple crisis, a good discussion of tax vs cap and trade market approaches to emissions reduction. And their limitations.

Prices Are Not Enough
http://triplecrisis.com/prices-are-not-enough/

y Frank Ackerman

Fourth in a series on climate policy; find Part 1 here, Part 2 here, and Part 3 here.

We need a price on carbon emissions. This opinion, virtually unanimous among economists, is also shared by a growing number of advocates and policymakers. But unanimity disappears in the debate over how to price carbon: there is continuing controversy about the merits of taxes vs. cap-and-trade systems for pricing emissions, and about the role for complementary, non-price policies.

At the risk of spoiling the suspense, this blog post reaches two main conclusions: First, under either a carbon tax or a cap-and-trade system, the price level matters more than the mechanism used to reach that price. Second, under either approach, a reasonably high price is necessary but not sufficient for climate policy; other measures are needed to complement price incentives.

Why taxes and cap-and-trade systems are similar

A carbon tax raises the cost of fossil fuels directly, by taxing their carbon emissions from combustion. This is most easily done upstream, i.e. taxing the oil or gas well, coal mine, or fuel importer, who presumably passes the tax on to end users. There are only hundreds of upstream fuel producers and importers to keep track of, compared to millions of end users.

A cap-and-trade system accomplishes the same thing indirectly, by setting a cap on total allowable emissions, and issuing that many annual allowances. Companies that want to sell or use fossil fuels are required to hold allowances equal to their emissions. If the cap is low enough to make allowances a scarce resource, then the market will establish a price on allowances – in effect, a price on greenhouse gas emissions. Again, it is easier to apply allowance requirements, and thus induce carbon trading, at the upstream level rather than on millions of end users.

If the price of emissions is, for example, $50 per ton of carbon dioxide, then any firm that can reduce emissions for less than $50 a ton will do so – under either a tax or cap-and-trade system. Cutting emissions reduces tax payments, under a carbon tax; it reduces the need to buy allowances under a cap-and-trade system. The price, not the mechanism, is what matters for this incentive effect.

A review of the economics literature on carbon taxes vs. cap-and-trade systems found a number of other points of similarity. Either system can be configured to achieve a desired distribution of the burden on households and industries, e.g. via free allocation of some allowances, or partial exemption from taxes. Money raised from either taxes or allowance auctions could be wholly or partially refunded to households.  Either approach can be manipulated to reduce effects on international competitiveness.

And problems raised with offsets – along the lines of credits given too casually for tree-planting – are not unique to cap and trade. A carbon tax could emerge from Congress riddled with obscure loopholes, which could be as damaging to the integrity of carbon pricing as any of the poorly written offset provisions of existing cap-and-trade systems. More positively speaking, either approach to carbon pricing can be carried out either with or without offsets and tax exemptions.

 

Why taxes and cap-and-trade systems are different

Compared to the numerous similarities between the two approaches, the list of differences is a shorter one. A carbon tax is easier and cheaper to administer. In theory, a carbon tax provides certainty about the price of emissions, while a cap-and-trade system provides certainty about the quantity of emissions (in practice, these certainties can be undone by too-frequent tinkering with tax rates or emissions caps).

Cap-and-trade systems have been more widely used in practice. The European Union's Emissions Trading System (EU ETS) is the world's largest carbon market. Others include the linked carbon market of California and several Canadian provinces, and the Regional Greenhouse Gas Initiative (RGGI) among states in the Northeast.

Numerous critics have pointed to potential flaws in cap-and-trade, such as overly generous, poorly monitored offsets. Many recent cap-and-trade systems, introduced in a conservative era, began with caps so high and prices so low that they have little effect (leaving them open to the criticism that the administrative costs are not justified by the skimpy results). The price must be high enough, and the cap must be low enough, to alter the behavior of major emitters.

The same applies, of course, to a carbon tax. Starting with a trivial level of carbon tax, in order to calm opponents of the measure, runs the risk of "proving" that a carbon price has no effect. The correct starting price under either system is the highest price that is politically acceptable; there is no hope of "getting the prices right" due to the uncertain and potentially disastrous scope of climate damages.

Perhaps the most salient difference between taxes and cap-and-trade is political rather than economic: in an era when people like to chant "no new taxes", the prospects for any initiative seem worse if it involves a new tax. This could explain why there is so much more experience to date with cap-and-trade systems.

 

Beyond price incentives

Some carbon emitters, for instance in electricity generation, have multiple choices among alternative technologies. In such cases, price incentives alone are powerful, and producers can respond incrementally, retiring and replacing individual plants when appropriate. Other sectors face barriers that an individual firm cannot usually overcome on its own. Electric vehicles are not practical without an extensive recharging and repair infrastructure, which is just beginning to exist in a few parts of the country. In this case, no reasonable level of carbon price can, by itself, bring an adequate nationwide electric vehicle infrastructure into existence. Policies that build and promote electric vehicle infrastructure are valuable complements to a carbon price: they create a combined incentive to move away from gasoline.

Yet another reason for combining non-price climate policies with a carbon price is that purely price-based decision-making can be exhausting. People could calculate for themselves the fuel saved by buying a more fuel-efficient car and subtract that from the sticker price of the vehicle, but it is not an easy calculation. Federal and state fuel economy standards make the process simpler, by setting a floor underneath vehicle fuel efficiency.

When buying a major appliance, it is possible in theory to read the energy efficiency sticker on the carton, calculate your average annual use of the appliance, convert it to dollars saved per year, and see if that savings justifies purchase of a more efficient appliance. But who does all that arithmetic? Even I don't want to do that calculation, and I have a PhD in economics and enjoy playing with numbers. My guess is that virtually no one does the calculation consistently and correctly. On the other hand, federal and state appliance efficiency standards have often set minimum levels of required efficiency, which increase over time. It's much more fun to buy something off the shelf that meets those standards, instead of settling in for an extended data-crunching session any time you need a new fridge, air conditioner, washing machine…

In short, the carbon price is what matters, not the mechanism used to adopt that price. And whatever the price, non-price climate policies are needed as well – both to build things that no one company can do on its own, and to make energy-efficient choices accessible to all, without heroic feats of calculation.

Frank Ackerman is principal economist at Synapse Energy Economics in Cambridge, Mass., and one of the founders of Dollars & Sense, which publishes Triple Crisis. 

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States Are Reconsidering Restrictive Medicaid Waiver Policies [feedly]

States Are Reconsidering Restrictive Medicaid Waiver Policies
https://www.cbpp.org/blog/states-are-reconsidering-restrictive-medicaid-waiver-policies

New governors and legislatures in Maine, Michigan, New Hampshire, and New Mexico are taking steps to protect access to health care for thousands of low-income Medicaid beneficiaries by reconsidering restrictive policies that their predecessors put in place through federal waivers, such as taking Medicaid coverage away from people who don't meet rigid work requirements and imposing premiums and high cost-sharing.  

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Dan Little's Blog: Marx's ideas about government [feedly]

Interesting review of the concept of CLASS and politics. I find discussions of Marx  quoting him directly, and in context, rather than via interpreters, instructive with respect to his actual strengths and weaknesses.

Marx's ideas about government
http://understandingsociety.blogspot.com/2019/02/marxs-ideas-about-government.html

Marx had something of a theory of politics and somewhat less of a theory of government. The slogan "the capitalist state serves as the managing committee of the bourgeoisie" represents the simplest version of his view of the state. He generally regarded government and law as an expression of class interests.

That said, Marx was not much of an organizational thinker. He had literally nothing to say about the workings of real governments — the British state or the French state, for example, and nothing to say about the ministries and bureaus through which the affairs of government worked. When he mentioned politicians in any European country it was as particular individuals rather than as functionaries. And yet it is crucial to understand government — including nineteenth century European governments — as bureaucracies organizing the flows of revenue, regulations, information, and coercion. Marx added essentially nothing to this task.

What Marx most likely would have asserted is that the existence of bureaucracy in government is a second-order factor, and that the main event is the existence and use of political power through the tools of state action. How precisely this is implemented was not of scientific interest to Marx, and he believed he had a more fundamental understanding of the orientation and workings of government. This is his view that political power derives from class privilege and state organs act in support of class interests.

Most of Marx's ideas about the state and government were formulated during the years surrounding the revolutions of 1848. Here are a few important passages from Marx's writings in the 1840s and 1950s. This is the full passage about the "managing committee of the bourgeoisie" from the Communist Manifesto:

Each step in the development of the bourgeoisie was accompanied by a corresponding political advance of that class. An oppressed class under the sway of the feudal nobility, an armed and self-governing association in the medieval commune: here independent urban republic (as in Italy and Germany); there taxable "third estate" of the monarchy (as in France); afterwards, in the period of manufacturing proper, serving either the semi-feudal or the absolute monarchy as a counterpoise against the nobility, and, in fact, cornerstone of the great monarchies in general, the bourgeoisie has at last, since the establishment of Modern Industry and of the world market, conquered for itself, in the modern representative State, exclusive political sway. The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie. Marx and Engels, Communist Manifesto

And here is his account of the establishment of the French "bourgeois republic" following the Revolution of 1848:

Upon the bourgeois monarchy of Louis Philippe, only the bourgeois republic could follow; that is to say, a limited portion of the bourgeoisie, having ruled under the name of the king, now the whole bourgeoisie was to rule under the name of the people. The demands of the Parisian proletariat are Utopian tom-fooleries that have to be done away with. To this declaration of the constitutional national assembly, the Paris proletariat answers with the June insurrection, the most colossal event in the history of European civil wars. The bourgeois republic won. On its side stood the aristocracy of finance, the industrial bourgeoisie; the middle class; the small traders' class; the army; the slums, organized as Guarde Mobile; the intellectual celebrities, the parsons' class, and the rural population…. 

The defeat of the June insurgents prepared, leveled the ground, upon which the bourgeois republic could be founded and erected; but it, at the same time showed that there are in Europe other issues besides that of "Republic or Monarchy." It revealed the fact that here the BOURGEOIS REPUBLIC meant the unbridled despotism of one class over another. Karl Marx, The Eighteenth Brumaire of Louis Bonaparte, p. 10, 11

The view here is perfectly clear — Marx describes the Republic of 1848 as the naked expression of the economic interests of the bourgeoisie, imposed on the whole of society through control of the state.

The epoch between December 20, 1848, and the dissolution of the constitutional assembly in May, 1849, embraces the history of the downfall of the bourgeois republicans. After they had founded a republic for the bourgeoisie, had driven the revolutionary proletariat from the field, and had meanwhile silenced the democratic middle class, they are themselves shoved aside by the mass of the bourgeoisie, who justly appropriate this republic as their property. This bourgeois mass was ROYALIST, however. A part thereof, the large landed proprietors, had ruled under the restoration, hence, was LEGITIMIST; the other part, the aristocrats of finance and the large industrial capitalists, had ruled under the July monarchy, hence, was ORLEANIST. The high functionaries of the Army, of the University, of the Church, in the civil service, of the Academy and of the press, divided them selves on both sides, although in unequal parts. Here, in the bourgeois republic, that bore neither the name of BOURBON, nor of ORLEANS, but the name of CAPITAL, they had found the form of government under which they could all rule in common. Already the June insurrection had united them all into a "Party of Order." Eighteenth Brumaire, p. 18

Significantly, Marx's analysis of the few crucial years of French political history between 1848 and 1851 focuses entirely on segments of the propertied classes who vied for power in the National Assembly. Landowners want X, small owners want Y, large industrial owners want W, financiers want Z; and the individuals and parties representing these segments compete for power. And the actions of government reflect the goals and strategies of the strongest parties. Here is Marx's description of the crucial manipulation of the Constitution's election rules for the election of a president:

The law of May 31, 1850, was the "coup d'etat" of the bourgeoisie. All its previous conquests over the revolution had only a temporary character: They became uncertain the moment the National Assembly stepped off the stage; they depended upon the accident of general elections, and the history of the elections since 1848 proved irrefutably that, in the same measure as the actual reign of the bourgeoisie gathered strength, its moral reign over the masses wore off. Universal suffrage pronounced itself on.May 10 pointedly against the reign bourgeoisie; the bourgeoisie answered with the banishment of universal suffrage. The law of May 31 was, accordingly, one of the necessities of the class struggle. On the other hand, the constitution required a minimum of two million votes for the valid election of the President of the republic. If none of the Presidential candidates polled this minimum, then the National Assembly was to elect the President out of the three candidates polling the highest votes. At the time that the constitutive body made this law, ten million voters were registered on the election rolls. Eighteenth Brumaire, p. 39

And, significantly, Marx describes this period of government as representing a coalition of two major groups of property owners, landed property and manufacture:

The parliamentary republic was more than a neutral ground on which the two factions of the French bourgeoisie— Legitimists and Orleanists, large landed property and manufacture— could lodge together with equal rights. It was the indispensable condition for their common reign, the only form of government in which their common class interest could dominate both the claims of their separate factions and all the other classes of society. As royalists, they relapsed into their old antagonism: into the struggle for the overlordship of either landed property or of money; and the highest expression of this antagonism, its personification, were the two kings themselves, their dynasties. Hence the resistance of the party of Order to the recall of the Bourbons. Eighteenth Brumaire, p. 54

But the INDUSTRIAL BOURGEOISIE also, in its fanaticism for order, was annoyed at the quarrels of the Parliamentary party of Order with the Executive. Thiers, Anglas, Sainte Beuve, etc., received, after their vote of January 18, on the occasion of the discharge of Changarnier, public reprimands from their constituencies, located in the industrial districts, branding their coalition with the Mountain as an act of high treason to the cause of order. Although, true enough, the boastful, vexatious and petty intrigues, through which the struggle of the party of Order with the President manifested it self, deserved no better reception, yet notwithstanding, this bourgeois party, that expects of its representatives to allow the military power to pass without resistance out of the hands of their own Parliament into those of an adventurous Pretender, is not worth even the intrigues that were wasted in its behalf. It showed that the struggle for the maintenance of their public interests, of their class interests, of their political power only incommoded and displeased them, as a disturbance of their private business…. Business being brisk, as still at the beginning of 1851, the commercial bourgeoisie stormed against every Parliamentary" strife, lest business be put out of temper. Business being dull, as from the end of February, 1851, on, the bourgeoisie accused thee Parliamentary strifes as the cause of the stand-still, and clamored for quiet in order that business may revive.  Eighteenth Brumaire, p. 58-59

Again, we find the same idea of the managing committee of (dominant factions of) the propertied classes.

This is a particularly reductionist interpretation of politics. It suggests a thoroughly mechanistic relationship between class interests and the actions of the state. Politicians are the creatures of various propertied interests, and their actions are dictated by their patrons. But towards the end of the Eighteenth Brumaire Marx gives a nod to the complexity and size of government:

This Executive power, with its tremendous bureaucratic and military organization; with its wide-spreading and artificial machinery of government — an army of office-holders, half a million strong, together with a military force of another million men— ; this fearful body of parasites, that coils itself like a snake around French society, stopping all its pores, originated at the time of the absolute monarchy, along with the decline of feudalism, which it helped to hasten. The princely privileges of the landed proprietors and cities were transformed into so many attributes of the Executive power; the feudal dignitaries into paid office-holders; and the confusing design of conflicting medieval seigniories, into the well regulated plan of a government, whose work is subdivided and centralized as in the factory…. Napoleon completed this governmental machinery. Eighteenth Brumaire, p. 69

This clearly presents a topic for study: how does this "machinery of government" work? What is the social ontology of the ministries, offices, and agencies of government? Further, Marx raises a point that Nicos Poulantzas eventually characterizes as the "relative autonomy of the capitalist state":

Nevertheless, under the absolute monarchy, during the first revolution, and under Napoleon, the bureaucracy was only the means whereby to prepare the class rule of the bourgeoisie; under the restoration, under Louis Philippe, and under the parliamentary republic, it was the instrument of the ruling class, however eagerly this class strained after autocracy. Not before the advent of the second Bonaparte does the government seem to have made itself fully independent. The machinery of government has by this time so thoroughly fortified itself against society, that the chief of the "Society of December 10" is thought good enough to be at its head a fortune-hunter, run in from abroad, is raised on its shield by a drunken soldiery, bought by himself with liquor and sausages, and whom he is forced ever again to throw sops to. Hence the timid despair, the sense of crushing humiliation and degradation that oppresses the breast of France and makes her to choke. She feels dishonored. Eighteenth Brumaire, p. 70

According to this passage, the government of Napoleon III has a degree of autonomy from the propertied interests of his period. "The machinery of government has by this time … thoroughly fortified itself against society." This idea too points to a more sophisticated understanding of the "machinery of government." This opens the door to a more nuanced theory of politics, including the possibility that other groups in society (environmentalists, workers, right-wing nationalists) may position themselves in ways that have substantial effect on the actions of government.

Here is Robert Paul Resch's description of Poulantzas's theory of relative autonomy in Althusser and the Renewal of Marxist Social Theory (329-330):

Poulantzas also seeks to explain how the capitalist state directly serves the interests of the capitalist class while being formally separated from the economy and from the direct control of the capitalists. Poulantzas's concept of the capitalist state is premised on its relative autonomy with respect to the economy and the fact that "it is this autonomy which, as a constant invariant, regulates the variations of intervention and non-intervention of the political in the economic, and of the economic in the political" (Poulantzas 1973, 143). The general concept of a class state, Poulantzas reminds us, does not require that the state be the direct instrument of the dominant class but only that it legitimize and reproduce the conditions and relations of domination and exploitation by which the ruling class is constituted. In capitalist social formations these conditions are defined by the existence of surplus value and the irresistible impetus to accumulate it that occurs when private property exists and labor power is completely commodified. Furthermore, in capitalist social formations, the members of the dominant class are in economic competition with each other, and their competing interests render them incapable of governing directly or with unanimity. Their only common interests, Poulantzas concludes, are that the exploited class be politically fragmented and that the existence of propertyless laborers "free" to sell their labor power be perpetuated.

Poulantzas argues that the peculiar characteristics of the capitalist mode of production do not require a state that directly represents the economic interests of the ruling classes; rather, they require a state that represents their political interest. However democratic a capitalist state may appear to be, Poulantzas maintains that it always functions as "the dominant class's political power center, the organizing agent of their political struggles" (Poulantzas 1973, 190). The state accomplishes this function by redefining agents of production, distributed in classes, as political subjects, distributed as individuals. The result is an effect of "individual isolation" that is then projected back, via the legal system, from the political realm into the economy to mask the existence of class relationships. The capitalist state is both the source and guarantor of the "rights" of isolated political subjects and thus of its own function of representing the unity of these isolated relations, that is, the body politic of "the people" and "the nation." In other words, "the state represents the unity of an isolation which because of the role played by the ideological, is largely its own effect. This double function of isolating [individuals] and representing [their] unity is reflected in the internal contradictions in the structure of the state" (Poulantzas 1973, 134).

(Rereading The Eighteenth Brumaire creates a little bit of a sense of what Marx was getting at when he wrote in the first sentence of the essay that "Hegel says somewhere that all great historic facts and personages recur twice. He forgot to add: 'Once as tragedy, and again as farce.'" The lawlessness and recklessness of the current US president resonates with Marx's narrative of Napoléon le petit, in Victor Hugo's phrase.)

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Democrats for Family Values [feedly]

Democrats for Family Values
https://www.nytimes.com/2019/02/21/opinion/warren-child-care.html

For millions of Americans with children, life is a constant, desperate balancing act. They must work during the day, either because they're single parents or because decades of wage stagnation mean that both parents must take jobs to make ends meet. Yet quality child care is unavailable or unaffordable.

And the thing is, it doesn't have to be this way. Other wealthy countries either have national child care systems or subsidize care to put it in everyone's reach. It doesn't even cost all that much. While other advanced countries spend, on average, about three times as much as we do helping families — so much for our vaunted "family values" — it's still a relatively small part of their budgets. In particular, taking care of children is much cheaper than providing health care and retirement income to seniors, which even America does.

Furthermore, caring for children doesn't just help them grow up to be productive adults. It also has immediate economic benefits, making it easier for parents to stay in the work force.

Over the past 20 years, women's prime-age employment in the U.S. has lagged ever further behind the rest of the advanced world — at this point we're well below even Japan. And lack of child care is probably one main reason.



So child care really should be an important part of the progressive agenda. Hillary Clinton had a serious plan back in 2016, but the news media was too busy obsessing over emails to pay attention. And if you ask me, Elizabeth Warren's new proposal isn't getting as much attention as it should.

For the Warren proposal is the kind of initiative that, if enacted, would change millions of lives for the better, yet could actually happen in the near future.

Among other things, unlike purist visions of replacing private health insurance with "Medicare for all," providing child care wouldn't require imposing big new taxes on the middle class. The sums of money involved are small enough that new taxes on great wealth and high incomes, which are desirable on other grounds, could easily raise sufficient revenue.

The logic of the Warren plan is fairly simple (although some commentators are trying to make it sound complex). Child care would be regulated to ensure that basic quality was maintained and subsidized to make it affordable. The size of the subsidy would depend on parents' incomes: lower-income parents would get free care, higher-income parents would have to pay something, but nobody would have to pay more than 7 percent of income.

Warren's advisers put the budget cost at $70 billion a year, or around one-third of one percent of G.D.P. That's not chicken feed, but it's not that much for something that could transform so many lives.


It is, for example, well under half the revenue lost due to the Trump tax cut, which seems to have been used mainly for share buybacks. And it's a tiny fraction of what it would cost to replace all private health insurance with a public program.

So what are the objections to this plan?

I'm hearing from a few people on the left who complain that the plan doesn't go far enough — that it should involve free, direct public provision of child care, not subsidies to private provision. There's certainly a case for a more expansive policy. There's also no chance that it will happen anytime soon.

The perfect here is the enemy of the good.

Meanwhile, on the right there are the usual cries of "socialism," which these days means anything to the left of eating poor people's babies.

More interestingly, I'm seeing at least some commentary on the right that doesn't just push back against the whole idea of making it easier for mothers to work, it wants us to go back to the days when families could "live on one income."

Realistically, of course, that's not going to happen, and not just because 30 percent of U.S. children live in single-parent households. And bear in mind that even as conservatives bemoan the decline of the traditional male breadwinner, they're pushing policies like Medicaid work requirements that basically force mothers out of the home.

The bottom line is that Warren's proposal is impressive: It's workable, affordable, and would do a huge amount of good.

And while this isn't a horse-race column — I'm not arguing that Warren necessarily will or even should be the Democratic presidential nominee — the field needs more policy ideas like this: medium-size, medium-priced proposals that could deliver major benefits without requiring a political miracle.


Right now, all of the real contenders for the Democratic nomination are solidly progressive, but so far some seem either underbriefed on policy issues — there's been far too much fumbling over Medicare for all — or too committed to sweeping, maximalist policy visions to think seriously about what they might truly be able to do if their party takes the White House and Senate next year.

Visions and values are great, but Democrats also need to be ready to hit the ground running with plans that might actually turn into legislation. And so far, Warren is setting the pace.

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Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman -- via my feedly newsfeed

Opioid Crisis Shows How Economic Inequality Kills [feedly]

Opioid Crisis Shows How Economic Inequality Kills
https://www.nakedcapitalism.com/2019/02/opioid-crisis-shows-economic-inequality-kills.html

Opioid Crisis Shows How Economic Inequality Kills

Posted on February 20, 2019 by Yves Smith

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

Pharmaceutical pushers like Purdue Pharma "couldn't have done their dirty work" without America's increasingly unbalanced economy

America's growing rate of economic inequality is more than a numerical ratio that worries economists or a trendy political talking point. The phenomenon has been linked to human tragedies ranging from higher murder rates to growing gaps in life expectancy.

Add death by opioids to the list.

In recent years, social scientists have been debating why more people have been dying from drug overdoses. Does the increased availability of highly addictive opioids fully explain the rise? Not entirely, it turns out.

Sociologist Shannon Monnat is author of a new study with the Institute for New Economic Thinking that examines county-level drug deaths in the U.S. Her research reveals that while overprescribing doctors, pharmaceutical pushers and illegal dealers are highly significant, a big part of what makes a community susceptible to the opioid scourge is recent patterns of economic distress — the kind inflicted by decades of bad policy.

A recent flurry of headlines about the billionaire Sackler family, whose members own Purdue Pharma, the company that created the powerful opioid painkiller OxyContin, highlights the ugliness of drug sales representatives promoting dangerously high doses to boost profits. "Supply is certainly important," says Monnat, "but Big Pharma couldn't do its dirty work without America's increasing economic inequality."

Monnat's research examines U.S. drug fatalities from 2000-02 and 2014-16, two-thirds of which were caused by heroin, fentanyl, and prescription opiates. She concentrates on non-Hispanic whites because other than American Indians, that group has suffered the highest drug mortality rates of anybody over the last two decades.

Several of her findings complicate the common media narratives. Despite the characterization of opioids as "hillbilly heroin," most deaths and the biggest increase in fatalities among whites since 2000 were actually in urban counties. Rural areas saw fewer deaths overall, but the rates varied widely from one region to another. Some rural counties have the highest opioid mortality rates in the country, while others enjoy the lowest.

Why would opioids be raging through some predominately rural states, like Maine and Kentucky, but not others, like Idaho and Iowa?

Among non-urban counties, drug mortality rates appear to spike in two types of places: economically beaten-down communities centered on mining and distressed areas where people increasingly depend on service jobs. In these corners of America, economic anxiety matters more in terms of how many will die from opioid overdoses than supply factors, which tend to drive death rates more around big cities.

Monnat explains how despair builds in areas like Appalachia, where residents have seen mining jobs disappear and there are fewer ways for people without a college degree to make a living. In regions where manufacturing jobs were once abundant, like Pennsylvania, people have to rely on badly paid service jobs that offer few benefits.

Communities facing these challenges begin to implode. The best and brightest young people tend to leave to find jobs elsewhere. Families break apart. The tax base shrinks and social services disappear. Economic policies that support disinvestment in the public sphere, along with those that disfavor workers and allow corporations — like greedy pharmaceutical companies — to run roughshod over communities make everything worse. Distress spreads across generations.

On the other hand, rural areas where people are more reliant on farming or where there are a wider variety of jobs tend have a lower rate of death from opioids. The quality of labor markets matters, it turns out. Monnat also thinks that that greater social cohesion in these communities may help people stay more resilient when economic strains develop. Having a more robust social safety net helps, too. Elsewhere, she has shown that places where religion and sports are more of a focus also tend to have lower rates of drug fatalities. Maybe going to church or rooting for the local team gives people meaning and a sense identity, which helps them cope better when other sources of these human needs disappear.

The opioid crisis is really a "tale of two rural Americas," says Monnat. In places where economic inequality has thrown more lives into chaos, a greater number of lives will be snuffed out by this deadly strain of drugs. (Methamphetamines, she notes, cause slower deaths, so we may not have the full story of their impact on drug fatalities yet).

Her findings suggest that no matter how well intentioned the efforts to limit supply or provide treatment to the addicted, places where the economy isn't working for most people may continue to see high opioid fatalities.

Research like hers underscores the reality that policymakers in both political parties are going to have to move beyond the neoliberal framework popularized in the Reagan era that promotes corporate deregulation, shrunken social safety nets, and trade and labor policies that hurt ordinary workers. Such policies were meant to spark growth, but instead they have only made a thin slice of people wealthy and socked America with inequality that has disproportionately hit certain regions of the country.

Pro-worker policies, investments in public services like health and education, fairer tax systems, and re-establishing sensible rules for how companies do business are all part of a much-needed prescription for a healthier society.

This entry was posted in Economic fundamentals, Free markets and their discontents, Guest Post, Health care, Income disparity, The destruction of the middle class on February 20, 2019 by Yves Smith.

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