Robert Kuttner on Keynes’ Ghost

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This is a guest note by Robert Kuttner, co-founder and co-editor of The American Prospect magazine. Kuttner is also a Distinguished Senior Fellow at the think tank Demos. This piece originally appeared at “Tapped,” the blog of The American Prospect.
John-Maynard-Keynes.jpgKeynes’ Ghost
I’m blogging from Bretton Woods, NH, site of the 1944 conference that reconstructed the rules for the global financial, monetary and trading system and the postwar recovery. This weekend, the world’s leading critics of the current economic mess have gathered here to discuss measures that the world’s governments should be pursuing, but lack the nerve. They are not optimistic.
The conference is being sponsored by INET, the Institute for New Economic Thinking created with a $100 million grant from George Soros. The Hew Hampshire tea party got wind of the event, and spun a conspiracy defining the meeting as a Soros coven to crash the dollar. Along the road leading to the dowager Mt. Washington Hotel were hand lettered roadside signs, “Soros Go Home,” and Soros Is Evil. At the gates of the hotel property, a polite state trooper stopped your car and asked for ID.
Rob Johnson, who directs INET, opened the conference with one of his trademark videos, showing the Japanese tsunami, with a rock track behind it (The Doors’ “Shelter from the Storm”). “That’s our music,” observed Leif Pagrotsky, a Swedish central banker and former culture minister, and a very hip Social Democrat.” It was an improbable genre for an international financial conference, but an all too apt metaphor.
The consensus so far: there is no shelter from the storm. Soros himself opened, with a very pessimistic assessment of problems unsolved – not just unsolved, but delayed while deeper problems fester. After the crisis, said Soros, “The authorities intervened, and put the system on artificial life support. They placed the private credit with public credit of the state. Now markets are functioning, but you are still left with the excesses and the imbalances.”
If the state of American financial reform is unfinished and courting the next crisis, the view from Europe is even worse. Europe is bifurcating into chronic creditors and chronic debtors, private banks are dictating whose belts are to be tightened, and it all adds up to a collective drag on the recovery–the polar opposite of what Keynes preached in this very hotel ballroom.
Larry Summers, now back at Harvard, was the after-dinner entertainment, interviewed by the prodigious Martin Wolf of the Financial Times, the world’s most respected financial journalist.
Summers was terrific, acknowledging that the stimulus of February 2009 was too small, that the idea of deflating our way to recovery is insane, that de-regulation had been excessive, and that much of the economics profession missed the developing crisis because its infatuation with self-correcting markets.
If only this man had been Obama’s chief economic adviser!
It reminded me a bit of Eisenhower’s farewell address, warning of a military-industrial complex, or Citizen Jimmy Carter’s sublime post-presidency. Why do these people find their consciences and souls after they give up power?
This morning’s opening session is a fine discussion of the problem of the imbalance between China and the U.S.
The echo of the original Bretton Woods conference is sublime, since Keynes’ idea was to to put pressure on creditor nations to expand and lend rather than on debtor nations to contract. This is the enduring economic conflict, Keynes’ authoritative biographer Robert Skidelsly is saying, “Who adjusts, debtors or creditors?”
In 1944, Keynes failed to persuade the Americas, then at the apex of their power, to turn over their finances over to a new international order. Nobody here is optimistic that the Chinese, the new surplus power, will allow anyone but the Beijing government to decide China’s monetary policy. The original Bretton Woods worked anyway, for a quarter century, because of the temporary supremacy of the mighty dollar.
In the end, it’s all about power. And despite the greatest crisis of financial capitalism in nearly a century, the banks have more power than ever.
Thomas Carlyle called economics the dismal science because things tended to end badly. A fine mess.
— Robert Kuttner

Comments

27 comments on “Robert Kuttner on Keynes’ Ghost

  1. erichwwk says:

    Also, it terms of “chief economic adviser”, we might consider James Galbraith. Here is a excerpt from a Q&A/ Ezra Klein:
    Ezra Klein:
    You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.
    James Galbraith:
    No, I think the danger is zero. It’s not overstated. It’s completely misstated.
    IMO, one of the clearest explanations of “what to do” is contained in James Galbraith’s book:
    The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too
    with four kudos on the back cover: Joe Stiglitz, Robert Reich, NAF’s MichaelLind, and supply sider Bruce Barlett. It is here:
    http://amzn.to/e33Phe
    Steve has had some great links and guest posts by James Galbraith in the past. Bravo for that!

    Reply

  2. erichwwk says:

    Linda:
    While Kuttner may have moved a bit to the right, I interpret his statement
    “If only this man had been Obama’s chief economic adviser!”
    differently (and hope it is not wishful thinking).
    I hope Kuttner was stating that there are two versions of Summers, one that skimmed money from the Russian privatization and funneled that money to his friends, the Larry Summers that was responsible for the financial meltdown- the “before” Summers – Summers “A”, and the “reborn” Summers “B”, that is trying to distance himself from his own past- Summers “A”, and now claim that obtaining personal wealth by manipulating financial instruments of entitlement, and austerity in general, are not the correct policies.
    But yes, I remain vigilant and skeptical to the extent to which Summers is, in fact reborn. But better to focus on “what to do”, rather than on retribution.
    Along that line, a presenter at the Counter COIN convergence I just attended sent me a RAND study of GWOT from the UK perspective, where the focus is on patience, enduring violence, rather than retribution. In the economics sphere the focus should be similar, getting people into productive activities, rather than getting our pound of flesh. (accessed by clicking on my user ID above).
    In that sense, USans have a lot to learn by applying British attitudes re terrorism to their own economic policies.

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  3. DakotabornKansan says:

    Atomic Deserts

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  4. citizen spot says:

    I wonder if “questions” has ever thought of getting a twitter account or perhaps their own blog. As for the comment “If only this man had been Obama’s chief economic adviser!”, I believe that was meant as snark.

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  5. DakotabornKansan says:

    Atomic Snowflakes

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  6. mike claussen says:

    When does “postedbyquestions” have time to be a doer when he spends so much time being verbally frenetic. Don’t get me wrong, I think his/hers ramblings are wonderful and actually worth more than just a cursory glance. Maybe even worth a semester if I wasn’t so busy actually doing.

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  7. Dan Kervick says:

    Linda, Kuttner was *joking*.
    Summers *was* Obama’s chief economics adviser. That’s the joke.

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  8. Linda says:

    Unfortunately since Clinton moved to the right in his second term, even “progressive liberals” like Kuttner have moved right also–or so it seems if Larry Summers is his choice. I think Stiglitz would be a better choice.
    http://nymag.com/news/business/wallstreet/peter-orszag-2011-4/ This article in New York magazine is partly about what Peter Orszag is doing now at Citi but also has a very nice graphic on the connections to Wall Street of Democrats in Obama Administration. The article’s title is “Revolver” as in revolving door.

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  9. questions says:

    Draft mode, Draft mode, Draft mode, Daft mode, or Why I am like a teenager with a new driver’s license and you should stay off the road if you want to survive……
    There are several bits and pieces of economic “things” I’m tossing around and I fear I will be more incoherent than usual. Please note that you read at your own risk! And that I am totally self-aware for this post only.
    *****
    During the Summers/Wolf video interview at INET, Yves Smith asked what for me is THE question, and Summers had THE answer. So I am suffering from some cognitive dislocation and have a major intellectual wound!
    The question is, if we’re going to dump ever so much money into our tottering financials, and we can’t afford to live without them, and they know it and we know it and we likely have moral hazard all over the place, why not treat the financials as utilities, regulate them like crazy, and, I guess, FORCE them to serve the public good.
    This idea seems super compelling to me, and though it’s not original to my thinking (I’ve referred to someone, David Schweikert, who has published on this topic), it is near and dear to my heart.
    Large pools of capital are different from other things in the world and maybe they should be treated differently. Put capital to public service and we all do better.
    Summers’s response seems to be that first, it’s been tried and doesn’t work so well, and second, implicitly I think, that large pools of capital may have an internal logic that defies their controllers. So we don’t get the public good out of private control of capital AND we don’t get the public good out of public control of large pools of capital either.
    Summers went on to note that there is room for some kind of publicly directed uses of capital with the World Bank, some other funds, and possibly with some kind of US infrastructure bank. But for the most part, it’s not going to matter.
    The controller doesn’t matter. And I find this fascinating to think through, as I sometimes already have agreed with him.
    Part II
    The Tea Party, the Ryanization of the known universe, the cut-the-budget-regardless people, the contractionary expansionists (!!) seem to think the following:
    A unit of economic activity (an “economicon”) has its moral worth not in the activity itself, but in the controller of the activity. The controller matters.
    Any economicon performed by the government is always already suspect, immoral, unfree, and terrible, horrible, no good, very bad.
    The controller matters. For the right. And for Yves Smith. (hmmmmm) They just want two different controllers of pools of capital.
    Any economicon controlled by “private” interests is always already moral according to the contractionary expansionists (love that phrase, thanks Summers/DeLong/whoever).
    Any shift of economicons from the government to private industry is always moral according to the CE people.
    Any denuding of the government’s ability to create econmomicons is always already moral and proper for the CE people.
    If the entire economy shrinks during a contraction, that is fine because the moral order is being restored, and the freedom to enjoy unemployment and service lacks and the like is preferable to the near-slave-like servitude of HAVING to pay taxes to cover the cost of publicly-generated economicons.
    The doer matters, the deed pales, the doer is the bearer of the moral worth, the deed, no matter how universally loved or loathed, has no moral content at all.
    *****
    Hope this makes sense so far.
    *****
    Now we get to my PAIN.
    I have a strong Kantian sensibility that says that the doer matters, the intentions of the doer ARE the moral content of the action, and the world/the result pales in comparison.
    As Kant notes in the Groundwork, nothing is good in or out of the world save a good will….the deed of a killer is far worse when couple with pre-meditated cold calculation (intention matters) (I’m paraphrasing.) Any deed can be anything, it’s the will that determines the moral status. We act on this point in law courts, with mitigating circumstances and we appreciate the difference between accidental deaths and deliberate deaths. Death is the same, intent changes the moral worth.
    So we do have some sense, all of us, that the doer matters.
    That means that we share something I’d rather not with the contractionary expansionist crowd.
    If private capital did much of what public capital should, I would be less happy because I want the doer to matter as much as I see that the deed matters. I want the intent to matter, and public intent is “better” than private intent. Not just because of outcomes.
    And then Larry Summers has the nerve (!!) to come along and spoil my whole way of thinking by noting that, in fact, public capital might actually not really work, that public intent could be as corrupt as private intent, that capital may simply have its own internal structural logic that simply renders the doer immaterial.
    Now, this point is great to use against the contractionary expansionists– it means that government spending is not immoral, and is no more or less (in)effective than private spending.
    But it also renders Yves Smith’s point (and mine) as, ummm, pointless.
    And it suggests that in fact control of capital is not at all the issue.
    *****
    If we don’t any longer worry about WHO controls capital, then we have to figure out some other issue to focus on — what do we do with capital, how does it get put to work by anyone at all, what kinds of dynamic balances can we set up, what kinds of countervailing forces….
    And suddenly, we’ve left the normative behind as THE topic. And we have to find some new normative hold that doesn’t appeal to the intent of the doers, the content of the doers, the doers at all.
    We have to focus on deeds, and perhaps we end up as utilitarians.
    I am not liking this! And I have some work to do to put all of this together into some vaguely more coherent thought.

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  10. rc says:

    Take a ‘medical holiday’ in Cuba!

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  11. PissedOffAmerican says:

    So the NRC tells us the Fukashima crisis is “static”, while Japan raises the crisis level to its highest possible rating, a “7”.
    Interesting, as all these comparably trivial topics get all the nattering, that the planet faces a crisis of unimaginable horror.
    With Obama administration propagandists placing fluffy little pieces of nonsense in our nation’s media, such as the recent L.A.Times article, (that Steve removed), that claimed un-named “Obama Administration experts” had determined that the Fukashima situation “would not worsen”, and the NRC making specious claims that are IMPOSSIBLE to make honestly because of the impossibility of examining the reactor cores at Fukashima, it has become obvious that there is a propaganda blitz on to downplay, dishonestly, the severity of this crisis. It was the NRC, weeks ago, that told us the reactors were “stable”, WHEN THERE WAS NO WAY TO KNOW THAT. And the EPA??? It simply raises the limits on what constitutes dangerous levels of exposure.
    Voila! What was dangerous a month ago, is now perfectly safe! Isn’t that special!
    This has the potential to become an epic and worldwide catastrophe. What are these posturing fops in DC doing to prepare for the possibility of this crisis deepening?
    What, you trust them to act competently?
    What is our “Fourth Estate” doing to keep us abreast of the FACTS as they become available??
    What, you trust them to tell you the truth???
    Pay attention people. Think about how you will protect yourselves and your loved ones if this crisis descends into its worst actual possibilities.
    One thing is for sure, your government, should you need them, will be a dollar short and more than a day late. And the agencies tasked to protect you are too busy protecting the industry to worry about us “regular folks” out here in Guttersville USA.

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  12. questions says:

    Oh wow. I thought I was done, but the author is a gift that keeps giving:
    “A more consumer-centered health-care system would not rely on a single form of financing for health-care purchases; it would make use of different sorts of financing for different elements of care

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  13. questions says:

    A late in the day new installment in my series on “the article” — the new model for medicine is LASIK!!!!!
    Now, how is Lasik just like, say, emergency bypass or cancer treatments that cost 40,000 per dose, or like maintenance therapy for organ transplants?
    Let me count the ways.
    They are all done by doctors.
    Ummm. That’s the only likeness I can find.
    Lasik doesn’t save lives, isn’t the least bit necessary, is more like getting ice cream for dessert than like getting the 1800-3000 calories people need to keep from losing weight.
    The competition for Lasik patients comes because it’s like factory work, because it’s completely discretionary and so you can set your prices and people either seek it out or don’t, because it’s easy to set supply and demand for frivolities using market mechanisms.
    Let’s try, I don’t know, trauma surgery!!!! That’s fun stuff!
    How many trauma units should a region have to help keep prices down and quality up?
    The answer? 1. There should be one trauma unit so that the doctors who staff it keep up their skills. If they don’t get enough patients, they get rusty at repairing all the little bits of us that were shmeared across the pavement or that blew out of us from the gunfire, or that fell off in the blender (dagnammit I hate when that happens.)
    So that kinda blows the article out of the water on the competition front.
    Indeed, I’d guess that bigger is often better in medicine as you really want doctors who have seen it all to see you. There are enough zebras making sounds out there that you’d actually like a zebra-finder when a zebra is what ails ye.
    This article seems to me to be a very sorry piece of opining and my guess it it’ll convince some people that we need the kinds of change in medicine that others think we need in education.
    It’s all wide of the mark.
    I do not know why there’s such worship of the business model, especially given what the business model gives us when it’s let loose on the world.
    ********
    And now for a quick installment of bad predictions!!! I have a long track record of getting things totally wrong and I wish to add to it.
    Obama’s budget message will have a Koo-ian curve. There will be some mild short term “stimulus-lite” tethered to some austerity in about a year and a half or so. The goal will be two-fold — Kooian realization that the deleveraging will continue and we need some spending, and Ryanian realization that we “need” austerity, and Obmamian realization that we want a peak at the moment in the coming year when people basically make up their minds about whom to vote for, and any double dip we’d like to delay til after the 2012 elections.
    Obama likes to do two things at once, in complicated and contradictory fashion. Being there and not being there, stimulating and austerizing at the same time, being a dem and a ‘pub at the same time. It irritates everyone, but it gets at that anterior cingulate complexity center in the brain!
    Meanwhile, amygdala-Americans will fight anything that doesn’t cut the budget, so that will be there too.
    Cutting and not cutting. It’ll be in his speech somehow. Maybe he’ll call it “smart cuts” or “haut coiffure” or “pragmatic budgeting.”
    Remember, he’s got a national campaign, Wisconsin is 50/50 on the supreme court vote, even after all the activism, people say they want programs but they don’t vote the way they talk because of intensity issues, people think the dems did well in the non-shutdown deal, and Obama gains bits and pieces of respect from the thin slice of us who are swing voters/independents, and that’s what he needs. The amygdala-Americans will never vote for him, so he can spend a bit, but the independents probably have an only mildly undersized anterior cingulate, and they have some activity in the amygdala. They want problems solved, they want competence (or the veneer of same) and Obama will look totes competent Wed. pm.
    Is it possible to get Paul Ryan in the same room as Koo and Summers and Wolf? (The videos are a wonderful resource! Thanks to whoever puts them online for viewing, and to those who put easy to find links up.)

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  14. DakotabornKansan says:

    The Fight That Just Won

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  15. DakotabornKansan says:

    “If the people cannot trust their government to do the job for which it exists – to protect them and to promote their common welfare – all else is lost.” – Barack Obama
    The New York Times today reports that the one area of the budget agreement that everyone thought President Barack Hoover Obama would never allow them to touch, his new health care law, is also a part of the budget cut agreement.
    Two provisions of the new health care law are to be cut.
    More than two billion dollars set aside for the creation of private nonprofit health insurance cooperatives will be cut.
    Also being eliminated is a program that would have allowed hundreds of thousands of lower-income workers to opt out of employer-sponsored health plans and use the employer

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  16. DakotabornKansan says:

    Honest Economic Thinking Is More Important Than “New” Economic Thinking
    Dean Baker comments on Robert Kuttner

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  17. DonS says:

    Economic news:
    On the faux budgetary proposal put out by Paul Ryan, via TPM, even “Conservative Economists Criticize ‘Off The Deep End’ Republican Budget”.
    We are almost guaranteed Obama will hail Ryan’s proposal as a serious opening of a dialogue in which he will negotiate [with himself] most of the crucial fallacies Ryan arrogantly advances. Hearing David Plouffe being interviewed this morning, his tone was quite respectful, while disputing in a seriously respectful manner, seeming minor nuanced disagreements with Ryan’s Randian box of hand grenades.
    http://tpmdc.talkingpointsmemo.com/2011/04/conservative-economists-criticize-off-the-deep-end-republican-budget.php?ref=fpa
    Can Obama be far behind? Personally, the next looming confrontation (read ‘opportunity to cave’) by Obama over the debt ceiling should prove additional examples of the betrayal of the middle class that Obama is up to on his march towards some sort of scenario leading up to ’12. Everything, but everything, is about “winning the future” — pretty catchy huh?
    In psychological terms, Obama’s pathetic attempt to couch his sell outs in positive terms, as examples of bipartisan comity, amount to an attempt to REFRAME cowardice as leadership and statesmanship; to REFRAME the turd sandwich of Boehner and co as fillet mignon. “Reframe”, as a psychological technique is an attempt to take a apparently negative/disasterous situation and encourage the client (in the case the American people) to see it from another view point that is more positive. There is a point for it in couseling; it makes the client feel better while, obectively, the situation remains as potentially negative as ever. And that’s all well and good when the problem, and the consequences are primarily psychological in nature. With regard to the actual, material consequences of the turd sandwich Mr. Obama is trying to reframe as fillet mignon is concerned, it is a devious and sophmoric attempt to blatantly propagandize, and it dismisses the growing number of critics who say Obama is a fraud.
    How long can Obama continue to play this sell out game while claiming the high ground? that’s a question, of course. More important are the consequences for the nation of his make believe presidency.

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  18. Linda says:

    Kuttner illustrates very well why and how most of the liberal progressives don’t think very clearly when he writes referring to Larry Summers,
    “If only this man had been Obama’s chief economic adviser!”
    Larry Summers, you’ve got to be kidding!
    No, it should have been Joe Stiglitz–so that’s not even very good Monday morning quarterbacking about how and why the game was lost.

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  19. DakotabornKansan says:

    As Obama feeds Tea Party zombies, 400,000 newly unemployed workers celebrate budget agreement
    According to Dean Baker, more than 400,000 workers will lose their jobs because our Chief Mediator, Barack Hoover Obama, gave the Republicans two-thirds of the budget cuts they were demanding.
    Why does Barack Hoover Obama continue to feed Tea Party zombies?
    Scarecrow at Firedoglake says,
    http://my.firedoglake.com/scarecrow/2011/04/09/obama-led-demo-pods-rescue-tea-gop-zombies-keep-washington-monument-open/

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  20. questions says:

    Hilarious! In a section on how little competition there is in the medical field, the author notes:
    “Take the ongoing battle between large integrated hospitals and specialty clinics (for cardiac surgery, orthopedics, maternity, etc.). The economic threat posed by these facilities is well illustrated by a recent battle in Loma Linda, California. When a group of doctors proposed a 28-bed private specialty facility, the local hospitals protested to the city council that it was unnecessary, and launched a publicity campaign to try to block it; the council backed the facility anyway. So the nonprofit Loma Linda University Medical Center simply bought the new facility for $80 million in 2008. Traditional hospitals got Congress to include an 18-month moratorium on new specialty hospitals in the 2003 Medicare law, and a second six-month ban in 2005. ”
    So, a facility is built to be competitive with another facility. Ok. But then a bigger fish just buys up the smaller fish. So, what’s non-competitive here? That’s what all corporations do. They buy up or underprice competitors until there ain’t no competitors no mo’. And then they lobby Congress for monopoly powers. And they get their monopoly status.
    (Note that the ban, in both cases, was short lived and seems like it night not have had much effect anyway….)
    This process would make medicine seem to be far more standard a sector of the economy, far more normally-behaving than we’re led to believe.
    And, by the way, since when has been the case that building more facilities for medical care causes there to be LESS use of less cost rather than more? I thought there was a whole, “If you build it they will come” dynamic. Hmmmm.
    If medicine is the major cost/budget buster of the future, I would hope that our new economic thinking does a better job of trying to figure this all out.
    Besides, isn’t Medicare a fabulous economic stimulus on an on-going basis?

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  21. questions says:

    Will I n’er be done with this article:
    “As a result, strange distortions crop up constantly in health care. For example, although the population is rapidly aging, we have few geriatricians

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  22. questions says:

    More on THE THREAT that Paul Ryan will save us from:
    “Let

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  23. questions says:

    h/t Mark Thoma:
    http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/7617/
    A fascinating look at health care from: the son of a victim of a series of hospital-borne infections, a businessman, a democrat.
    And what he finds is curious. We spend huge amounts of money on medical care, and yet the incentive system we’ve set up completely removes the customer from the equation. So the rooms are ugly and unpleasant, the garbage gets taken out once a day and the cans are overflowing and are thus a germ pit, doctors refuse to wash their hands sufficiently frequently to avoid transmitting infectious agents, 100,000 people a year die from these infections.
    Somehow we’re supposed to change the incentive system. And somehow, medical spending –with seemingly a mind of its own — is crowding out all other kinds of spending. Gosh, the author wants to know just why we spend so much on a crappy health care system when in fact there are some other really amazing things we could spend money on instead.
    But then, the author sat in the hospital for 5 weeks watching his dad die, and he’s still mourning the loss, and his dad did go into the hospital for pneumonia at age 83, and still got 5 weeks of ICU care, and then he died. And the son mourns the loss of his dad.
    So why do we spend so much money and effort on a lousy system?
    It’s not an accident and it’s not an incentive issue. It’s because we all know that first we’ll spend 5 weeks or 5 years going back and forth to the hospital for our parents, and then for ourselves, and if we’re profoundly unfortunate, we’ll spend time there in between for our children and friends.
    The reason for the incentive system we have is that we value life saving beyond pretty much everything else. We fear death, we fear the wrong death, we all spend time at 3 am convinced we have cancer (oops, just a hive from the tofu!), or some tropical illness (oops, just a hive from the tofu), or some cognitive problem caused by a rare disease the NYT wrote up (oops, forgot to buy more tofu.)
    There may well be a range of better incentives we could set up to FORCE doctors to wash their hands, to FORCE people to talk all the day long about their deaths, to FORCE people to die sooner rather than later and to save the extra money for something fun like music lessons for the children who aren’t yet dead.
    But I get the feeling that the national concern about death is a potent force that the author of this piece perhaps doesn’t quite see. (I haven’t finished reading it yet.)
    Other countries have other cost levels for health care. And we could force a new cost system on ourselves — it’s what Paul Ryan wants. But when we cut back on the money we dump in, the first thing that’s gonna go is the author’s dad’s pneumonia treatment.
    It won’t be a new handwashing ritual’s getting instituted to save the author’s dad. It’ll be the hospital admission at all.
    We should think long and hard about how we want to limit our health care payments.
    Look around at the 80 year old set and say your goodbyes now. Because many/most/all of them will be denied anything more than the most basic care.
    Very few people have the many thousands of dollars it takes to prolong life, to push for research, to guarantee a long and happy life.
    Paul Ryan will likely win this war. Obama is switching parties to appease the independents and win re-election. I don’t have a handy count of how often this happens, but it seems pretty standard operating procedure at the presidential level. (Bush, Clinton, Nixon all did it. Probably other have as well. I’m no presidential historian, though.)
    So we’ll give our parents a few grand to buy “insurance” on the open market and that insurance will cover one trip to a doctor, one minor surgical procedure, and that’s about it.
    Ask your parents, if you still have, how many times they go to a doctor in a week, or a month. Ask yourself how much care you’d like them to have so you could spend another day/week/month with them. Ask what happens when they CLING to life and for that last gasp of hope, they sell the house, the furniture, cash in every investment, all to get one injection of the latest and greatest drug. If the drug works, they’re movin’ in with you!!!!!
    What we pay in medical care/Medicare, we save for inheritance, independent living, nursing home care, a whole economy.
    If we don’t pay it in Medicare, we will pay it in housing and caring for our own parents, in watching them die in our living rooms, in eating up any and all intergenerational transfers because, after all, it’s mom and dad, or the kid’s tuition. But for mom and dad, it’s life or death.
    So what decisions do we make individually, as opposed to our current social decision to keep mom and dad alive?
    Oh, and did I mention, it’s not just mom and dad, it’s all of us.
    We join society to protect our lives, to share risks, to keep people from stealing, to prevent all the game theory nastiness we’re capable of generating quite accidentally.
    And now Paul Ryan, Barack Obama, Congress, and some businessman/author dude in the Atlantic want us all to give up on the life part and the risk sharing part.
    We might as well just die now.
    **********************
    Take two:
    so we put less money in, what incentives do we set up — poorly trained health care workers? Adulterated medicine? Budget cuts that lead to even worse hygiene?
    We could get doctors who score lower on their medical boards, who go to cheaper schools, who have flunked a few classes, who don’t quite remember where body parts are…. That would save money!
    All the studies that deal with what other countries pay for medicine — do they include the social status and pay comparisons between, say, CEOs and MDs? Do they deal with the cost of med school across nations? Do they deal with the kinds of career choices available to really smart people? If medicine pays significantly less, that too is an incentive.
    There’s a lot to worry through here, and Paul Ryan has nobly opened the conversation….
    I’m preparing myself for an early, painful, death.
    O! Brave new world that has such creatures in’t!

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  24. erichwwk says:

    Wow. First James Galbraith and now Robert Kuttner! Who’s next – David Korten or Manfred Max-Neef?
    Is Steve secretly behind the creation and empowerment of the “dissident economists”? Kudos!
    Are we really remembering Adam Smith and John M.Keynes, and wealth creation as cooperation increasing productivity, rather than how best to “cook the books”?
    Is the pursuit of wealth through financial instruments fundamentally different from the fools errand of pursuing gold as the means to wealth?

    Reply

  25. sanitychecker says:

    >> If only this man had been Obama’s chief economic adviser!
    Am I missing the irony here? Summers was the director of the national economic council until a few months ago. Not exactly the dog walker. Or is it that Summers is such a shy, unassuming guy his ideas never got a hearing…
    Let’s also not forget that part of the reason we’re in this mess is… Larry Summers himself! Amazing this infinite ability to forgive the powerful for their fuckups.

    Reply

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