Verily on Economics (WARNING: Long)

[Verily]

As stated in the title, this a long post. I apologize. However, I felt it was necessary to fully articulate my own economic views, and I would like to see and hear how many people agree with the fundamentals of my positions and their justifications, which tend to veer wildly around the political spectrum yet form a coherent ideology all told. I have left off certain arguably economic topics such as environmentalism because I don't feel that they depend much on the rest of the economic plan.

Please comment/critique as you will.

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Social and economic policy in the United States should be geared toward creating and maintaining a strong economy, of which a key necessity is a democratic and egalitarian society.

The United States’ key advantage over economic rivals such as China and India is an educated and healthy workforce that is accustomed to and familiar with cutting-edge technology. Therefore, the American economy should focus its economic efforts on technological development and high-tech industries. This includes abandoning low-tech manufacturing industries in which the United States cannot compete because production costs are so drastically lower in undeveloped and developing countries. To the end of encouraging high-tech development, the keys to a strong American economy are education and health care.

Education in the Unites States suffers under the weight of the property tax. Property tax funding of school systems unfairly weights education toward wealthy communities that pay more in property taxes. Children have no ability to change their economic standing and should not be punished for their parents’ poverty. School vouchers have been proposed as a way to alleviate this problem, but they are expensive for the federal government, and the problem can be solved without introducing another government program.

The property tax should be abolished and replaced with an increase in state-level income taxes that will be bound to school funding. These funds will be distributed by population to school districts in each state, thus providing equal funding per student in each state. This will help to eliminate a root cause of poverty, poorly funded education, as well as provide all students with the opportunity to enter high-tech levels of the economy. This is economically beneficial because previously only students living in reasonably wealthy areas could even consider a future in high-tech industries; once this change is implemented, high-tech industries will be able to pull workers from all areas of the financial spectrum.

The other key to a strong economy is a healthy workforce. Workers who are ill cannot perform their jobs, thus dragging down economic viability. Furthermore, our current health care system demands that companies shoulder the financial burden of their employees’ health. This both discourages companies from hiring the best workers simply due to illness and also eats into economic productivity by funneling money away from companies with sick workers. Finally, the insurance system is inefficient because both doctors and the companies that offer insurance try to make a profit: they charge more than necessary for health services, usually far more than necessary.

The solution to this problem is universal health care, dare I say it, socialized health care. With insurance companies and private doctors relegated to luxury status, (though still legal) their drag on both individual wages and corporate profit is eliminated. Also, programs such as Medicare and Medicaid that would be rendered obsolete by universal health care already cost the bulk of what universal health care would cost, at least partially because their costs are raised by insurance and private doctor profit margins. Universal health care is an effective solution and hardly so expensive as claimed.

With the institution of universal health care, the majority of the costs incurred after retirement are already covered by the government. This means that our current social security program no longer need exist. Social security, as currently conceived, merely provides for individuals what reasonable savings plans before retirement should be doing. Meanwhile, it compounds the costs with bureaucratic needs and a fund into which Congress routinely dips to provide money for unnecessary pork programs. With health cost needs already covered, Americans should be considered responsible enough to save for the remainder of post-retirement costs. With the abolition of social security also comes the abolition of social security tax, which may be exchanged for a lower-rate income tax designated to supplement health care funding.

With Americans emerging from schooling with across-the-board strong educations and a health care safety net that guarantees that a severe illness will not render them bankrupt, Americans can be considered responsible for their own financial futures. Current economic equalities in health coverage and education can be blamed for many or even most people living off of welfare. However, those who would not make use of a strong education and due to universal health care, cannot be not driven into or kept in poverty by health costs, must be considered in a different light. Welfare should therefore be rolled back considerably, providing smaller payouts and demanding employment or signs of seeking employment. Government should continue to provide assistance in finding local available jobs to the unemployed but should not continue to provide welfare payouts if more than two jobs are turned down. Because of this scaling back of welfare programs, funding for welfare can be cut considerably. This money may either go to income tax cuts or augment funding for education and health care depending on what seems prudent at the time.

As stated previously, the United States cannot hope to compete in low-tech industries with developing nations such as China, India, Indonesia and Bangladesh. These nations have larger uneducated worker pools willing to work for far less money than Americans. They are therefore able to export products of equal or near-equal quality at as little as a tenth of the price of American goods.

While the United States may seek to insulate itself from such imports with high tariff barriers, we cannot realistically provide all, most or even half of our own low-tech industrial product demand domestically, so tariff barriers serve only to greatly raise prices within the United States due to dramatically reduced supply. It is better for the United States economy to allow foreign products in without charging tariffs because it alleviates the need to tie up resources in low-tech production and lowers prices of basic goods. The United States should promote free trade and a globalized economy universally. In order to ensure that high-tech industries are not also grabbed by foreign markets, the United States should offer large corporate tax incentives to high-tech industries rather than imposing tariffs or subsidizing corporations.

Finally, the United States economy is in need of all of its workers and can be most productive when tensions are defused between them. To this end, liberal social policies should be pursued by the government. I will not go into more detail since further debate about the merits of social policies have only a slight bit to do with the economy.

[I spent the winter writing songs about getting better]

That's not that long. I've written longer posts about strip clubs.

Too lazy to read all that now though. Will later.

[True Federalist (진정한 연방 주의자)]

It suffers somewhat from the assumption that government is equipped to be able to pick winners and losers in the economy.

Another is the Lake Wobegon fallacy.  As much as we would like it to be the case, not all of our children will be above average, even with perfect schools.  We can't all work desk jobs.  Besides, with telecommunications connecting the world at the speed of light, the high value service industries such as law, computing services, financial services, architecture, etc. can all be done anywhere now, so the best desk jobs will go where they will.

[MaC]

Some I like, some I don't like.

1.You are right in that our country can no longer support a manufacturing-industrial economy and that it needs to move to a info/service economy.  However, one of the main reasons why my state (and I'm sure others) lag is because unions and other stagnation advocates think that auto-industry jobs should maintain as a large part of the economy.  Despite this will loose many jobs, the long-run interests of growth are more important than greedy union leaders keeping the economy down.  If not under such heavy control by unions, the auto industry's control would diminish and people would find better jobs under the service/info industry.  However, Michigan's current economy is stagnant because of the political influence of stagnation.

2. I would say more important than property tax influencing educational standards, and more important than a voucher system, it is more important to have (if a public education system must exist) an equal distribution of money-and I do mean in a progressive way (as much as I grit my teeth to say it) only because richer school districts already have excessive utilities and many low income districts cannot even pay for basic teaching supplies.  After this inequality is solved-then we would have to immediately go back to equal funding.

3.The problem of health is based more on fixing health once it's bad, rather than keeping it from getting bad.  Provided that the 60% of the FDA is funded by perscription drug companies to pass medicines through, and the FDA wouldn't allow into the market other medicines that don't have lobbyists working for them, the health needs of our country are not met with any type of integrity.  This needs to stop.  What else needs to stop is the subsidies paid to factory farms to produce hormone-fed animals and poisonous fertilizer given to plants.  This will in the short run make food cost more, but compared to current health costs, prevention is absolutely key.  Also, stop funding food made from High Fructose Corn Syrup.  It tastes like crap, and sugar is equally as cheap.

4.I like the idea of ending social security.  It's likely tangible to do if the government were to privatize more industires-and the money that it would save would go towards filling the social secuirty gaps.  Cut off everyone under 35 years of age and end the program.

5.I would support the use of tariffs under the following circumstances
-tarriffs have short time periods so as not to continuously harm any particular industry
-tarriffs are assigned randomly
-tarriffs should never be used for revenge
-cut down as much as humanly possible the political assignments to the tarriffs imposed (I understand this is nearly impossible, hence the first three statements)

[Verily]

It suffers somewhat from the assumption that government is equipped to be able to pick winners and losers in the economy.

I'm not quite sure what you mean by that statement. I certainly don't advocate government favoritism of one corporation over another, but I do think it is important to acknowledge that low-tech manufacturing industries were for the days when the US was the cheapest country with any industry at all.

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The point is not to give everyone desk jobs, nor do I believe that better education will make everyone great. However, by improving education in blighted areas, we allow those who are above average in those areas to succeed whereas now only the above average who happen to be children of the wealthy and middle class can succeed. Increasing that pool of successful people also increases our skilled workforce.

Those who are below average won't get desk jobs or work in high-tech industries no matter how much support the government gives them. However, the US will always have low-tech service jobs that cannot be outsourced.

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Which is precisely why the United States needs to foster its position as a technological leader as soon as possible so as to secure the lion's share of such industry while other regions still cannot compete in terms of education of the workforce. Any less, and we risk losing that one industrial advantage to Karnataka permanently, and then the US has no real economic legs to stand on save inertia.

[True Federalist (진정한 연방 주의자)]

Besides, with telecommunications connecting the world at the speed of light, the high value service industries such as law, computing services, financial services, architecture, etc. can all be done anywhere now, so the best desk jobs will go where they will.

Which is precisely why the United States needs to foster its position as a technological leader as soon as possible so as to secure the lion's share of such industry while other regions still cannot compete in terms of education of the workforce. Any less, and we risk losing that one industrial advantage to Karnataka permanently, and then the US has no real economic legs to stand on save inertia.

That ship has already sailed.  While we are likely to hold onto the share of those services needed to support our domestic economy, the days in which we had an international advantage in them are already gone and the part of those services that we provide internationally above what is needed domesticly is only due to inertia.

[Emsworth]

Furthermore, our current health care system demands that companies shoulder the financial burden of their employees’ health. This both discourages companies from hiring the best workers simply due to illness and also eats into economic productivity by funneling money away from companies with sick workers. [...] The solution to this problem is universal health care, dare I say it, socialized health care.

Non sequitur. It is true that the current healthcare system essentially compels companies to directly provide for their employees' health insurance. It is also true that such a system is not optimal. However, it is not necessary to introduce so radical an idea as universal healthcare to solve the problem. On the contrary, one can simply amend the tax structure so as to abolish the incentives that employers presently have to pay for their employees' insurance costs.

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The idea of charging more than is necessary for a particular service is not unique to the healthcare system. It applies to every other business as well. Yet, one generally thinks of all those businesses as efficient, not inefficient. What sets healthcare apart--why does the profit motive lead to inefficiency in one instance, but not the other?

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One is simply replacing one "drag" on individual wages and corporate profit with another--namely, taxation.

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I absolutely agree that the "average" citizen needs a safety net that guarantees that a severe illness will not render him bankrupt. Unfortunately, a lot of people don’t quite see it that way. Health insurance is no longer something that covers only extreme cases -- emergency operations, for example. Instead, it has become something that one relies upon for prescription drugs (thanks, no doubt, to the manner in which the government has structured income tax credits, deductions, and so forth). Certainly, insurance costs would go down if we were to treat prescription drugs as ordinary monthly expenses rather than as extraordinary costs that must be covered by insurance.

But aside from all of the practical questions involved, there is also a philosophical issue. Generally, one does not adopt a purely utilitarian calculus when attempting to resolve questions of public policy. There are also normative issues to be considered. Moral claims are subjective; therefore, any debates involving morality are necessarily bound to be somewhat nebulous. Nevertheless, the philosophical discussion is certainly a worthwhile one. Is healthcare a positive right, and therefore something that the government must provide regardless of the practical consequences? Or, on the contrary, is there a right to property -- meaning that any universal healthcare system is tantamount to theft? Or, perhaps, does neither right exist, in which case the utilitarian consideration is paramount? 

[opebo]

Many of the above posts are filled with the nonsensical assumption that 'merit' has something to do with one's position in the economic hierarchy.

And Emsworth, the prescription drug costs of many working-class persons exceed their income.

[Verily]

Furthermore, our current health care system demands that companies shoulder the financial burden of their employees’ health. This both discourages companies from hiring the best workers simply due to illness and also eats into economic productivity by funneling money away from companies with sick workers. [...] The solution to this problem is universal health care, dare I say it, socialized health care.

Non sequitur. It is true that the current healthcare system essentially compels companies to directly provide for their employees' health insurance. It is also true that such a system is not optimal. However, it is not necessary to introduce so radical an idea as universal healthcare to solve the problem. On the contrary, one can simply amend the tax structure so as to abolish the incentives that employers presently have to pay for their employees' insurance costs.

that doesn;t solve the problem of unhealthy employees, it makes it worse.

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The idea of charging more than is necessary for a particular service is not unique to the healthcare system. It applies to every other business as well. Yet, one generally thinks of all those businesses as efficient, not inefficient. What sets healthcare apart--why does the profit motive lead to inefficiency in one instance, but not the other?[/quote]

Profit always leads to inefficiency, but inefficiency in health care is something that can be reasonably avoided by government-provided health care while inefficiency in, say, fast food can't be avoided because it would be unreasonable for fast food consumption to be considered both essential for the individual and important to the economy.

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One is simply replacing one "drag" on individual wages and corporate profit with another--namely, taxation.[/quote]

No, because you're eliminating other inefficient government programs that currently waste money subsidizing insurance and medicines (and paying more than they should be due to profit margins).

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I absolutely agree that the "average" citizen needs a safety net that guarantees that a severe illness will not render him bankrupt. Unfortunately, a lot of people don’t quite see it that way. Health insurance is no longer something that covers only extreme cases -- emergency operations, for example. Instead, it has become something that one relies upon for prescription drugs (thanks, no doubt, to the manner in which the government has structured income tax credits, deductions, and so forth). Certainly, insurance costs would go down if we were to treat prescription drugs as ordinary monthly expenses rather than as extraordinary costs that must be covered by insurance.[/quote]

And why should we do that? Prescription drugs are clearly essential to individuals health and thus their ability to work and contribute to the economy. Take away fundign for prescription drugs and you have an unhealthy population that is less able to work.

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I don't see why we shouldn't be applying utilitarian thought, especially if there's nothing immoral about that utilitarianism. There's nothing "tantamount to theft" about taxation, which is returned to both the individual and the economy. It seems to me that the goal of taxation is to provide solutions to the problems individuals cannot be held responsible for; health issues are one of those, and education is another.

Although really, if you're just an anti-tax crusader, I'm not going to argue with you about it here.

[bullmoose88]

I'm not so sure about universal healthcare, but I'm open to arguments for it. But otherwise, I generally like your plan.

[Emsworth]

that doesn;t solve the problem of unhealthy employees, it makes it worse.

On the contrary, the employees would simply have to buy their own insurance.

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How exactly do you draw this rather startling conclusion? Unless you are defining "efficiency" in an unconventional manner, your statement would be inaccurate. The profit motive is precisely what produces efficiency (relative to the alternatives, at least).

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In order for the government to do anything more efficiently than the free market, the government has more information than the free market--which is quite plainly not the case.

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One can eliminate those programs independently. It is not necessary to establish universal healthcare in order to reduce other forms of spending.

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Food is even more essential to individual health than prescription drugs. Should the government provide free food to everybody? Clearly not: food is regarded as nothing more than a normal expense--a product that individuals must provide for themselves. I propose that prescription drugs be regarded the same way. Insurance is (or at least should be) meant for unforseen catastrophes--house fires, automobile accidents, emergency operations.

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That is certainly the assumption you have made. But utilitarian analysis disregards entirely the issue of individual rights, which (in my opinion) ought to be paramount in any liberal democracy.

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That depends on your point of view. Suppose that a store compelled you to buy a product every day. It is taking away your money, but giving you something in return. Some people might benefit tremendously from the product, but for others, keeping their money might have been preferable. Would you not consider this act theft?

I am not, however, arguing against taxes in general, which are obviously essential to any government. However, if a particular tax is used for illegitimate purposes, then certainly, imposing that tax is tantamount to theft. Whether the particular purpose you propose is legitimate or illegitimate ought, therefore, to be determined, before one proceeds to consider the practical harms and benefits of the plan.

[Verily]

that doesn;t solve the problem of unhealthy employees, it makes it worse.

On the contrary, the employees would simply have to buy their own insurance.

Which, currently, at least half of the population can't afford. Would we really like to have half of our workforce easily disabled by illness?

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How exactly do you draw this rather startling conclusion? Unless you are defining "efficiency" in an unconventional manner, your statement would be inaccurate. The profit motive is precisely what produces efficiency (relative to the alternatives, at least).[/quote]

Let's put it this way. If companies strove simply to provide services or goods at as low a price as possible, turning over goods or service at exactly their production cost, society would be optimally efficient. However, this is clearly impossible as companies would have no reason to provide services: profit margins cause "inefficiency". Government does not need to earn profit on what it provides, so it can provide products at a lower, more efficient price.

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In order for the government to do anything more efficiently than the free market, the government has more information than the free market--which is quite plainly not the case. [/quote]

I don't see why when the holy free market has failed to cover all of its workers with insurance where the government could.

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One can eliminate those programs independently. It is not necessary to establish universal healthcare in order to reduce other forms of spending.[/quote]

It is if you want to maintain a workforce that has any potential to work at all. If you simply destroyed Medicaid, our low-tech service industry workers would be perenially ill and unable to provide health care for themselves.

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Food is even more essential to individual health than prescription drugs. Should the government provide free food to everybody? Clearly not: food is regarded as nothing more than a normal expense--a product that individuals must provide for themselves. I propose that prescription drugs be regarded the same way. Insurance is (or at least should be) meant for unforseen catastrophes--house fires, automobile accidents, emergency operations.[/quote]

Food is cheap. Presciption drugs are not.

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That is certainly the assumption you have made. But utilitarian analysis disregards entirely the issue of individual rights, which (in my opinion) ought to be paramount in any liberal democracy.[/quote]

And how, exactly, am I violating individual rights? One is still free to but insurance if one wishes.

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That depends on your point of view. Suppose that a store compelled you to buy a product every day. It is taking away your money, but giving you something in return. Some people might benefit tremendously from the product, but for others, keeping their money might have been preferable. Would you not consider this act theft?[/quote]

You offer a false analogy. First off, health care is essential where a store's product is not. Moreover, your strategy/the current strategy offers health care at high prices that the vast majority cannot afford; it is less free than universal health care because the vast majority are not free to purchase "the product" at all.

[David S]

Many of the above posts are filled with the nonsensical assumption that 'merit' has something to do with one's position in the economic hierarchy.

And Emsworth, the prescription drug costs of many working-class persons exceed their income.

More advice from Jack the Ripper

[Emsworth]

Which, currently, at least half of the population can't afford. Would we really like to have half of our workforce easily disabled by illness?

Instead of providing health insurance as a benefit, the employer would simply increase the employee's salary; the employee would then use the money to purchase health insurance (or, if he so desires, something else).

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Lower prices are not equivalent to greater efficiency.

The problem here is that you are focusing only on one particular part of the economy--the sector encompassed by the product that the government is providing. However, one must remember that acts in one particular sector of the economy have effects that might reach other sectors. To be concrete: when society produces more of one particular good or service, it  must produce less of some other good or service, because its resources are limited. However, there is no way to know beforehand how much of each good or service is optimal. The free market remedies this problem through the mechanism of prices. A rise in prices is a signal to increase production; a fall in prices, conversely, is a signal to reduce it.

This mechanism fails, however, when the government intervenes--whether by controlling the prices themselves, or by taking over production. In either case, it becomes impossible to reliably determine the appropriate quantities of production. In some instances, too little of society's resources might be devoted to the product in question, the consequences of which are obvious. On the other hand, too much of society's resources might be used up, in which case other parts of the economy suffer from shortages. This is precisely the problem that is likely to result from any socialized healthcare scheme; too much money is pumped into healthcare, and, consequently, too little into some other sector or sectors.

This would not be the case only if the government somehow had more information than the free market: if it knew more about the optimal distribution of resources. I see no reason to do anything but doubt such an assumption.

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I must be living in a very different country than you, if all of your compatriots are perenially ill. Most people I know are quite healthy, and would need to call upon insurance only rarely.

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Perhaps, then, there should be a high deductible--the insurance company would pay for prescription drugs only if the costs are particularly high.

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One's money is being taken away; hence, the right to property is being violated. When the money is used for something like national defense, I think the violation is justified--but here, I consider it unjustified.  

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But suppose that the product was "essential": water, for example. Would it be acceptable for a store to force someone to buy water, even if he did not desire it? (The fact that water is cheap is irrelevant to the analysis--the essential point is that A is forcing B else to buy something that A, and perhaps society in general, considers "essential," but that B does not wish to buy.)

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This situation arises precisely because of the problem I outlined earlier: the failure to emphasize insurance as something that is supposed to cover exceptional and unforseen expenses. High deductible insurance, if only the tax structure did not discourage it, would be significantly cheaper.