Battles with Integrity

[using the House MD icon, because though I don't have an economics icon, I do have one with a medical bent]

Economics is about the distribution of goods and services, with the intent that this distribution be as efficient as possible. The major mechanisms for this involve the manipulation of supply and demand, or rather the idea that supply and demand will adjust themselves to come to an equilibrium where the system is efficient (generally, economists' goal is maximum efficiency).

bradhicks offers a reasonable suggestion that artificial restrictions on the number of graduating MDs serve to increase the cost of health care in the US. Leaving aside his class-based points of argument regarding the motivations behind this restriction (valid tho' they may be), the fact remains that our population has grown by 50% without a concurrent rise in the number of doctors. It stands to reason that, given rising demand, a constant (not rising) supply of MDs will command a higher price on the market, thereby causing an increase (perhaps one of several causes) in healthcare cost. Brad's post is worth checking out. I'm not sure his answers are all the answers, but it makes for an illuminating thought experiment.

Professor Reich (former Secty. of Labor) wrote a post on his blog about the necessary priorities for the coming administration, specifically economics. He writes that since the economic downturn (mini-bagel, not a Great Bagel) is consumer based--which is to say that as consumer wages have failed so far to keep up with costs, consumers have eventually run out of money to spend--that the consumer economy won't improve unless those consumers actually get the money to start spending again. Since consumers account for 70@% of the economy, and investors aren't spending until the consumers will, then the government has to be the kick-start for the economy.

His rather Keynesian idea is that the way to fix the economy is to use government debt to give money to consumers in the form of infrastructure jobs. We should spend lots on infrastructure (you remember those crumbling roads, bridges, levees, ports, and trains?) which will have dual benefit of boosting the economy and making the economy better in the future (by way of better infrastructure).

It's elegant in its simplicity. There's more, but Prof. Reich does it better than I, so read the link above. Funny enough, this spring in Prof. Reich's class, I was tasked with putting together a public policy plan, and it was just this.

From Harper's Index for October 2006:

Minimum amount of USDA farm subsidies since 2000 that have been paid out to people who do not farm: $1,300,000,000

Minimum value of “small business” contracts given out by the U.S. last year that went to Fortune 500 firms: $1,200,000,000

Dairy Industry Crushed Innovator Who Bested Price-Control System

I get really frustrated when folks claim that our socio-cultural-economic system rewards people who work hard and punishes layabouts. Many people who self-identify as conservatives rail against 'the Welfare state', even as they support initiatives that provide government assistance to those (rather, companies who purchase their candidates of choice) unable to compete in the market without help. Cornel West describes some of these people as free-market fundamentalists. At first I thought this was a misnomer, as these free-market fundamentalists don't hew to a strict view of the free market, where each actor has an equal chance in the market to face off against his or her competitors. Then I realized that 'fundamentalist' means less a fundamental interpretation of the intent of the original concept, and more a personal interpretation about how to self-justify one's own prejudice, nevermind the consequence. Just like much other fundamentalism, really.