Monday, July 31, 2017

Democracy's Disjuncture: Money, Economics, Health Care and Politics

In my last post, I tried to pick up a thread from over a year ago where I looked at Trumpism for what it tells us about the shifting dynamics of American public life. This is not a discussion of whether Trump is right or wrong; good or bad. We have to engage empirical issues in any analysis. That is life and if you don't believe that ... well ... you and I have different conceptions of what constitutes analysis.  But, if we put the question of Trump's merits or demerits on hold and look at what the discourses associated with his government tell us about American public life (or, the changing character of American public life), we can, I think, produce both interesting, nuanced and accurate treatments of this subject. This analysis may have some implications for Canada as well.

Last post I tried to argue that there were important implications to the disjuncture between image and reality in American public life with regard to health care. The right-wing discourse of the problems of Obamacare, for instance, focused on a failure that was, in important ways, difficult to specify.  The American health care system has its problems. No one debates that but, overall, the issue of the cost of health care -- associated by Republicans in the US with Obamacare -- is intensely problematic because it fails to understand why health care costs have increased. There are a number of reasons for this, but one reason is that health care is expensive. I've made this point with regard to Canada.  Canadians periodically complain about taxes being too high (which is both an empirical and philosophic issue) but those doing the complaining fail to tell us what those taxes dollars have done. And, one thing they have done is improve the health of the country.  We now, for instance, live longer than we used and not by a little bit. By a lot. Moreover, the recovery from serious health problems -- say, heart attacks or strokes -- is astronomically better than it was when I was a kid. Said differently, we are getting things for our dollars.

Does this mean  that one cannot have health care "reform." Of course not, but it does mean that if you start from the wrong premise, you get the wrong answer.  If you begin, for example, from the assumption that the cost of health care is *not* related to its increasingly high tech nature and increased costs but must, instead, be related to something the government is doing, one begins to toy around with policy when, in fact, that might *not* be the thing to do.

In this blog, let me take a long diversion to make a point about taxes, honesty, and democracy. Trump and his crew may have problems with honesty. Frankly, I think they believe their own propaganda. But, ultimately, I want to suggest that on economic issues there is a disjuncture built into democracy between reality and ... well ... image, for lack of a better term. We can use the health care debate in the US to illustrate this point.

This is an important consideration for the US because we key proponents in the health care debate tell people something that is not true. I've complained about this before. The anti-tax perspective in Canada, for example, tends to ignore the costs of not paying taxes? There is a cost to not paying taxes?! Does not lower taxes, in fact, save us money?  As anyone who has taken economics 101 will tell you -- and this is the reason that there were so few economists on board with ant-tax think tanks -- there is a cost to everything. This is called, in economics, "opportunity cost" and it is a basic principle of economics. It is not, in other words, some fancied up confusing newfangled idea. It is a basic foundation upon which the discipline is built.

What is it? In effect, the principle of opportunity cost states that there is a price for everything. Money is a valuation of that price but it is a valuation only. Saving money saves you money but it also comes at a price. What is that price? You give up what you otherwise would have done with that money. Let me give you an example or two. Imagine that I have a dollar and I can buy a hamburger for that dollar. I decide to not buy the hamburger and keep the dollar. What is that price of that dollar? The hamburger I could have had. So, I have a dollar in my pocket -- money I have "saved" -- but I am hungry. Likewise, I go to work to make money. The price of going to work (even if I like my job) is what I could have done outside that job (say, go for a hike, weed my garden, sit in my hot tub, etc.).

This relates to taxes in this sense: the issue is not "how much money would you have if you had not paid taxes" but what is the cost of not paying those taxes?  What does our society -- and the people in it -- not have that they otherwise would have had? In Canada, these costs are big. Taxes are used to pave roads (which are often, btw, needed for business development), make sure the medicines we buy are safe to use, pay the coast guard, repair the water supply, maintain schools, keep electricity flowing, make sure I don't get mugged walking down the street, etc. Said differently, we can give up on taxes but we also have to give up on all the things that we get from those taxes. That is the cost of *not* paying taxes.

What this means is that for most people, there are good reasons to pay taxes. Some people -- say, just about everyone who lives in New Brunswick -- is a net beneficiary of the tax system. That is, what is being purchased through taxes is fairly valuable and are things that we don't want to give up. Moreover, because we do them collectively, we realize something called "an economy of scale". This is another important concept that is also *not* fancied up. An economy of scale is something you all know. That is: it is less expensive per item to do things on a big scale. For instance, if I am making shirts, one shirt costs a lot to make. If I am making 1000 shirts, however, the cost per shirt falls because I can get a deal of raw materials, set up an assembly line, etc. Thus, while making one shirt might cost per shirt $25.00. The per unit cost of a 1000 shifts might fall to $15.00. Making things on a big scale, in other words, for a lot of people, allows those lot of people to benefit.

Taxes can be like this. If we all pay into a central fund and organize, say, our health care or education or road paving or electrical supply collectively, we can all save money. Yes, we have to pay taxes but those taxes are buying us something at a lower rate than if we tried to go out an buy it individually.

I don't want to get more deeply into this at this point in time. What I am trying to indicate, however,  is, I hope, by now clear. Taxes are not just a loss. There is a price to lowering taxes and that price might be significant. Moreover, there are good reasons to have central purchasing of some product because they allow us to realize an economy of scale, thus lowering the per unit costs for everyone. Said differently, taxes can actually save you money if you get a product that you would otherwise have bought for less. Health care is an obvious example. In Canada we buy it collectively and it costs us less than it does for Americans who buy it individually (through insurance premiums). Why? Economies of scale.

I've taken too long to get to my point but bear with me just a nick longer.  What does all this have to do with the health care debate in the US? If you use these simple tools of economics, you start to realize that the debate is on the wrong track. The anti-Obamacare people do not explain in their discussion that if you get rid of Obamacare, there is a cost and that cost is health care. Yes, you will pay less. But, you also will not get the same product. And, why would you? We live in a capitalist society and you have to pay for what you get, right? That is the nature of capitalism.* (*I will provide a refresher on markets and lower costs in a future blog.)

What this means, for the federal governments and an increasingly section of the population (as they come to understand the issues) is this: you can't get something for nothing. I recognize that that is not an ethical position that, if you are a politician, wins elections. If I come out and say to people -- in the US or Canada -- look, I am running for election and what I have to tell you is that you have to pay taxes *if* you want certain things -- roads, health care, a military, disease control, schools, police officers, fire departments, electricity, etc. -- and, because of that, if you elect me, I will not lower taxes, I doubt I will win. The person who says "I have found a way to save you money" and this will mean that you will get to keep all you are getting now and still have more money in your pockets, will have a better chance of winning. If they say, I will lower taxes and you will still have good roads (in fact, I'll make them better), you will still have health care (in fact, I will make sure its cheaper), you will still have a military (in fact, I will rearm), etc. ... which position will sound better to the average Joe? This person is the person more likely to get elected even if they are not telling the whole truth?

What this means is that here is a bit of a disjuncture built into democracy. When it comes to economic issues, like taxes, there is a strong incentive to not tell the whole truth. Now, I recognize some people don't tell the whole truth because they believe something other than this. They believe, for instance, that "entrepreneurial spirit" will lower taxes. Exactly what this is, is never explained and I, myself, am deeply concerned about things that are not -- or, cannot -- be explained. I recognize that someone who believes in this might say "gee, Andrew, if you were a business person you would understand" but I have a brain. Explain it to me. I've never been to the moon and I can understand what the moon is like when a scientist explains it to me. Don't tell me "you can't understand because you are not X" because that basically says only people X  can understand and, that being the case, why would anyone believe you? The only thing we can do -- if we cannot understand -- is accept it on faith and that is the definition of metaphysics.  And, I, personally, think metaphysics is not a good ground on which to build a polity.

What this means, though, is that democracy suffers from a problem. It suffers  from a disjuncture between reality and image and that is connected to electoral politics.
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