Commentary by Don McCanne, MD: Thomas Piketty – “CAPITAL in the Twenty-First Century”

April 23rd, 2014 by Sylvia Moore Leave a reply »

CAPITAL in the Twenty-First Century

By Thomas Piketty

Harvard University Press

The overall conclusion of this study is that a market economy based on private property, if left to itself, contains powerful forces of convergence, associated in particular with the diffusion of knowledge and skills; but it also contains powerful forces of divergence, which are potentially threatening to democratic societies and to the values of social justice on which they are based.

The principle destabilizing force has to do with the fact that the private rate of return on capital, r, can be significantly higher for long periods of time than the rate of growth of income and output, g.

The inequality r>g implies that wealth accumulated in the past grows more rapidly than output and wages. This inequality expresses a fundamental legal contradiction. The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor. Once constituted, capital reproduces itself faster than output increases. The past devours the future.

The consequences for the long-term dynamics of the wealth distribution are potentially terrifying, especially when one adds that the return on capital varies directly with the size of the initial stake and that the divergence in the wealth distribution is occurring on a global scale.

The problem is enormous, and there is no simple solution.

Many people worry that moving toward greater cooperation and political integration within, say, the European Union only undermines existing achievements (starting with the social states that the various countries of Europe constructed in response to the shocks of the twentieth century) without constructing anything new other than a vast market predicated on ever purer and more perfect competition. Yet pure and perfect competition cannot alter the inequality r>g, which is not the consequence of any market “imperfection.” On the contrary. Although the risk is real, I do not see any genuine alternative: if we are to regain control of capitalism, we must bet everything on democracy.

http://www.hup.harvard.edu/catalog.php?isbn=9780674430006

Comment:

By Don McCanne, MD

Although the English translation of Thomas Piketty’s “CAPITAL in the Twenty-First Century” was published only this month, it has already become a classic in the economics literature. This book is not about health care, but it provides us with an excellent background for understanding why we need to reform our current health care financing system. It is a must read, not just for those advocating for health care reform, but for everyone.

Our health care system is designed to support rentiers. Current trends in income and in wealth accumulation indicate that a disproportionate share of global income will continue to shift more and more to the control of the rentiers. We are already seeing a relative decline in financing of health care for wage earners, manifested by higher cost sharing and by more limited access through narrower, lower-cost provider networks.

Piketty shows us how the concentration of capital at the top drives an ever greater percentage of income upwards, with the rentiers having to do nothing further to accomplish that feat. He explains how the solution is progressive income taxes and progressive wealth taxes.

Expanding progressive financing through single payer would provide a step forward in implementing solutions to the iniquities of concentrated wealth. And it would be a significant move since health care constitutes such a large part of our GDP.

Without intervention, there is the risk of major social disruption. If we wish to avoid this, people are going to have to rediscover democracy. As Thomas Piketty says, “if we are to regain control of capitalism, we must bet everything on democracy.”

Re-posted with permission from pnhp.org.

Washington is broken. The states are leading the way toward single payer.

March 20th, 2014 by Sylvia Moore Leave a reply »

Health policy expert and single payer supporter Uwe Reinhardt said in a recent interview with the Washington Post that the United States won’t ever have single payer “because our government is too corrupt.” Reinhardt points the finger at special interest lobbying as the culprit:

“When you go to Taiwan or Canada,” Reinhardt said, “the kind of lobbying we have here is illegal there. You can’t pay money to influence the party the same way. Therefore the bureaucrats who run these systems are pretty much insulated from these pressures. Here you have basically a board of directors in the House Ways and Means Committee that gets money from lobbyists both at the regulatory writing stage and during normal operations. And they can call an administrator and demand they stop something from happening.”

True, money in politics is an underlying factor in America’s failure to enact the kind of not-for-profit, universal healthcare system enjoyed by the rest of the developed world. But Reinhardt only has it half right. The corrupting influence of money in the United States is not the complete picture. The political power imbalances between the majority of the American public who support Medicare for all and those who resist meaningful healthcare reform is equally to blame.

Many liberals have criticized President Obama for not vigorously supporting a single payer system or even the idea of a public option when healthcare reform was being bitterly debated in Congress in 2009-10. Some blame the Republican takeover of the House of Representatives in 2010 on voter disenchantment with the legislative sausage making that produced the Affordable Care Act. But, putting the blame entirely on Obama and the Democrats for the failure of single payer on the federal level is misplaced. The sad fact is, as much as progressive activists wanted to see single payer or a public option enacted at the federal level, the nature of American politics today makes that feat extremely difficult.

Some liberals like to point out that the Democrats had enough votes in Congress in 2009-10 to pass at least a public option. On its face, that’s true. The House had passed the public option, but the problem was in the Senate. Where although a simple majority supported a public option, Senate filibuster rules allowed a determined minority to torpedo more progressive legislation that would minimize or eliminate the role of the health insurance companies in our healthcare system. Combined with a healthy dose of health insurance campaign cash, Senate filibuster rules empowered a minority of legislators from more conservative, sparsely  populated states to thwart the majority. This kind of power imbalance is also evident in battles over other kinds of legislation, from gun control to increasing the minimum wage to expanding unemployment insurance to immigration reform.

The reality is that America’s electoral system creates unique barriers to progressive legislation. Unequal political representation is baked into our system and has gotten worse over time as more Americans have migrated away from rural areas and concentrated themselves into cities where their voting power is diluted. Today, we have the perverse result of red state Wyoming with just under 600,000 people having the same number of votes in the Senate as blue state California with nearly 40 million people. In the House, the 2012 election resulted in Republicans capturing 234 seats although they got fewer votes than Democrats who got only 201 seats. The division of power between the President, who may be from one party, and the Congress, which may be controlled by the other party or split between both parties, creates the likelihood of legislative gridlock. Partisan gerrymandering, Senate malapportionment, entrenched incumbency, the division of power between two ideologically opposing parties, the complete shutout of third parties, combined with the polluting influence of special interest money, all contribute to legislative paralysis or to the passage of legislation that is far from what most Americans want. Further, voter participation rates are far higher in other democracies where access to the ballot box is considerably easier than in the United States. Add to the mix America’s troubled racial history when it comes to the provision of social programs, and you have among the skimpiest social safety nets of any developed nation.

It doesn’t matter that polls have consistently shown that a majority of the American public supports universal Medicare, a legislative minority backed by health industry lobbyist money can take advantage of undemocratic and arcane Congressional rules, as well as Constitutional anachronisms that unfairly magnify the political power of the minority, to get single payer put off the table. I often wonder why many activists hold up the problem of money in politics as the main reason why popular ideas like single payer can’t get passed at the federal level, but gloss over the fact that glaring structural flaws in America’s political system are just as problematic. Perhaps it is due to a particular American loyalty to the ways we do (rather, don’t do) democracy and a nearly religious reverence to a Constitution that is rather shop-worn. Or it may be an ignorance of how other countries practice democracy differently (and perhaps, better) than we do. Or it may have much to do with the extreme difficulty – if not near impossibility – of getting any sort of institutional change in America, let alone remaking the political system altogether to make it fairer. The movement to amend the Constitution to get money out of politics and strip corporate personhood is going full steam ahead, but four years and two general elections after the Supreme Court’s Citizens’ United decision, we’re still a long way from getting 2/3 of Congress and 3/4 of the states to agree to pass an amendment as required.

Since Washington is hopelessly broken, it’s up to the states to take the lead on single payer. States, Supreme Court Justice Louis Brandeis once said, “are laboratories of democracy.” They can also be laboratories of health reform. The states aren’t as legislatively constrained as the federal government. Vermont was the first to  say yes to single payer. There are strong single payer movements in California, New York, Oregon, Pennsylvania, Maine and Maryland. The Affordable Care Act’s flaws and its troubled rollout have led the public to give single payer a second look. Fortunately, the ACA does provide the states with the means to implement single payer on their own. In 2017, states can apply for a waiver enabling them to create healthcare systems apart from the ACA as long as those programs cover as many or more people than the federal law. We already know that single payer will cover everyone in America for less money than our current wasteful for-profit healthcare system. A successful single payer system at the state level will more easily open the doors toward a national universal healthcare system.

Sylvia@californiaonecare.org

Gen. Colin Powell endorses universal health care

December 18th, 2013 by Sylvia Moore Leave a reply »

From the Puget Sound Business Journal:

Former Secretary of State and longtime Republican Colin Powell is calling for a universal health care solution in the U.S.
“We are a wealthy enough country with the capacity to make sure that every one of our fellow citizens has access to quality health care,” he said Thursday at a Seattle fundraiser for prostate cancer. “(Let’s show) the rest of the world what our democratic system is all about and how we take care of all of our citizens.”
The retired four-star general, a prostate cancer survivor, spoke at the Prostate Cancer Survivors Celebration Breakfast, organized by UW Medicine and the Fred Hutchinson Cancer Research Center.

“I am not an expert in health care, or Obamacare, or the Affordable Care Act, or however you choose to describe it, but I do know this: I have benefited from that kind of universal health care in my 55 years of public life,” Powell said. “And I don’t see why we can’t do what Europe is doing, what Canada is doing, what Korea is doing, what all these other places are doing.”

Gen. Powell’s support for universal health care is welcome news for the single-payer movement. He demonstrates that this issue cuts across all political stripes. Providing health care to all is a progressive and a conservative idea. Universal health care will not only save lives, but save our country billions of dollars, spur entrepreneurship, create jobs and boost our economy. If only Gen. Powell’s fellow Republicans in Congress could see that.

Sylvia@californiaonecare.org

Birth control fight just shows job-health coverage link must be cut

December 12th, 2013 by Sylvia Moore Leave a reply »

Should your boss have the right to keep you from getting birth control? This question is at the heart of two cases now before the U.S. Supreme Court involving a couple of companies whose Christian founders are suing for the right to deny their employees birth control coverage mandated by the Affordable Care Act. Oklahoma-based arts-and-crafts chain Hobby Lobby and Pennsylvania cabinet maker Conestoga Wood Specialties are arguing before the court that corporations have religious rights that should be protected by the Constitution’s guarantee of free exercise of religion. The justices are scheduled to hear the matter in March.

If Hobby Lobby and Conestoga prevail, and corporations are granted religious rights, how far would that go? Already under the ACA, health plans are not required to cover abortion. So what’s next? What if your boss belonged to a religious sect that opposed blood transfusions or HIV treatment? Could he or she then refuse to provide you health coverage that includes those services? The actions of Hobby Lobby and Conestoga are exactly why the connection between employment and health insurance must be severed. Without health coverage, birth control can be costly, especially for low-income women.

Fortunately, now that with the ACA, millions of Americans won’t be tied down to their jobs in order to keep their access to health care. But we don’t want to be a society where people who have jobs don’t have access to the kind of medical treatment they need just because their boss doesn’t approve of said treatment for religious or other reasons.

Companies have no right to dictate their employees’ medical treatment, and especially have no right to interfere in their employees’ reproductive health decisions. Instead, companies should be focusing on providing their customers with a good product. We need a healthcare system where the kind of health coverage you get doesn’t depend on whether you have a job or where you work if you do. It should be the sole responsibility of the public – through progressive taxation – to provide health coverage to all.

Sylvia@californiaonecare.org