The Myth Of The Free Market Outside Of Government

The libertarian movement and portions of the conservative movement have a highly successful con going. They appeal to the common desire for freedom and translate this into a bogus economic philosophy which pretends that markets are a force outside of the rest of society. They then argue that government regulation of the economy is an intrusion on freedom, and that any government interference in them will do great economic  harm. Libertarians accept this without question, while naively denying that libertarianism is more like a fundamentalist religion than a serious political or economic theory. This blind faith works well for its major proponents, such as the Koch brothers who fight any regulation on such quasi-religious grounds while quietly taking advantage of government to amass their fortunes.

In discussion of this subject, I have often pointed out that markets are creations of people, and that regulations are necessary for them to function. Robert Reich addressed this topic today:

One of the most deceptive ideas continuously sounded by the Right (and its fathomless think tanks and media outlets) is that the “free market” is natural and inevitable, existing outside and beyond government. So whatever inequality or insecurity it generates is beyond our control. And whatever ways we might seek to reduce inequality or insecurity — to make the economy work for us — are unwarranted constraints on the market’s freedom, and will inevitably go wrong.

By this view, if some people aren’t paid enough to live on, the market has determined they aren’t worth enough. If others rake in billions, they must be worth it. If millions of Americans remain unemployed or their paychecks are shrinking or they work two or three part-time jobs with no idea what they’ll earn next month or next week, that’s too bad; it’s just the outcome of the market.

According to this logic, government shouldn’t intrude through minimum wages, high taxes on top earners, public spending to get people back to work, regulations on business, or anything else, because the “free market” knows best.

In reality, the “free market” is a bunch of rules about (1) what can be owned and traded (the genome? slaves? nuclear materials? babies? votes?); (2) on what terms (equal access to the internet? the right to organize unions? corporate monopolies? the length of patent protections?); (3) under what conditions (poisonous drugs? unsafe foods? deceptive Ponzi schemes? uninsured derivatives? dangerous workplaces?) (4) what’s private and what’s public (police? roads? clean air and clean water? healthcare? good schools? parks and playgrounds?); (5) how to pay for what (taxes, user fees, individual pricing?). And so on.

These rules don’t exist in nature; they are human creations. Governments don’t “intrude” on free markets; governments organize and maintain them. Markets aren’t “free” of rules; the rules define them.

Reich went on to further discuss the types and goal of rules which might be made to regulate markets, and finally who makes the rules:

…the rules are being made mainly by those with the power and resources to buy the politicians, regulatory heads, and even the courts (and the lawyers who appear before them). As income and wealth have concentrated at the top, so has political clout. And the most important clout is determining the rules of the game.

Not incidentally, these are the same people who want you and most others to believe in the fiction of an immutable “free market.”

If we want to reduce the savage inequalities and insecurities that are now undermining our economy and democracy, we shouldn’t be deterred by the myth of the “free market.” We can make the economy work for us, rather than for only a few at the top. But in order to change the rules, we must exert the power that is supposed to be ours.

I certainly would prefer a situation where regulatory burdens are diminished, especially on small businesses which have more difficulty in dealing with this, and there are undoubtedly a number of bad economic regulations which should be repealed. That said, there is a relationship between regulations on the economy and freedom, but libertarians and conservatives get it wrong. In a free society, economic regulations should be developed by a democratic government, not by an oligarchy as promoted by conservative policies.

In America, Even Most Of The Left Does Not See Socialism As The Answer

Conservatives have been claiming that Barack Obama is a socialist despite his centrist, pro-business economic policies. I’ve often wondered how they would react to actual socialists. Of course they would have a hard time finding many actual socialists any more among those with any degree of influence in the United States government. Robert Reich is pretty far left by American standards but even he argues that The Answer Isn’t Socialism; It’s Capitalism That Better Spreads the Benefits of the Productivity Revolution.

Francois Hollande’s victory doesn’t and shouldn’t mean a movement toward socialism in Europe or elsewhere. Socialism isn’t the answer to the basic problem haunting all rich nations.

The answer is to reform capitalism. The world’s productivity revolution is outpacing the political will of rich societies to fairly distribute its benefits. The result is widening inequality coupled with slow growth and stubbornly high unemployment….

Those on the right who see no role for government in the economy would find much to object to in Reich’s views, and perhaps, if they are  honest, would see the difference between his views and Obama’s more moderate economic views. This would provide a framework for a far more meaningful debate than the current right wing arguments that Obama is a socialist.


Robert Reich Endorses Obama

It’s time to see James Carville blow up again. Another Clinton appointee has endorsed Obama. Robert Reich initially did not plan to endorse anyone but, as with many other people, the negativity and dishonesty of Clinton’s campaign tipped the balance:

“I saw the ads” — the negative man-on-street commercials that the Clinton campaign put up in Pennsylvania in the wake of Obama’s bitter/cling comments a week ago — “and I was appalled, frankly. I thought it represented the nadir of mean-spirited, negative politics. And also of the politics of distraction, of gotcha politics. It’s the worst of all worlds. We have three terrible traditions that we’ve developed in American campaigns. One is outright meanness and negativity. The second is taking out of context something your opponent said, maybe inartfully, and blowing it up into something your opponent doesn’t possibly believe and doesn’t possibly represent. And third is a kind of tradition of distraction, of getting off the big subject with sideshows that have nothing to do with what matters. And these three aspects of the old politics I’ve seen growing in Hillary’s campaign. And I’ve come to the point, after seeing those ads, where I can’t in good conscience not say out loud what I believe about who should be president. Those ads are nothing but Republicanism. They’re lending legitimacy to a Republican message that’s wrong to begin with, and they harken back to the past twenty years of demagoguery on guns and religion. It’s old politics at its worst — and old Republican politics, not even old Democratic politics. It’s just so deeply cynical.”

Robert Reich endorsed Obama on his blog:

The formal act of endorsing a candidate is generally (and properly)limited to editorial pages and elected officials whose constituents might be influenced by their choice. The rest of us shouldn’t assume anyone cares. My avoidance of offering a formal endorsement until now has also been affected by the pull of old friendships and my reluctance as a teacher and commentator to be openly partisan. But my conscience won’t let me be silent any longer.

I believe that Barack Obama should be elected President of the United States.

Although Hillary Clinton has offered solid and sensible policy proposals, Obama’s strike me as even more so. His plans for reforming Social Security and health care have a better chance of succeeding. His approaches to the housing crisis and the failures of our financial markets are sounder than hers. His ideas for improving our public schools and confronting the problems of poverty and inequality are more coherent and compelling. He has put forward the more enlightened foreign policy and the more thoughtful plan for controlling global warming.

He also presents the best chance of creating a new politics in which citizens become active participants rather than cynical spectators. He has energized many who had given up on politics. He has engaged young people to an extent not seen in decades. He has spoken about the most difficult problems our society faces, such as race, without spinning or simplifying. He has rightly identified the armies of lawyers and lobbyists that have commandeered our democracy, and pointed the way toward taking it back.

Finally, he offers the best hope of transcending the boundaries of class, race, and nationality that have divided us. His life history exemplifies this, as do his writings and his record of public service. For these same reasons, he offers the best possibility of restoring America’s moral authority in the world.

Intolerance And The Derailing of Health Care Reform

There’s some more ridiculous Obama-bashing on health care in the blogosphere today, this time starting with a post by Mike Lux at Open Left. The complaint is that Jim Cooper advocated more moderate health care reform than Clinton while in Congress and he is now a health care spokesman for Obama. The twisted logic here is that Cooper was more moderate than Clinton on health reform in the 1990’s and therefore Barack Obama is not serious about health care. This argument is taken to its absurd extremes by Paul Krugman, who continues his ongoing attacks on Obama:

This fits in with my sense, based on everything we’ve seen in this campaign, that Obama just isn’t all that committed to health care reform. If he does make it to the White House, I hope he proves me wrong. But as I’ve written before, from my perspective it looks as if a dream is dying.

This is typical of the logic of the Clinton camp to ignore everything which Obama has actually said about his dedication to health care reform and instead fabricate a case based upon disapproval of a surrogate. Even if everything negative they are saying about Cooper was true, it would still be Obama’s views and not Cooper’s which ultimately matter.

There are also other problems with the attacks on Cooper. The reason we did not achieve health care reform in the 1990’s is the fault of Hillary Clinton, not Jim Cooper. Clinton proposed a poor health care plan. She showed then, as she shows now, that she simply does not understand economics or health care delivery. Politically Clinton made the mistake of demanding her plan without being willing to compromise. Others, such as Cooper, attempted to propose plans which might actually have passed in Congress. As Brad DeLong writes:

What Mike Lux, “veteran of the Clinton health care wars,” knows–but is very careful not to tell you–is that in 1993-1994 health care reform needed 60 votes in the Senate in order to defeat a Dole-led filibuster, and that Sen. John Breaux (D-LA) was vote 55. “undermin[ing] Clinton’s health care plan by… [working] with former Senator and current lobbyist John Breaux” translates as “working on bills that might actually pass the senate.”


Clinton Continues Use of Dishonest Mailers

Throughout the primary camapaign Hillary Clinton has resorted to using dishonest mailers to distort Obama’s positions on the issues. The Politico reports on a mailer now being sent on health care. The mailer asks, “Which of These People Don’t Deserve Health Care?” The implication is that Obama would leave people out while Clinton’s health plan would include them. This is untrue as the only people who would be left out are those who choose not to have coverage.

On a conference call today, Ted Kennedy responded to Clinton’s charges:

“They both effectively have universal health care programs,” Kennedy said. “The point of this ad is to undermine people’s belief that Barack Obama is committed to universal health care, and that is simply a distortion, a misrepresentation… that is the kind of distortion that we had back in 1994.”

To be exact on this, Obama’s plan might not be called universal as people have the option not to participate. However if Obama’s plan is not considered universal, then Clinton’s plan could not be called universal as not everybody obeys government mandates. Robert Reich has argued that Obama’s plan would actually cover more people:

She says his would insure fewer people than hers. I’ve compared the two plans in detail. Both of them are big advances over what we have now. But in my view Obama’s would insure more people, not fewer, than HRC’s. That’s because Obama’s puts more money up front and contains sufficient subsidies to insure everyone who’s likely to need help – including all children and young adults up to 25 years old. Hers requires that everyone insure themselves. Yet we know from experience with mandated auto insurance – and we’re learning from what’s happening in Massachusetts where health insurance is now being mandated – that mandates still leave out a lot of people at the lower end who can’t afford to insure themselves even when they’re required to do so. HRC doesn’t indicate how she’d enforce her mandate, and I can’t find enough money in HRC’s plan to help all those who won’t be able to afford to buy it. I’m also impressed by the up-front investments in information technology in O’s plan, and the reinsurance mechanism for coping with the costs of catastrophic illness. HRC is far less specific on both counts. In short: They’re both advances, but O’s is the better of the two. HRC has no grounds for alleging that O’s would leave out 15 million people.

It would be a simple matter to resolve the free rider argument. There are numerous ways in which incentives can be built into the system to provide incentives to join and consequences for trying to wait until one needs the coverage.

Medicare has just such a situation with the Medicare D program which covers prescription drugs. People who do not currently have expensive drug costs might be tempted not to participate and wait until they do. This problem was solved by charging a higher premium should you join later. Those purchasing the insurance later would be charged both the higher rate than in effect as well as an additional charge. Should people try to game the system it doesn’t matter because down the road the system picks up increased premiums when people do join, eliminating the fears that the free riders are making the coverage more expensive for all.

Another way in which the Medicare D Program discourages free riders is to have open enrollment only during a brief period every year. This makes people consider the fact that should they develop a medical condition which requires expensive medications to treat after the open enrollment period, they will have to pick up the cost for several months. Other incentives could also be built into any system to make it more costly to join later, including waiting periods and temporary exclusions on preexisting conditions as currently exist.


Clinton Attempt At Negative Ad Shows Lack of Competence and Integrity


Apparently this ridiculous ad (video above) really is what Hillary Clinton is trying now. I agree with Atrios that “the narrator sounds like he’s a bad parody of political ad narrators.” The content is pretty lame also. It’s also dishonest.

The gist of the commercial is to attack Obama for not agreeing to a debate in Wisconsin, ignoring the fact that Obama has agreed to a large number of debates. There is no need for him to go along with Clinton’s strategy of constantly debating to the point where it would seriously interfere with his campaigning. After all, Clinton and everyone else now realize that the more the two candidates campaign in an area, the more the voters prefer Obama over Clinton.

Clinton claims that Obama would rather give speeches than answer questions, but what is really important is the content of their campaigns. It is Hillary Clinton who shows herself to be afraid to answer real questions when she resorts to Bush-style staged town hall events and planting questions during campaign appearances.

While Obama has given concrete solutions to our problems, the Clinton campaign has concentrated on attacking Obama with dishonest misrepresentations of his views. She has also devoted a considerable amount of time to side shows like criticizing Obama for a kindergarten paper and attacking journalists who displease her. When she does take a stand on an issue, she is all to often on the wrong side.

Clinton mentions two issues in the ad, but the facts go against her. She claims to have the only health care plan that covers every American. Her plan will attempt to force every American to join, but Obama has the superior plan to actually provide health care coverage to everybody who desires it. As mandates do not guarantee universal compliance, many such as Robert Reich actually believe Obama’s plan will cover more people than Clinton’s. has already criticized Clinton for the untrue claims she makes in comparing her plan on foreclosures to Obama’s. The New Republic has reviewed Clinton’s plan and called it “dishonest, a fairy tale that won’t come true.” The Washington Post compared the economic stimulus plans of each candidate. Obama’s plan earned an A- while Clinton’s plan received a C-, barely beating John McCain’s D+.

If a commercial like this is the best Clinton can come up with, it is easy to see why Obama has the momentum. Clinton continues to play politics while Obama shows why he is ready to be president. Clinton continues to try to perfect the art of Swift Boating, while Obama vows to end it. We don’t need a debate every week to see which candidate is qualified to be president and which is not.


Compare Clinton’s ad to this ad which Obama is running, along with this ad which directly responds to Clinton’s attack. There’s also a great parody on this ad.

Clinton, Obama, Krugman, and Free Choice

Paul Krugman continues his vendetta against Barack Obama’s health care plan due to its lack of mandates. The consequence of lacking mandates is unclear as nobody knows for sure how many people would still go without insurance if it was affordable but voluntary, and nobody really knows for sure how many people would remain uninsured despite mandates. It does seem reasonable to assume that achieving near one hundred percent compliance with a mandate would require yet another new bureaucracy and the expenditure of funds which might better be used for actual health care.

There are a variety of views as to whose plan would really insure more people. Robert Reich has argued that more people would wind up being covered under Obama’s plan than Clinton’s. Krugman searches for the analysis which best fits his preconceptions and has now found a study by health care economist Jonathan Gruber:

Mr. Gruber finds that a plan without mandates, broadly resembling the Obama plan, would cover 23 million of those currently uninsured, at a taxpayer cost of $102 billion per year. An otherwise identical plan with mandates would cover 45 million of the uninsured — essentially everyone — at a taxpayer cost of $124 billion. Over all, the Obama-type plan would cost $4,400 per newly insured person, the Clinton-type plan only $2,700.

Grubner might be right, but so might Reich. Personally I suspect the truth is somewhere in between. Other health care experts are also fed up with this bickering over mandates. Considering human nature I do find it hard to believe that a mandate will cover essentially everyone without significant additional expenditures for enforcement. The number left uninsured by Obama’s is also greatly exaggerated compared to what others such as Reich believe will be the case.

There’s also a problem with the manner in which Krugman plays with the numbers to come up with what on the surface looks like an impressive difference when comparing $4,400 versus $2,700, falsely giving the impression that Clinton’s plan is some sort of bargain. If you ignore his creativity in using math, the real numbers here are that Obama’s plan would offer health care to everyone who desires to participate at a savings of $22 billion compared to Clinton’s plan. Providing affordable health care to all those who desire it but are unable to obtain it should be the real goal.

Using mandates to achieve universal coverage seems like quite a cop out to me. Regardless of whether the plan is good or the plan stinks, universal coverage is achieved because the government forces you to join up. In contrast Obama takes on the challenge of offering a plan so good that virtually everyone will want to participate to receive health coverage. There is also a clear philosophical difference here in that Obama isn’t obsessed with having every single person sign up. In contrast, a self-proclaimed government junkie like Hillary Clinton just can not live with the fact that somewhere, someone decides they do not want her help. Clinton will help them whether they want her to or not.

I know Clinton supporters will scream that I’m using right wing frames here, but again I must point out that freedom and choice should be considered virtues, not right wing frames. Liberty is what liberalism is ultimately all about, which explains whey Clinton prefers to label herself a progressive and not a liberal.

Some on the far left claim that Democrats lose when these alleged right wing frames about freedom are employed. They got it all wrong. Democrats lose when they concede traditional liberal values such as liberty to the right. If an election is framed so that one side is allowed to be defined as the party of freedom, that party will win virtually every time. Democrats have lost so many elections not because of using right wing frames, but because of conceding values such as freedom to conservatives, even though conservatives talk about freedom without really supporting it.

Krugman falls into this trap when he concludes:

If you combine the economic analysis with these political realities, here’s what I think it says: If Mrs. Clinton gets the Democratic nomination, there is some chance — nobody knows how big — that we’ll get universal health care in the next administration. If Mr. Obama gets the nomination, it just won’t happen.

The real political reality is that if you define health care reform as an intrusive government program, Americans will not go for it. If you offer a voluntary program which Americans find beneficial, then health care reform has a chance.

Update: Mandates are once again an issue with blogs from left and right linking to this post in September 2009.

The Clintons and Race

I’ve previously noted the use of race in this election by the Clintons.

Even former Clintonite Robert Reich agrees on their use of race:

While it may be that all is fair in love, war, and politics, it’s not fair – indeed, it’s demeaning – for a former President to say things that are patently untrue (such as Obama’s anti-war position is a “fairy tale”) or to insinuate that Obama is injecting race into the race when the former President is himself doing it.

Bob Herbert has reviewed some cases and concludes:

The Clinton camp knows what it’s doing, and its slimy maneuvers have been working. Bob Kerrey apologized and Andrew Young said at the time of his comment that he was just fooling around. But the damage to Senator Obama has been real, and so have the benefits to Senator Clinton of these and other lowlife tactics.

There’s also an entire wiki documenting examples of the use of race by the Clinton campaign.

The Tipping Point on Clinton Dishonesty

At this point nobody knows who will win the Democratic nomination. Insurgent candidates typically lose to the establishment candidate. Good does not always triumph over evil. Hillary Clinton might win as a result to resorting to lies and smears. However, should Obama win, Thursday just might have been when the tipping point was reached. The campaign is not going as Obama would prefer, but he has managed to make the issue of Clinton’s dishonesty a major issue.

Making honest an issue might matter. shows that Obama is the candidate that voters feel is the most honest.

How important are perceptions of integrity and trust? Very. Drawing on decades of opinion poll data, political scientists identify two central traits — competence and integrity — that drive judgements about presidents and presidential candidates. “Presidents are judged,” wrote Professor Donald Kinder (with whom I once studied at the University of Michigan), ” by their intelligence, knowledge and experience on the one hand, and by their honesty, decency and ability to set a good moral example on the other” (p. 840). Candidates that are perceived to be otherwise qualified and competent lose when voters find them lacking in terms of honesty and trust. And keep in mind that the bulk of the research driving these conclusions comes from general election surveys in which perceptions of competence and integrity were sometimes strong enough to overcome partisan leanings in driving voter choices.

The media is increasingly describing the race in terms of the Clinton smear campaign and Obama’s response. Greg Sargent describes how Obama has won the “spin war.” Numerous journalists have discussed how the Clintons have responded to smears, with several of these articles discussed in previous posts here. We also find that the Clinton campaign’s response is to continue to lie, smear, and distort as they draw a false equivalency between their own smears and Obama’s response.

The Clinton campaign attempts to attack Obama regardless of how he resonds. If Obama doesn’t respond strongly the narrative is that he wouldn’t be able to stand up to similar types of attacks from Republicans. When Obama does respond they claim that he is also engaging in attacks and therefore there is no difference between Clinton and Obama. Fortunately several journalists have seen through these bogus attacks and this is reflected in the coverage.

Obama is showing that he can handle Republican attacks by handling the same types of attacks from the Clintons. There is little doubt he will criticize the Republican candidate even more strongly where there are more legitimate differences in their positions. This is far different than the Clinton strategy of inventing differences by lying about what Obama has said. Should the Republicans resort to similar lies, smears, or distortions Obama can take the higher moral ground and convince voters to reject that approach. This is something the Clintons could never do, leaving us in another cycle of the same dysfunctional partisan disputes.

By fighting back against their campaign of lies, smears, and distortions the Clintons have been forced to back down and discontinue their dishonest ad in South Carolina. Among the other accomplishments I noted yesterday, former Clinton Secretary of Labor Robert Reich has criticized his old boss concluding “sadly, we’re witnessing a smear campaign against Obama that employs some of the worst aspects of the old politics.” Thursday’s must-see TV came from YouTube as Lorna Brett Howard, the former President of Chicago NOW, explains why she changed from supporting Clinton to Obama in response to the Clinton smear campaign. She explains how Obama is one hundred percent pro-choice and one hundred percent honest.

Obama has done his best to turn a bad situation to his advantage but it is not yet certain that this will be enough. Andrew Sullivan notes the problem that remains for Obama:

I think the spin war itself is a distraction from Obama’s core message – of unifying change – and distracting from that is central to the Clintons’ strategy. It seems to me that Obama needs to focus back on the case for his own candidacy, in particular, providing explicit concrete policy detail in his public presentation. The Clintons are running as prosaic general managers. Obama should not downplay his transformational potential or his broader themes. But in the battle for base voters, many people are not hearing specifics – on the economy, on healthcare, on taxes, on climate change. He has them. He needs to repeat them. With the same mind-numbing repetitiveness that the Clintons always deploy.

What Obama must do is to combine his defenses against the Clinton smear campaign with his original message. Obama has been calling for change, but not everyone was clear as to what this means. The Clintons provide an excellent example of the type of politics, and government, we need a change from. Obama must make it clear that defending himself from the Clinton smears is not only about himself, but about bringing about a necessary change in the tone of politics in this country. In contrast, Hillary Clinton offers not only a Bill Clinton third term but a third term for the ethics of George Bush and Karl Rove.

Robert Reich on Bill Clinton’s Smear Campaign

Former Clintonite Robert Reich weighs in on Bill Clinton’s smears against Barack Obama:

Bill Clinton’s Old Politics

I write this more out of sadness than anger. Bill Clinton’s ill-tempered and ill-founded attacks on Barack Obama are doing no credit to the former President, his legacy, or his wife’s campaign. Nor are they helping the Democratic party. While it may be that all is fair in love, war, and politics, it’s not fair – indeed, it’s demeaning – for a former President to say things that are patently untrue (such as Obama’s anti-war position is a “fairy tale”) or to insinuate that Obama is injecting race into the race when the former President is himself doing it. Meanwhile, the attack ads being run in South Carolina by the Clinton camp which quote Obama as saying Republicans had all the ideas under Reagan, is disingenuous. For years, Bill Clinton and many other leading Democrats have made precisely the same point – that starting in the Reagan administration, Republicans put forth a range of new ideas while the Democrats sat on their hands. Many of these ideas were wrong-headed and dangerous, such as supply-side economics. But for too long Democrats failed counter with new ideas of their own; they wrongly assumed that the old Democratic positions and visions would be enough. Clinton’s 1992 campaign – indeed, the entire “New Democratic” message of the 1990s – was premised on the importance of taking back the initiative from the Republicans and offering Americans a new set of ideas and principles. Now, sadly, we’re witnessing a smear campaign against Obama that employs some of the worst aspects of the old politics.