It’s time for a new, progressive supply-side economics
thecgo.org
thecgo.org
Improved manufacturing and (essentially) cheap Chinese labour is responsible for the cheaper goods.
The connection here is that "inflation" as it is measured by central banks is artificially lowered by improved and cheap manufacturing. This allows them to keep very low interest rates while being congruent with their "charter" of keeping stable average prices.
Artificially low interest rates can be seen as the cause of the most of the "more expensive" goods. It inflates the price of assets relative to income.
And there are many stake holders in asset inflation.
College textbooks are such an odd case because the incentives make no god damn sense.
Obviously they aren't Veblen; the actual owner (students) would always rather pay less.
But colleges and universities also don't make a ton of money on books. Two of the colleges I'm familiar with would lose money on their bookstore if they didn't have a monopoly on college-branded merchandise. It'd be better for them to just stop selling books and only sell clothes + electronics + price-gauged office supplies for the captive market ("I need some pens/paper/etc. but don't want to leave campus tonight"). Books lose money -- they're heavy, require a ton of extra labor, have thin margins, and you have to do all of that work twice so you can capture a few extra pennies in the used market. The best you can say is that they're pretty cheap loss leaders for selling hoodies and hats.
Instructors/professors don't really have an incentive to insist on expensive textbooks either. People always share anecdotes about being required to use the professor's super expensive book. But even if the prof wrote the book:
1. publishing just isn't very profitable (for me, 10 hours of consulting can make as much as about 30K book sales... maybe that goes up to 40 or even 80 hours for an expensive textbook. Maybe even a whole month of consulting for a super expensive hardback! But writing a book takes years of labor, so even on the upper bound it's just a horrendously bad way to make money as an author), and
2. this is rare enough to not explain systematic behavior -- remember that the US has 5000+ colleges and hundreds of thousands of professors. In most subjects there are fewer than 10 widely used textbooks.
One of the best Linear Algebra textbooks available is completely open source (I think the author is even on HN sometimes). For some reason, small colleges and local branch campuses of state university systems still insist on using $100+ Linear Algebra textbooks that are... quite bad. This is true in lots of other subjects, too.
It's like non-open-access academic publishing. Why do colleges/universities/professors keep going along with generating profit for the publishing industry? It makes no sense.
My higher-level college professors were really mindful of textbook prices and generally eschewed or at least minimized dependency on textbooks unless absolutely required.
I think professors teaching lower-level courses have no say in textbook selection. The books are sold to department chairs, who require the book for all the courses. Then the professors get the carrot of having some software or other material that helps them teach the course.
If I were an Adjunct making $3000 to teach a calculus class to 30 students, I'd feel bad that they are paying $180 for a text book, but I'd also appreciate having standardized test/homework materials with answer keys.
I do think the future is college students all using some Khan Academy-like program with standardized tests, homework, lectures, and reading materials.
Caltech did that years ago, I'm told, except for books with some obvious Caltech connection (e.g., the Feynman lectures, biographies of famous Caltech people, and that sort of thing). If you want textbooks for your classes, they send you to some online place called MBS Direct.
I still have trouble imagining this. When I was there ('70-80s) I bought a lot of books on campus that were not textbooks for my classes. They were a good general technical bookstore and decent general interest bookstore (at least when it came to science fiction and fantasy). I think the nearest off campus bookstore with a decent technical books selection was Vroman's, which was about a 3 mile round trip to walk. I wouldn't have wanted to do that every time I felt like browsing technical books.
Take the response last year to the Coronavirus: quantitative easing and zero interest rates drove the stock market to all time highs in parallel with a massive rise in unemployment.
The wealthy got much, much richer. The poor got much, much poorer.
But, it is a hell of a lot better than something not even in the chart like the undefined and catch it all concept of 'productivity', as anyone who saw an operating room in the 70s, or an ICU and has seen one now can attest to the enormous real growth in core productivity driven by the same factor as all the other sectors of the economy: technology.
Single payer doesn't really matter. There are countries which do great without it (Switzerland for example). If you want cheaper stuff you need to focus on getting rid of cartels and anti competitive practices. Train more doctors, some through shorter track so they can provide simple checkups/treatments. Force everyone to list prices in clear way. Change the law so you don't go bankrupt when something goes wrong and that you don't need several million investment to provide something as easy as MRI scans. There are tons of obvious things to do. Single payer will not solve those problems.
Full blood panel with all hormones, cholesterol, mineral levels costs like 80$ here and I can get it done any day, any time by just walking into a lab and telling them what I want to get done. No doctor consultation, nothing. The results are available online the same day (with the exception of things like free testosterone that takes several days as they ship it to outside lab). This is done without any coverage, insurance or anything. Just paying out of pocket. Think about why it's possible in a poor Central European country and not in US. Hint: it's not what progressive politicians tell you.
> How do you explain nations with more government involvement in healthcare who have lower healthcare costs?
They made other tradeoffs and inverted the graph. For example cellphones are way more expensive on some countries, cars are taxed up to 100% on others.
The US has a market for private healthcare, but healthcare will never be a free market. It's the antithesis of a free market. Intrinsic inequality of bargaining power and information asymmetry are the biggest reasons for this.
This point is usually brought up in regards to healthcare emergencies. But emergencies only make up a small fraction of healthcare spending[1].
Maybe people have less bargaining power because of agreements with providers/insurers. That's a barrier to an effective market with price sensitivity, but it's a contingent one, not a mathematically inevitable one. For much of our healthcare spending the balance of bargaining power could look like it does for food.
1: https://www.politifact.com/factchecks/2013/oct/28/nick-gille...
The other big inflator is rent - the cost of land and buildings. At this point the Georgists would like a word about land value taxes.
You can't import a haircut because it really is technically and practically impossible or because bureaucracy has made it impossible for outsiders to enter the haircutting business? Let me remind you all that in the US you need a license to cut hair. Let me repeat that, in the US you cannot cut hair without the government giving you permission.
I think it is perfectly within our abilities to build lets say some kind of smart-helmet that cuts hair and can be imported from the same countries that build smartphones, drones, watches, shoes, etc. I'm open to other ideas.
You can technically automate hair cuts (badly, but it is technically possible, most wouldn’t want to pay for it yet).
You can buy an electric hair trimmers and give yourself a standard length.
But there are no robots for remote-controlled hair cutting. Until there are, you can’t import them.
This is why haircuts are expensive even outside of the USA, and why they vary in rough accordance with the local cost of living.
Aha. So the two Baby Bell descendants own virtually all of the last mile land lines in the US, and who were cheaply sold by the government cell phone wavelength which they also both mostly control - this duopoly which spends an inordinant amount of money on lobbying at the state and federally for regulatory capture is part of the unregulated market. The government regulating exclusive spectrum use for this as part as that lack of regulation.
Your "by comparison" and "most involved" qualifiers are doing a lot of heavy lifting. Corporate America is heavily involved in desiring bailouts, regulatory capture etc. Just witness the corporate talking heads demanding more Reddit Wall Street Bets Gamestop regulation. And these were people long, not short.
The notion that "free market enterprise" wants free markets, a lack of regulatory capture etc. is a fantastic notion. And you will be hard-pressed to find Fortune 500 companies not tightly intertwined with the government, which is something they obviously desire to be by their actions.
> The notion that "free market enterprise" wants free markets, a lack of regulatory capture etc. is a fantastic notion.
I didn't say that.
Enterprises are gonna enterprise, they will suck out to the last penny if you let them. That is why it is so important to keep the market fair, it's the only real chance at even a semblance of meritocracy, if it even exists. That is the job of government, or it should be, but as you've said the disparities are increasing because surprise! the 'people's government' sold everyone out. It is about time those clamoring for more and more government intervention realize that sad, yet true, reality.
Why is the opposite of "bad government" always "no government" and not sometimes just "better government"?
But yes, make education better and cheaper like the Swedes and Estonians have done with school vouchers, and adopt the Bismarck healthcare model used to great success in many European countries like Germany, Switzerland, France, & the Netherlands.
These are two simple suggestions, naturally the method will be as key as the principle in order for them to be successful, but the track record is there.
Alternatively, adopt the negative income tax that Milton Friedman suggested, which together with a state-guaranteed health insurance and a school voucher system, would create a really solid and efficient welfare state. Maybe forego income tax totally and do that with a higher VAT instead.
there is a forceful ideological denial of this simple premise by the owner and managerial class, because it's an existential threat, but labor is still the essence of value. that technology can leverage labor and multiply its output doesn't change that. labor can create value that is not yet owned (depending on law), which itself is a threat and why owners focus so much legal fortification on that front.
also note that economists work for the owner and managerial class, providing a powerful incentive for bias in this regard.
Exponential debt growth as that is making people go more into debt energy use creates higher carbon footprint.
> The trickle-down theory is all but dead, but there is more to the supply side of the economy than taxes. Thousands of government decisions affect real output and economic productivity. A new supply-side economics would recognize that productivity growth is the right target, but it would reject tax policy as the primary means of stimulating productivity. Instead, it would examine how everything government does — from permitting to procurement — could be improved to increase productivity.
Which is basically saying that lowering taxes is not the only way to achieve trickle-down.
The rest of the article is stating the obvious fact that the poor spend a higher proportion of their income on things that are essential - and it's possible to make those cheaper.
But the criticism of tickle-down was never that it targeted the wrong services (e.g. entertainment instead of housing). The main criticism is that it increases inequality.
Every progressive politician beats the drum of more taxes, more money for healthcare (and other stuff) and things magically improve. When was the last time a major politician said something a long the lines of: "let's think how to make doctor visits cheaper so people don't avoid them, maybe you know, lower requirements, allow nurses and other healthcare workers to carry simple checkups or minor treatments".
Making stuff cheaper if what worked historically to improve the economic situation of poor/lower economic classes. It should be the main focus but it somehow isn't.
> When was the last time a major politician said something a long the lines of
I can only answer considering Brazil, my home country. Despite the mess that we're currently in, even we have these points in the public debate. Fixing the income tax progression to rebalance the tax burden, reducing tax on goods and compensating on services, prioritizing investments on public services essential but currently too expensive for the poor (e.g. infant day care). More often we discuss that taxes are not following the "principle of contributive capacity" than we discuss increasing taxes (except for stock dividends and other super-rich stuff, which are also always mentioned).
I won't say that we're having significant progress, as there are always some profiting from the current state of affairs to block the road, but if you pay attention to the right politicians, those topics pop up constantly.
1. End of life costs. Americans spend an enormous amount of medical dollars in the last 12-18 months of life.
2. Medical Malpractice insurance. This drives aggressive testing and monitoring.
3. Obesity, diabetes, metabolic syndrome. These are the result of subsidized farming and sugar.
All three are entrenched and would take a massive lift to pacify.
This is true in Canada, the U.K., and elsewhere in the world with Universal healthcare.
You could have have summed the above as "insurance".
Sure, the population is more unhealthy, so you’d not expect to get down to European levels just by implementing healthcare reform, but it’s the big difference.
Lets say that you want to start public health clinics to treat non-emergency, routine care. Imagine your system of clinics misdiagnoses a few patients who later get very sick and die. Those patients' families will sue for vast amounts of money from the clinic.
The mere threat of these lawsuits requires every interaction, every medical history change, every diagnosis update, all of it to be meticulously documented and tracked. It leads to doctors agreeing with patients asking for expensive and invasive testing. It leads to doctors agreeing with patients who request medication, etc.
At end of life, it leads to doctors agreeing to many, many expensive interventions.
How does end-of-life care/cost compare in Europe with the US?
I agree with your point that you'd need to dramatically overhaul the regulatory framework to implement socialized medicine (i.e. the government opening clinics), but I think you would need to do significantly less work if the healthcare delivery remained privatized. Of course in both approaches you could reduce healthcare costs by reforming liability laws.
The main decision in my opinion is between true "single payer" (i.e. private health insurance is not permitted for services covered by the public insurance) and "public option" where private insurance can compete with the public option for coverage on core services. The details here are pretty complex and there are options all across the spectrum in the EU to compare; e.g. Germany has a hybrid approach where below a certain income you must take the public option, and above the threshold you can buy private coverage. Canada has a true single-payer system it seems (though you can supplement for additional coverage that the core single payer system doesn't cover). Etc. (See for example https://www.griffinbenefits.com/blog/how-does-healthcare-in-... for a bit more detail).
Either way there's extremely high support for some sort of public option in the US; it's around 80% supporting medicare for everyone who wants it, and that reduces to something like 60% if you ask specifically about "medicare replacing your insurance" i.e. true single payer.
> How does end-of-life care/cost compare in Europe with the US?
I'm not familiar with those numbers, would be interested in comparisons if anyone has data they can link. I'd guess at low confidence that it's better in the EU, since they are more likely to use utilitarian measures like QALY for allocating healthcare spending, and that framework should discourage excessive end-of-life care expenditures.
I just don't see how we get there in the US. According to the World Bank, the US spent 16.89% of GDP on healthcare vs 11.43% of GDP in Germany.
That difference in spending represents billions in revenue and millions of jobs. The businesses capturing that revenue and those workers will not give up their livelihoods because the German model is more efficient.
Healthcare spending in the US is a massive political force and I see nothing on the horizon that will take it on in any meaningful way. We've discussed Obama's ACA plans many times on this site.
The realist in me says that uneven outcomes and health emergencies bankrupting families is actually a stable political outcome. E.g. Most people have no fear of medical bankruptcies - simply because it hasn't happened to them. So a politician promising a solution to medical bankruptcy isn't going to win votes. Instead that politician is inviting opposition from the medical industry. By the time someone faces medical bankruptcy it is too late for systemic change. They just go bankrupt.
From a game theory perspective, we would all collectively benefit from a better distribution of medical spending and insurance. Channelling that collective will is nearly impossible because the motivation for change doesn't become obvious until you have to pay $5K/month for medicines to survive.
Motived, ethical political leaders could do it. But you don't reform 17% of GDP spending without risking your political future, speaking fees, or board seats.
However I think there is cause for reserved optimism; the ACA moved the Overton Window on this subject. Sanders and Warren made Medicare For All a core part of their platform, and did not get killed for it. Biden supports a public option (Medicare buy-in, not single payer), but that is now the moderate / bipartisan position in terms of voter support.
We will probably not get a single payer solution in this administration, but the public option could capture some of the market, and make further changes more tractable.
if it is to be a disrupter, it must be cheaper on a much larger scale...like 50%
I don't understand why this is "progressive," in the way that term is usually used. I have been reading various different conservatives arguing for supply-side changes in these different industries my entire adult life. Sometimes, a thing is just a thing that people can agree on independent of world view. For example, the author could have instead written "People who care about affordable housing must continue to unite against excessive zoning and NIMBYism."
It's not purely cynical, of course -- TFA demonstrated that these efforts help people in lower-income groups more (by some measures) than they help people in upper-income groups.
--
Supply side is a "push" strategy. Top down, more or less. Monetarians, those who primarily see money as a commodity, prefer top down. They worry more about deficits and balances.
Demand side is a "pull" strategy. Bottom up, more or less. Fiscal-o-tarians (I forget the proper label), those who primarily see money as measure of value, prefer bottom up. They worry more about interest rates.
The period from The New Deal to the 70s was mostly demand side policies. It got out of whack. Then Reaganomics switched us to supply side policies. It too got out of whack.
The Correct Answer™ is some kind of hybrid. Balance the two forces. Ideally with automatic triggers (adjustments) to dynamically rebalance. Recognizing that policy making is too slow, automatic triggers will minimize recurring under- and oversteer.
Today, we need to shift emphasis from just deficits and inflation to also include interest rates. We must remain vigilant about unemployment. And we need better policies for productivity and inequity.
--
Technology influences our mental models for how the world works.
In the West, Greeks gave us mind & body duality. Clocks made us imagine the Great Clockmaker in the Sky. Automata got us thinking we're all just machines.
And now the digital age. We're just computing and communication systems. Input, processing, output. Massive game-like simulations. Optimization algorithms with feedback loops. Transaction costs. Attention economy.
I definitely have an algorithmic view of humanity.
So here's my response to this "progressive supply side" OC:
We rebuild the economy, creating wealth, by keeping the money moving, by increasing the velocity of money.
Hoarding money suppresses wealth creation, increases inequity, and reduces productivity.
So The Correct Answer™ (today):
"Pull" more money thru the economy by giving money directly to people. Then recover that money thru taxes.
Implement complimentary policies to keep the money moving.
Tax idle wealth. Tax corporate profits, to restore prior levels of R&D and profit sharing (wages, benefits). Tax windfall profits.
My own notions are adjacent ("Yes, and...") to advocates for universal basic income (UBI) and modern monetary theory (MMT). Mostly, I think in algorithms and systems.
--
Beyond the scope of this thesis:
Rebuild economy thru "caring work". All the stuff where people are helping others, creating new stuff, building a better world. Teachers, doctors, eldercare, police, firefighters, parenting, journalism, farming, etc, etc.
Disincentives for managerialism. All that wealth destroying middle management. The unnecessary work in financialization, public relations, advertising, project management, etc.
h/t David Graeber and many others
Since when are these ideas "defunct"? Politicians currently serving in government advocate for these falsified ideas.
>We badly need health innovation to drive down costs. As I argued in Fortune, research on biological aging could lead to longer healthspans, compressed morbidity, reduced chronic disease prevalence, and lower medical expenditures. Additionally, consumer medical devices could lower the cost of high-quality medical monitoring, replacing the annual physical with continuous observation of health indicators. With better monitoring, serious conditions could be detected earlier, when they are cheaper to address. Other breakthroughs in biology, like mRNA vaccines and computer-simulated protein folding, could lead to quicker and less expensive cures for virtually every disease.
Or we could just pay for everyone's healthcare from taxes like most other developed nations.
https://en.m.wikipedia.org/wiki/List_of_countries_by_total_h...
Health insurance is almost pure wealth capture. The provision of services is actually rationed acutely.
Public healthcare is wealth creation. There a trickle-out effect as private sector "insurance taxes" are reduced. But access is also increased, which creates jobs in frontline health care services.
There's a limited role for private industry in health R&D innovation, overlapping with public funding of original research. But provision is most economically efficient and productive when it's state-managed.
What it isn't is politically efficient. Wealth capture is political capture, and dilution of one creates dilution of the other.
This is not a popular idea in some quarters.
https://naic.org/documents/topic_insurance_industry_snapshot...
Their profit is not the measure of what they extract
Their total top-line income is the proper measure of what the HC Insurance companies extract from the system -- PLUS the entire income of the set of companies that optimize billing so that providers can get fully paid -- PLUS the entire income of the industry of seminars & trade shows teaching providers how to optimize their billing, etc., etc., etc.
That entire industry of HC payments is parasitic - it adds no value, and extracts money.
Just pay the providers, and have patients show up at the door to get care, and let the doctors be the gatekeepers, not some unqualified insurance bureaucrats.
And yes, there would be many, many thousands of HC insurance workers who would need to find new employment. This is a good thing.
The comment by orwin says that 22% is spent on bureaucracy in France public healthcare. 16% doesn't look that bad.
I'm not saying US healthcare doesn't have problems and there aren't some weird practices but if you can't measure or identify the problems correctly, you are not going to fix it.
For tax-funded public healthcare, 78% of the money they are making via taxation is used to reimburse patients. That mean 22% is used to pay for the bureaucracy. Its is growing according to the numbers i have, despite all the shiny new tech they could have.
You would imagine private healthcare insurance compny overhead is lower, right? or at most at 25% for a 3% profit? Right. So Swisslife (i think this is the european private healthcare that have the biggest network, at least for glasses): 31% of what you're paying will get in their pocket to pay for bureaucracy and profit.
Either they have huge margins, either they have huge costs and are more inefficient than public healthcare. whatever the reason is, the number is way too high.
Serious changes like paying for Medicare for all US citizens? That's my whole point.