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November 09, 2005

More Growth!

Dean Baker has some suggestions for real pro-growth progressivism, and they all look good to me.  It strikes me as strange that economists spend a lot of time inveighing against trade-related protectionism but have little to say about similar barriers in the domestic economy.  I'd love to see an expanded Medicare compete in the private market, love to see government-run 401(k)'s pass their increased efficiency onto workers, love to see the sweetheart legislative deal drug companies have unravel a bit in taxpayer's favor, love to see the rich stop paying effectively lower tax rates than the middle class (why should they get all those great growth incentives?), love to see schools financed by something other than property taxes so wealthy districts can't entrench their eonomic superiority into generational perpetuity, and so forth.  Look at me, ma -- I'm a pro-fair growth progressive! 

Also check out my post on Tapped about tying the minimum wage to productivity increases among workers.  It's related and, I think, interesting.

November 9, 2005 | Permalink


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We elect politicians to represent *our* interests, not the interests of those in New Dehli as Mr. Baker proposes. What he is really discussing is the world under a one world government. Thank GOD he and the other BOZOS like him don't have a rat's chance of influencing anything.

Posted by: Fred Jones | Nov 9, 2005 3:59:00 PM

Yes! I just read your post on Tapped.

This will sort itself out. Since a)real wages have been declining; b) 70% of GDP is consumer spending; c) real savings are negative, and d) household debt is skyrocketing to record levels (this is how consumer spending has been maintained)...

real soon now we will have a major contraction and/or revolution.

So don't worry, be happy!

Posted by: bob mcmanus | Nov 9, 2005 4:07:15 PM

Ah yes, because what New Delhi really wants is the chance to come to America and buy into Medicare...

Think you'll ever be able to respond to the actual issues raised in my posts? Or will you always go and spit out some misinterpreted or diversionary non sequitur?

Posted by: Ezra | Nov 9, 2005 4:07:50 PM

I'd say, Fred Jones, that it's in my interest if I can get a doctor in from New Dehli.

I agree with most of the suggestions, but I'm skeptical about the "medicare for all" one. It seems to me that if you allow people to buy into the system on a voluntary basis, then medicare would face the same problems as private insurance in deciding between elaborate schemes of price discrimination or facing adverse selection. This would not make our health care system worse off: the inefficiencies and failures of the private sector would simply be transferred to the public sector. I don't see how it would do either harm or good. Norquistians should know that there's nothing about being a private sector firm that miraculously increases efficiency (though one might make the case that the accountability of the market to be efficient or go bankrupt is quicker-acting and more thoroughgoing than the accountability of the ballot box to be efficient or lose elections).

I think that Republicans lost any right to call themselves "pro-growth" when they tried to shut down municipal Wi-Fi projects. Or, at least the Republicans who supported that kind of thing have.

Posted by: Julian Elson | Nov 9, 2005 4:31:25 PM

Taxing the stock market traders? Huh? Work on efficiency in government to free up money instead of more taxes....for instance if the idea of opening Medicare to everyone would work and be cheaper than private insurance that would be great.

Posted by: Steve Mudge | Nov 9, 2005 5:23:24 PM

"Think you'll ever be able to respond to the actual issues raised in my posts?"

Well, golly! :)

That was probably directed at Fred and you are shunning me as even worse than Fred, which is pretty worse. But you know, I am really not that level of policy wonk. I trust y'all to sort it out.

1)"Personnel is policy"...Get a bunch of Democrats in the House. Without, you got nothing.
2) Manhattan Project on energy...got to. Besides CAFE, mass transit, alternative distributed production, America needs something to sell overseas besides action movies and debt.
3) Fiber optic and/or WiFi everything. End patents and copyrights. I am scared of the waves, but I will line my gimme-caps with foil for the good of the country.
4)Massive progressive tax reform and increase. Hell, lets nationalize big-energy production so they don't get in the way of distributed.
5)Re-urbanization. Kill the suburbs and exurbs. We can't afford them.

If you think reform and incremental, you will get nothing. If your starting point is radical, you will get reform. But we need radical.

Posted by: bob mcmanus | Nov 9, 2005 6:03:19 PM

Actually, I suspect Bob has just pointed out basic negotiating strategy. You can bet the Repubs catch on.

Posted by: opit | Nov 9, 2005 11:16:03 PM

Well, I don't know what Ezra's position is here. If he is pretending to be a third-level staffer for a minority member of Congress trying to slip something decent past Bill Thomas, then itty bitty little goodies are all his boss will listen to. Talking about the inportant stuff will get doors slammed in your face.

And I ain't saying how you campaign. Elements of Teddy's, Wilson's, FDR's, LBJ's agendas had been floating around for decades and were not the main platform points. Once in office tho, the good ones don't go for midnight basketball. They go for broke.

Posted by: bob mcmanus | Nov 10, 2005 12:02:57 AM

I'd love to see an expanded Medicare compete in the private market,

Not a good idea, but the rest of them are.

Posted by: Kimmitt | Nov 10, 2005 3:35:50 AM

Think you'll ever be able to respond to the actual issues raised in my posts? Or will you always go and spit out some misinterpreted or diversionary non sequitur?

Let me see if I understand. The author asks institutions in this country to make policy that is contrary to their charge.... to achieve a liberal social policy and you think this worth considering for what reason?
Pointing out these facts may burst your bubble, but discussing an unreal, undo-able and never-gonna-happen scenario as you wish to do is a waste of time. Just doing you a favor.

Posted by: Fred Jones | Nov 10, 2005 11:56:18 AM

Major problem with Medicare "competing" in the private market, in theory, is that the government would create a massive conflict of interest for itself. It wants its programs to continue, therefore any private competitor that poses a serious threat to the program would suddenly find itself on the receiving end of government power.

In theory.

Posted by: Mastiff | Nov 10, 2005 2:33:40 PM

In regards to the idea of linking productivity increases to the minimum wage law.

There seems to me to be a few assumptions that you are making that are not justified. One is, are minimum wage jobs where we are seeing productivity gains? I don't know that this is the case, and I would expect it is not.

Secondly, what is the source of our productivity gains and how linked is it to labor?

Your basic formulation seems to me to be that workers are producing more therefore they should reap the benefits of their enhanced production. If though the increase in productivity is primarily a result of capital investments rather than sourced from the workers themselves compensating workers for this increased production (at the expense of those who supported the capital investment) would tend to be a disincentive to productivity increase.

As an example, lets say that the Klein rule of all enhancements to productitity should be reflected by an increase in the wages of workers was applied to an auto manufactoring business.

In our hypothetical business, it takes 10 people a full days work to produce one car. Each person makes $100 a day. With substantial capital investment this plant could be retooled to be more automated so that one person can make one car each day. a 1000% increase in productivity. If we adjust that persons wages by the 1000% increase (he now makes $1000 dollars a day) then our businesses labor costs remain the same.

Therefore there is no reason for the owner to make the capital investment and thus the factory will not be automated and productivity will not increase.

Posted by: Dave Justus | Nov 10, 2005 3:21:41 PM

A most impressive post, Dave. You back up your idea with a page right out of Microeconomics 202.

Posted by: Fred Jones | Nov 11, 2005 10:54:10 AM

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