Tag: Matt Yglesias

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Health care Politics The Opinionsphere

The Right-Wing Canard of ‘Rationing’ and Health Care Reform

I came across this post by John Holbo at Crooked Timber somewhere in my web travels yesterday. (My guess is a Yglesias tweet. Because later, I came across it again on Yglesias’s blog.) Holbo makes a few good points about the use of the term “rationing” by opponents of health care reform:

Guaranteed minimum healthcare doesn’t forbid anyone to seek more on the private market – paying out of pocket, extra insurance. No more so than a guaranteed minimum income would forbid you to get a job to earn more than the minimum. So guaranteed minimal healthcare doesn’t ensure its minimum by positively forbidding anyone to get more. So it isn’t really rationing… There just isn’t going to be any attempt by the government to ration healthcare, as opposed to its own spending of taxpayer money. Because: why would there be?

Yglesias seconds this:

[C]onservative appear to have concocted a special one-off meaning of the term “rationing” to apply to government guarantees of basic health insurance coverage. They observe that insofar as the government guarantees basic health insurance coverage to everyone, the government probably can’t actually deliver an unlimited quantity of health care services without breaking the bank. Therefore, at some point someone will probably not get some service he or she might [want]. This is rationing and it’s evil and the solution, for unclear reasons, is for the government to deliver no guaranteed services whatsoever since . . . well . . it’s not clear how that’s better since either way you could still pay out of pocket.

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Health care Politics The Opinionsphere

4 Points on Health Care

There’s just too much going on in health care – too many important points to make and second. So, here’s another hodge-podge post on health care.

Zeke Emanuel. Alex Koppelman addresses the irony of the fact that Ezekiel Emanuel – Rahm Emanuel’s brother and a member of the Office of Management and Budget – is one of the centers around which the conspiracy theories about death panels and such are flying. As a leading bioethicist, he has written academically about many hypothetical scenarios – and now, they are being taken out of context to suggest he is in favor of all sorts of Nazi-like practices. In fact, Emanuel is not even in favor of physician-assisted euthanasia:

[Zeke Emanuel] is actually one of the country’s leading medical ethicists, a forceful defender of people approaching the end of their life. Indeed, he opposes even voluntary euthanasia and physician-assisted suicide.

The Eight Point Plan. Matt Yglesias had an important post today – pointing out that though most of the attention on health care reform is being given to the public option (and to a lesser degree the Health Insurance Exchange), neither of these will affect the health insurance received by most Americans. (Though if done right, the public option and exchange would provide a measure of security to Americans as they realize they could lose their job as well as health insurance.) Instead, Yglesias says :

For those of us outside the exchange, the core of health reform is this eight point plan to make health insurance better by blocking dirty tricks by private insurers.

The Purpose of the Public Option. Jacob S. Hacker defends the public option in a white paper [pdf]  written describing the purpose of the public option in the Health Insurance Exchange:

The public Medicare plan’s administrative overhead costs (in the range of 3 percent) are well below the overhead costs of large companies that are self-insured (5 to 10 percent of premiums), companies in the small group market (25 to 27 percent of premiums), and individual insurance (40 percent of premiums).

What if the right “wins”? David Frum asks what it would mean for conservatives and right-wingers to “win” the health care fight. This Republican’s answer:

We’ll have entrenched and perpetuated some of the most irrational features of a hugely costly and under-performing system, at the expense of entrepreneurs and risk-takers, exactly the people the Republican party exists to champion.

Risk Adjustment in a Health Insurance Exchange. DiA asks a few questions of health care blogger Ezra Klein. Klein makes a point I hadn’t realized – that the legislation as currently written does not include a “risk adjustment fund” without which insurers could simply race to the bottom in creating plans. Without this, the Health Insurance Exchange would seem to offer nothing like an “ebay for health insurance.”

DIA: The House health-care bill includes universal community rating. But it doesn’t have a risk equalisation fund to compensate insurance companies who get stuck with the riskiest and least healthy clients. Doesn’t this ensure a race to the bottom in terms of the benefits companies offer, in order to discourage the unhealthy from signing up with them? Won’t they all just offer the minimum possible benefit package they can under law? (The point of the REF system, used in Germany and the Netherlands, is that companies actually offer extensive benefits and compete with each other to cover the older and less healthy, because they draw in more government compensation that way.)

Mr Klein: A risk adjustment fund is crucial, and, happily, a lot of senators understand that. I’d expect some form of risk adjustment to be added into the bill by the end. But you’re right: Without risk adjustment, the exchanges can’t really work, which means they can’t really grow, which means we won’t have changed much of anything at all.

Categories
Health care Humor Politics The Opinionsphere

Prominent Liberal Blogger: Obama acting exactly as if he does have a secret “death committee”!!!

[digg-reddit-me]In the ultimate Yglesias Award Nominee: Prominent liberal blogger Matt Yglesias (many of whose posts are ghost-written by the AntiChrist, George Soros himself) admitted ((There’s no need to follow the link. Just trust that I’m providing adequate context.)) yesterday that, analyzing what Obama has been saying about health insurance reform, it’s clear:

[T]hat’s exactly what Obama would say if he did have a secret “death committee” plan. [emphases in original]

Finally, a liberal with the inside scoop admits it. The T-4 program has commenced!!>!>!> George Soros will be supervising who lives and dies! The secret Muslims have taken over the White House and the Holocaust of the born-again is upon us.

It’s time to panic everyone!!

But be sure to make your way to your local Congressperson’s or Senator’s office first. That’s the only way to stop this Nazi-Communist-Muslim-Godless-Chicago-style-Kenyan-America-hater! He’s out to kill your children and your grandparents for being burdens on society – and he just fucking hates babies! He actually considers every live birth to be a missed opportunity for abortion!

This bill also will hurt small businesses profit margins, perhaps causing some to close!

Another godless liberal blogger has admiringly pointed out that even with admidst these Hitler-style antics by Hitlerbama, our Great Leader, Sarah Palin is urging restraint, as he summarizes her message(s):

Indeed. Obama’s evil death panels would kill my baby Trig, but let’s be sure to keep the discourse civil.

What a selfless woman! She is sooooo right! But it’s important to make sure to make your “civil” disagreement with Obama’s plan to run a Holocaust on American soil in front of your local representative. Panic – but do so in strategically-wise places.

[Legal disclaimer: Civil discourse is essential to our society, blah, blah, blah. This post is in no way intended to promote violence or otherwise mislead or induce panic despite the clear meaning of the text contained herein. The following is not supposed to be used as a list of suggestions for the most effective and media-savvy means of opposing health care reform: I’m not saying people should bring guns when they go to “discuss” health care with their Congresspeople – but all patriotic Americans stand behind the right to bear arms strongly. I’m not saying people should make death threats to supporters of the bill, though all patriotic Americans know the freedom of conservative speech is under attack!!>! I’m not saying we should hang supporters of the bill in effigy, but all patriotic Americans know group activities can build group spirit. I stand behind Sarah Palin when she chastized reporters, saying “Goshdarnityall, troops are dying for your freedom. So stop making things up!>!?!” Which is why I’m encouraging all of y’all not to lie about health care reform – but instead to express the “truth” about the government-sponsored euthanasia and abortion and gang rapes (see sections 34.1, 23.2, and 104.4 of the bill for reference) that the bill the Democrats are pushing will mandate.]

[Image by Floyd Brown licensed under Creative Commons.]

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Health care Politics The Opinionsphere

Right-Wing Editorial FAIL!

[digg-reddit-me]The rabidly right-wing yet still influential Investors Business Daily opines against health care reform saying:

People such as scientist Stephen Hawking wouldn’t have a chance in the U.K., where the National Health Service would say the life of this brilliant man, because of his physical handicaps, is essentially worthless.

Of course, Stephen Hawking is and always has been British – having lived and worked and been taken care of by this system.

All this is to say nothing of the various other canards raised – namely that any of the current plans being debated bear any resemblance to the British single-payer and entirely government-run system.

The editorial also explains:

The British have succeeded in putting a price tag on human life, as we are about to.

Matt Yglesias nicely parries this point:

[A]s with all anti-rationing talk you really have to wonder what rightwingers think happens in a free market system. In a pure market, your life is worth what you’re able to pay. The way the free market works, if an indigent woman gives birth to a premature infant you let the infant die. Thankfully, no country—not even the US of A—is actually sufficiently committed to free market principles to let infants die like that.

Continue reading “Right-Wing Editorial FAIL!”
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Barack Obama Health care Political Philosophy Politics The Opinionsphere

What Do Matt Yglesias, Ezra Klein, and Che Guevera Have in Common?

[digg-reddit-me] Answer: Not much.

But Democracy in America’s anonymous blogger seems to think that some of liberal bloggers Ezra Klein’s and Matt Yglesias’s recent posts suggest a new and profound (indeed revolutionary) disenchantment with our means of governance. DiA cites Klein who recently wrote:

[Health care] like climate change, is a litmus test for our government. Both are serious, foreseeable and solvable threats to our society. One threatens to bankrupt the country. The other threatens irreversible damage to the planet we live on. Responding to such threats is the test of a political system. And our system will fail it. We will not avert catastrophic climate change. We will not protect ourselves from health-care inflation.

Yglesias recently wrote this post I’ve noted before explaining how our current media-political system can be manipulated so easily by people acting in bad faith – and how that leads to bad policy outcomes.

DiA tries to summarize this generation of pundits and policy wonks – led by Klein and Yglesias:

Mr Klein exemplifies the generation of young left-leaning policy wonks, journalists and activists who have been formed politically by the reaction against Bush-era conservatism, and for whom the Obama presidency represents the first experience of wielding political power. Like Mr Klein, many of these young progressives are fundamentally moderate, process-oriented wonks who, long before the Obama campaign even began, had accepted that the pragmatic limitations of real-world American politics rule out any utopian, or even first-best, solutions to most public-policy problems. They have happily dedicated themselves to figuring out what kinds of reform are possible within the constraints of corporate and interest-group lobbying, ideological and partisan divisions, and America’s kludgey, creaking 220-year-old machinery of government.

But now, DiA suggests, they have abandoned this moderation and want a revolution – that they have become disillusioned about our media-political processes due to Obama’s lack of success.

Certainly, Klein and Yglesias are extremely critical of the processes by which policy is created and by which the public views and understands policy debates. They believe that this system is broken. But both believed this before Barack Obama’s recent troubles – as Yglesias himself pointed out in response to DiA.

What DiA is missing is that reformists (towards both the right and left, but here I will look only at the left) have long been extremely critical of our media-political process works. Just two days ago, in The American Prospect, executive editor Mark Schmitt wrote:

[T]he idea that America’s “existing democratic institutions are strong enough to deliver accountability ” flies in the face of all observed reality. For at least eight years, those institutions consistently failed to deliver accountability, and the Department of Justice and courts likewise failed to punish some of the greatest abuses of power in our history…

As Al Gore wrote in his book describing The Assault on Reason:

American democracy is now in danger—not from any one set of ideas, but from unprecedented changes in the environment within which ideas either live and spread, or wither and die. I do not mean the physical environment; I mean what is called the public sphere, or the marketplace of ideas.

It is simply no longer possible to ignore the strangeness of our public discourse. I know I am not alone in feeling that something has gone fundamentally wrong.

Or look at Lawrence Lessig’s lecture on Corruption – which eloquently makes the case for “disinterestedness” as one of America’s key founding principles which has been since lost. Read Glenn Greenwald’s blog – which constantly points out the deep and serious faults in our media-political processes. Obama himself made a number of these arguments. Virtually every intellectual reformist has a “theory of what’s wrong” – and what none of them seem to disagree with is that something is wrong.

While in other times, reformers may have focused more on accomplishing something regarding important issues – temperance, Wall Street greed, environmental issues, discrimination – today, the central problem facing reformers is how to reform the system itself. This is the essence of the reform movement today – from Obama to Gore, Lessig to Yglesias, Klein to van Heuvel.

Reformers have presented compelling critiques of how the media presents issues; of how Congress deals with issues; of how long-term problems such as an increasing number of uninsured, spiraling health care costs, climate change, copyright expansion, and many others are ignored or marginalized because any attempt to address these issues involves significant obstacles and risks in the present for an uncertain future benefit. One of the key beliefs that makes reformers reformers today is their understanding that America’s political system is broken and that our traditional democratic institutions just aren’t up to the job of managing serious and difficult areas and making rational, long-term decisions when the payoff only comes after policy-makers are out of office.

This idea was the basis of my post yesterday discussing Obama’s focus on outsourcing authority to independent, technocratic institutions as a way of getting around our broken media-political system.

Continue reading “What Do Matt Yglesias, Ezra Klein, and Che Guevera Have in Common?”

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Barack Obama Health care Politics The Opinionsphere

Health Care Reform: Choice and Security

[digg-reddit-me]There’s been a lot of commentary and puzzlement in the opinionsphere about exactly how Obama is trying to sell his health care reform. Part of the problem is that our system is messy – and Obama does not feel it is feasible to try to start anew. So, instead, Obama is seeking to accomplish two goals with his reform: to “bend the curve” of overall spending on health care; and to provide some form of health insurance to those Americans without it. The problem is that each of these problems seem to be inherent parts of our status quo – as the health insurance industry has sought to drive down medical costs not by incentivizing cheaper effective treatments as in most industries, but by purging the sick from its coverage. Ezra Klein describes this business model most vividly:

Private insurance is a bit like a fire department that turns a profit by letting buildings burn down.

But, as medical professionals swear an oath to provide aid to those who need it, hospital emergency rooms and the government then are forced to pick up the slack. Thus, the health insurance model does not reduce the cost of health care but merely pushes these costs onto the rest of us. This is at least part of the reason America pays about $6,500 more for health care per person – as David Leonhardt writes:

We may not be aware of this stealth $6,500 health care tax, but if you take a moment to think, it makes sense. Over the last 20 years, health costs have soared, and incomes have grown painfully slowly. The two trends are directly connected: employers had to spend more money on benefits, leaving less for raises.

In exchange for the $6,500 tax, we receive many things. We get cutting-edge research and heroic surgeries. But we also get fabulous amounts of waste — bureaucratic and medical.

One thing we don’t get is better health than other rich countries…

This isn’t the only thing causing health care costs to rise so quickly – but it is the most obviously flawed compenent of our system and one of the drivers of the escalating costs and declining level of care. And it is very unclear what benefits – if any – our health insurance model provides. It is an industry which seems designed purely to create profits for a select few and disburse costs to the population at large.

Obama has done rather well in making this case – in attacking the status quo. But the question is: What is he offering? Matt Yglesias suggested, “Health care security” and I think that’s about right. Obama expressed the same idea:

Reform is about every American who has ever feared that they may lose their coverage…

At the same time, as Ezra Klein points out, most people are currently satisfied with their health care – and want more choices rather than less. Klein suggests:

The answer, put simply, is that you don’t institute rapid change. You don’t take what people have. But you give them the option to trade up to something better. As the theory goes, if the current system really is so inefficient, and your alternative really is so much better, then the lure of lower costs and better quality will persuade Americans to switch to the new system of their own accord.

The policies to address these issues are there – in some form in the plans being discussed. The measures that deal with these should be strengthened. And the positive case for health care reform should be simple, always repeated the words choice and security:

Health Care Reform: Delivering Security and Choice to the Middle Class

[Image by dmason licensed under Creative Commons.]

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Barack Obama Health care Politics The Opinionsphere

A Leap of Faith on Health Care

[digg-reddit-me]Last week, Matt Yglesias explained how the relationship between Congress, the media, and the public doesn’t often lead to positive policy results. His these is that a policy idea do not become popular and then receive bipartisan support and those presidents who support such ideas then succeed; instead, the observing affects the observed: if an idea is promoted by the president at the head of one party and is supported by at least some of his opposition party then the media conveys this in such a way that the idea becomes popular; if instead his opponents remain solidly opposed, the idea is seen as overreach. It was this insight that allowed Bill Clinton to bounce back after his defeat on health care in 1993/1994. The plan was solid enough – but failed, among other reasons, because the Republicans solidly opposed it and were able to peel off a few Democrats. The public thus assumed that the health care plan was a bad thing, that it was a result of Clinton’s liberal overreach. Clinton, to his credit learned from this defeat and subsequently exploited this dynamic by consistently peeling off a few Republicans for the rest of his initiatives – or sometimes siding with them more substantially – and thus accomplished things as he needed to in order to save his presidency. The problem is that Clinton’s approach often hurt the Democratic party – and resulted in many small initiatives at a time when there were festering problems that needed to be dealt with.

Obama has tried to be the un-Clinton on this and other issues. Clinton was often seen to be insincere in reaching out to the Republicans – but he helped the class of 1994 pass a significant part of their agenda. Obama has taken pains to appear sincere, but has been more interested in ideas of his own – including incorporating Republican ideas into his proposals. While Bill Clinton had started out happy with partisan victories, but then gradually came to see how the above dynamic could be used to protect himself, and became a proponent of bipartisanship, Obama started out trying to reach out to Republicans, but has become disillusioned with bipartisanship as he saw how the necessity of it gave inordinate power to a few Republicans to derail his agenda.

All of this creates a situation which Jonathan Chait over at The New Republic‘s Plank describes:

Democrats simply have to accept that health care reform is going to be polling badly when they vote on it. There’s no mechanism in the current media configuration that would allow them to convey the details of the plan in a positive way without getting overrun by negative process stories. It’s just not possible. What they have to focus on is which alternative is likely to make them better off: reform passing or reform failing. It’s an easy call, which is why I think reform will pass.

But it’s a bit depressing that the actual merit of a policy has little to nothing to do with whether or not it will pass. I agree with Chait that health care reform will pass – and it will be substantial – because the Democrats know they must just take that leap of faith and trust the president (or whoever the architect of this health care bill ends up being). It’s an easy choice between whether each representative wants to survive together, or hang separately.

[Image by ClickFlashPhotos licensed under Creative Commons.]

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Barack Obama Criticism Health care Politics The Opinionsphere

The Federal Reserve, Henry Gates, Popular Policies, Health Care, Krugman on Cap and Trade, and High Times

1. Down with the Fed! William Greider suggests we “dismantle the temple” that is the Federal Reserve in a piece this week. Greider is not only one of my favorite authors and one of the best writers on economics, he is also one of the foremost experts on the Federal Reserve. They key problem for Greider is that the Federal Reserve is an essentially anti-democratic institution:

The Federal Reserve is the black hole of our democracy – the crucial contradiction that keeps the people and their representatives from having any voice in these most important public policies.

Ezra Klein gives the piece a symapthetic audience, but then explains his reservations:

[F]or a period of time, Ben Bernanke ran our economy under a monetarist’s version of martial law. And the really problematic thing is that it probably worked. It may be all that saved us. You could argue that in the absence of the Federal Reserve, Congress would have been a whole lot more aggressive and responsible because Bernanke wouldn’t have been there to backstop them. But would you really want to bet the U.S. economy on it?

2. Sanity on the Henry Gates Controversy. Jacob Sullum in Reason‘s Hit ‘n’ Run blog gives what I think to be the essential take-away from the Gates fiasco:

[E]ven if we accept the facts as presented by Crowley, it’s clear he abused his authority, whether or not the color of Gates’ skin had anything to do with it.

Let’s say Gates did initially refuse to show his ID (an unsurprising response from an innocent man confronted by police in his own home). Let’s say he immediately accused Crowley of racism, raised his voice, and behaved in a “tumultuous” fashion. Let’s say he overreacted. So what? By Crowley’s own account, he arrested Gates for dissing him.

3. The Appearance of Bipartisanship Creates Popularity. Matt Yglesias has an interesting piece exploring the difference between how the media treats the relationship between public opinon, Congress, and policy issues and how that relationship actually works.

4. Imitation is the Sincerest Form of Flattery. Ezra Klein points out that one passage from Obama’s speech Wednesday night seemed to be taking arguments directly from articles by Steven Pearlstein and David Leonhardt this week that got a lot of traction in the blogosphere. Both columns are worth reading even independent of their apparent influence on the Obama administration’s tactics.

5. Krugman on Cap and Trade Speculation. Paul Krugman takes on doubters encouraged by Matt Taibbi’s piece describing cap-and-trade as a giant scheme:

The solution to climate change must rely to an important extent on market mechanisms — it’s too complex an issue to deal with using command-and-control. That means accepting that some people will make money out of trading — and that yes, sometimes trading will go bad. So? We’ve got a planet at stake; it’s crazy to cut off our future to spite Goldman Sachs’s face.

6. A Laid-back Beat. Lastly, I came across this song in an episode of the British series Skins this week:

[Photo by me.]

Categories
Barack Obama Economics Health care Politics

The Lesson of 1993/1994

[digg-reddit-me]Like a lingering odor, the failure of Hillarycare in 1993 is hanging over this perilous moment in Obama’s presidency. It’s true that Clinton’s health care plan never got this far legislatively.  By presenting a complicated plan to Congress and trying to bully it through, the Clinton administration made a huge tactical blunder. But it is clear that both sides sense that this is the moment when health care reform could be derailed. While the Democrats and Obama have long been planning on pushing through health care, what is going on now is pure political blood sport. This is a zero sum game. This is a Democratic attempt to prove that they can accomplish something that is popular and helps the middle class and which they have been trying for sixty years with only moderate success to enact. This is the Republican attempt to protect the status quo and to slingshot their way back to power as they did in 1994.

Bill Kristol has said that this is the week to stop health care reform – to not worry about being obstructionist or trying to appear constructive:

There will be a tendency to want to let the Democrats’ plans sink of their own weight, to emphasize that the critics have been pushing sound reform ideas all along and suggest it’s not too late for a bipartisan compromise over the next couple of weeks or months.

My advice, for what it’s worth: Resist the temptation. This is no time to pull punches. Go for the kill.

Beneath the veneer of policy disagreement that Kristol is using, it’s clear he is advocating pure obstructionism. He senses opportunity. Which is why he and many other Republicans are now all repeating the same talking points: Obama’s health care reform is an “experiment” with your health; it will ration health care; you will lose the insurance you have now; the government will impose itself between you and your doctor; socialism! These rather familiar refrains are being thrown about for one purpose – and it has little to do with health care.

As Senator Jim DeMint rather infamously declared in a secret call to anti-reform advocates:

If we’re able to stop Obama on this it will be his Waterloo. It will break him.

Newt Gingrich echoed this point:

This could be the bill that drags his whole presidency down and they look back on it and suddenly the whole thing is unraveled.

And the Democrats seem to agree – as the former Organizing for America sent out DeMint’s statements to rally supporters – and Mark Kleiman, a Democratic blogger said, “This bill is make or break for the Democratic Party.”

The Republicans are trying to break the Obama presidency – as they did Clinton’s. Clinton came back, but he never had the same political support.

Meanwhile, moderates play an interesting role in this political blood sport. They decry both sides for being mean – and suggest everyone get along. They talk about bipartisanship, suggest the Democrats move slowly, and they feel queasy at the prospect that the Democrats – by actually governing and doing what they promised they would do – might be overreaching. Matt Yglesias ably responded to this point:

It’s not as if what happened in 1994 was the congress passed Bill Clinton’s big health reform package, then the public didn’t like it, then in revulsion they turned against Democrats. Nor did congress pass the proposed BTU tax, then the public didn’t like it, and then in revulsion they turned against Democrats. The noteworthy thing about the first two years of the Clinton administration was the lack of ambitious progressive programs put in place. And you could say the same about Jimmy Carter. Whatever it is people reacted against in 1978, 1980, and 1994 it wasn’t actually existing left-wing governance.

Ezra Klein – on the same theme – explained the lesson one of the key architect’s of Obama’s strategy learned from 1993:

Emanuel has carried that lesson with him into the Obama White House. “The only thing that’s not negotiable is success,” he likes to say. The worst outcome for the party — in part because it’s the worst outcome for its marginal members – is defeat. Voters punish defeat.

If the Democrats succeed – as Bill Kristol explained in 1993:

It will revive the reputation of the party that spends and regulates, the Democrats, as the generous protector of middle-class interests. And it will at the same time strike a punishing blow against Republican claims to defend the middle-class by restraining the growth of government.

Despite this moment of peril, Obama’s strategy to get health care through is still intact. His administration has learned the lessons of 1993- 1994 well – perhaps too well.

But make no mistake as you see the charges thrown about by both sides in these next few weeks. This battle is no longer about policy for either the White House or the Republican Party. (Though the right policies will be essential to its long-term success.) Right now this is political blood sport – it is about whether or not the Obama administration will be broken by obstructionist elements. The short-term success of the administration will be determined by whether or not they succeed in the next few weeks to pass something substantial; their long-term success will depend on the policies they are able to include.

[Image not subject to copyright.]

Categories
Economics Political Philosophy The Opinionsphere

The Success of Goldman Sachs as a Repudiation of the Free Market

[digg-reddit-me]David Rothkopf – commenting on Goldman Sachs – sees their success as a repudiation of the free market – and I tend to agree with him:

I’m a dyed-in-the-wool capitalist. I love free markets. I hope a free market marries one of my daughters some day. But if some people have too many advantages and others simply can never catch up, the markets aren’t free, regardless of law or intent. Even if the advantages are in part derived from talent and hard work, fairness can remain an issue if other components of the success are linked to access, influence, history and other intangibles. [my emphasis]

From this insight comes the inevitable conclusion that – contrary to the doctrine of the right-wing – the government is not the antithesis of the free market, but rather plays an essential role in creating and maintaining it.

Goldman Sachs – with their obscene profits so soon after needing public assistance – demonstrate that our system has become less free and more feudal. As I wrote several weeks ago:

[T]he free market is effective because it prevents any small set of individuals from monopolizing decision-making. Especially in the world today with so much information available and events moving so quickly, the “right” business choices to make aren’t always clear. A free market – by allowing each business to make its own choice – prevents decision-making from falling victim to individual follies. But our current economic system – with it’s enormous corporations – ends up recreating the feudal system in which power is not centered in a single place, but in a handful of powerful “princes.” While these “princes” push for free market reforms, it is not in their interest to actually achieve this ideal free market – as Yglesias points out:

As a market approaches textbook conditions—perfect competition, perfect information, etc.—real profits trend toward zero. You make your money by ensuring that textbook conditions don’t apply; that there are huge barriers to entry, massive problems with inattention, monopolistic corners to exploit, etc.

George Will himself has pointed out that those “reforms” that are passed tend to be of a specific sort, following what Will calls, “the supreme law of the land…the principle of concentrated benefits and dispersed costs.” What free market supporters rarely seem to admit is that the free market exists not in spite of the government, but because of it. And today, our market is far from free because the government has failed to protect it – and has instead allowed the worst characteristics of capitalism (exploitation of labor; externalizing as much cost to society as possible, for eg. pollution) with the worst characteristics of socialism (concentration of power and limitation of competition) to create a kind of modern feudal society. In  this feudal society, freedom is enjoyed by the “princes” of finance and industry while the creative ferment of a real free market is formally protected but effectively quashed.

David Rothkopf expresses the same thing with different terminology:

These guys [at Goldman Sachs] operate as ultra-citizens in our society, virtually able to tell the government to heel and fetch in ways the rest of us can only fantasize about.

Warren Buffett seems to agree – as he claimed that America is moving from an aspiring “Ownership Society” to a “Sharecropper’s Society” – with its suggestions of a feudal structure. Of course, Buffet now owns a significant portion of the very Goldman Sachs that epitomizes this trend.

Goldman Sachs – along with other major corporate powers – rise by exploiting inefficiencies in the market – and eventually must try to create inefficiencies in the market in order to maintain their profitability (which is the hyperbolized point of Matt Taibbi’s recent piece). This contradicts those who see the market as supremely efficient – as Warren Buffet admitted, he would “be a bum on the street with a tin cup if the markets were always efficient.”

Goldman Sachs proves – with its successes – that our system is not a truly free market – but a more feudal one – in which those with sufficient money can secure power and tilt the system to their advantage.

[Image by saebryo licensed under Creative Commons.]