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"Hey, Democrats, Give Markets a Chance"

Updated: Apr 24, 2019

Given revealed preferences in recent years coming out of Congress, the Administrative Branch, and the Supreme Court, the even more intriguing admonition would seem to be "Hey, Republicans, Give Markets a Chance"



Ip(2019) contends that "Market-based mechanisms for health care, economic inequality and the environment have in many cases not even been given a chance" pointing in particular to the Left Isle, and especially how they are thinking about replacing what is largely a market based approach in the Affordable Care Act with medicare for all. Intriguingly, while this may or may not be accurate, one could also point to the Right Isle who rejected building carbon emissions trading markets, and also has done everything possible (with the exception of Senator McCain and a couple of others) to eliminate access to market based health care insurance for everyone. Some on the Right Isle cry "socialism" at their "colleagues" on the Left Isle (and, many on the Left and Right Isle could be colleagues, if everyone in both Isles acted with a bit of empathy), claiming those on the Right Isle are the only supporters of "capitalism." Are they? The Right Isle continues to reject, also fails, to give the Market a chance to resolve all manner of issues from health care to the environment. Especially important here: Is the Right Isle in favor of building Good Capitalism? The kind that Enlightenment thinkers like Adam Smith had in mind? The Left Isle points to a lot of Bad Capitalism (e.g. rampant Cronyism), and when the Left tries to fix it, their action is often branded as socialism. What is going on?


Back to Ip (2019): "States have made cap and trade work—California’s plan should cut greenhouse gas emissions 40% by 2030." Intriguingly, he does not mention this is a Left Isle state. He goes on: "Yet nationally, the last national cap-and-trade plan failed in Congress in 2010, and no carbon tax has made serious headway." Yes, this is true: cap-and-trade was proposed by the Left Isle and rejected by the Right Isle. There have also been conversations on the Left Isle about carbon tax pricing, as well, wherein a Market is, in effect, simulated to give efficiency in carbon use: Again, it is the Right Isle that is not seeing the possibilities of using a Market .


We now turn to his commentary on health care, and will qualify our comments with the reality that we have not been doing empirical studies of the health care situation and the markets. However, we can still use Metaeconomics to ask intriguing questions. So, with that caveat, we can go back looking further into Ip (2019), who claims: "Health care provides the most vivid example of a market-based mechanism never given a chance to thrive, largely due to Republican opposition." Yes, this is true: the Affordable Care Act depends upon the Market to provide health insurance. As he says, "President Obama sought to extend health insurance to everyone while preserving private insurance. He did so by requiring insurers to cover everyone, including those with pre-existing conditions. To keep premiums from going sky-high and choking off demand, insurers needed lots of healthy members to subsidize the sick. Thus, everyone was required to have insurance or pay a hefty penalty. ... Obamacare’s market mechanism was undermined from the get-go. The disastrous rollout of federal exchanges for buying insurance may have discouraged healthy customers from signing up. When Republicans took control of Congress they refused to fund “risk corridors” meant to defray insurers’ unexpected costs. ....The Supreme Court freed many states from expanding Medicaid, diverting more sick people to the exchanges. Under President Trump, subsidies to insurers were cut, healthy people were allowed to buy cheaper, bare-bones plans and the penalty for not having insurance was repealed.....All these factors push up costs and prompt insurers to withdraw. With less competition, premiums for those remaining rise."


So, it appears it is the Right Isle that is stopping all attempts to use the Market in health care. It seems the article really needs to say, "Hey, Republicans, Give Markets a Chance." Those who claim to favor capitalism don't want markets and those who are told they favor socialism, in turn, want markets? Again, what is going on? Metaeconomics can easily explain this... just stay with me a moment.


Ip(2019) attempts to argue the problem is on the Left Isle, revealed by recent events: "many Democrats want to ditch Obamacare as well, because it doesn’t intrude in the market enough. Many contenders for the party’s 2020 presidential nomination and a sizable share of their voters back “Medicare for all,” which would replace most private insurance with a single government-run plan....This is just one example of the party’s growing disenchantment with markets. True, most don’t go as far as Rep. Alexandria Ocasio-Cortez of New York, who has called capitalism 'irredeemable.' Yet many readily blame inequality, poverty, racial inequity and global warming on 'market fundamentalism,' 'market fetishism' and 'neoliberalism.'"


Metaeconomics would suggest this could just be a reaction by the Left Isle to the refusal by the Right Isle to use Markets, along with Government, seeing a need for balance in Market&Government, some mix generally working better than one or the other. This kind of overreaction is also represented on the Right Isle for wanting to trash "Obamacare" (really, the Affordable Care Act, which it has the potential to facilitate due to Market&Government jointly integrated), with the position completely ideological, as in an ego based self-interest only Market approach to everything... which has never worked very well, with no Government involvement... could somehow do better?


Also, due to the empirical reality about the role of progress in the Enlightenment we have experienced since the time of Adam Smith, perhaps the Left Isle is just trying to be progressive, like Adam Smith, and, pragmatically, do what works, which generally means good balance in Market&Government, like Smith taught us. So, we can suppose that some on the Left Isle, who favored and tried balance in the ACA, can now think Markets cannot play a role, as the Right Isle continues to reveal by their choices, so, try something else, like medicare for all? Seemingly both Right and Left Isle need to carefully study "Romney Care" in Massachusetts; it seems to be working just fine. Perhaps what works in that State could be spread to other states, and also tried?


Intriguingly, current medicare for those 65 and older is a Market&Government approach, already. Basic medical needs, especially any requiring hospital care, are provided by the Government, albeit the insured contributes part of the monthly premium ($100-200/month for typical Medicare participant). A private sector, Market provided, supplemental insurance plan is then purchased by this Medicare participant (typically adding another $200-300/month in cost). So, clearly a joint, integrated health insurance plan, represented in the Metaeconomics notion of Market&Government, is already working quite well in that part of the population. Naturally, we can always look at empirical reality and keep asking about, and keep tweaking, the balance.


The Affordable Care Act, ACA (derisively referred to as ObamaCare, and RomneyCare in Massachusetts), too, is an attempt at balance in Market&Government... with Government seeing and setting the limit, i.e. everyone is born with pre-existing conditions, so everyone needs to be in the insurance pool, so, require it. The Market in private insurance... with claims used to buy health services in the private supply Market, is then given the task to minimize cost, achieve efficiency. The Left Isle has been largely the driver and supporter of both Medicare and the ACA. So, again... hate to keep asking, but wanting you to stick with me here... what is going on?


Metaeconomics Framing would also point to the empirical possibility that terms like "irredeemable," "market fundamentalism", "market fetishism" and "neoliberalism" could all reflect a completely different concern than Ip(2019) is claiming. In particular, we are not currently experiencing the Good Capitalism that Enlightenment thinkers like Adam Smith had in mind: Rather, there is a lot of Bad Capitalism around, like in the Greed and Casino Capitalism that brought down the economy in 2008; the money market capitalism that just manipulates stock prices which helps Take wealth but does little to Make wealth; and, rampant Crony Capitalism (like occurred in the 2008 bank bailouts, and is ongoing right now in the pharmaceutical industry), involving too much self-interest expressed in both the Market and the Government, the one Taking wealth from the consumer and the other Taking wealth from the taxpayer. Frustrated Left Isle representatives can also throw around "ism" words to make a point. So, again... and again... what is really going on?


This is all easily understood through a Metaeconomics lens. Recall that Metaeconomics sees the role of giving context to the ego based expression of self-interest in the Market, with that context given by the empathy based other-interest which is reflected in a Good Government, defined by the extent that Government is representing the larger Moral (it also must be Good!) Community that is in the background Tempering the Market. The mystery of why the Right Isle has been unwilling to give Markets a chance, and, the Left Isle was supporting Markets and now also seems to not want to give them a chance, is easily explained with the notion of the shared other-interest.


For the carbon market it goes like this: A cap and trade Market can only arise if a Government first sets the caps, which is to say, it recognizes the inherent scarcity of something. Markets allocate scarce resources, period. So, what is scarce in the case of carbon? Well, it is simply the scarcity which is defined by 1st Law thermodynamic reality, which says the atmosphere of this Spaceship Earth can only hold and otherwise process so much greenhouse gas, with carbon releases from burning carbon fuels the largest contributor. So, Government with the help of our scientists, based on the best empirical, science based data and information we can muster, needs to find out the level of that capacity, and, then, set the cap. It is in our shared other-interest to set such a cap, in order to stop the path toward monster storms, severe swings in heat and cold, wet and dry, and ecosystem destruction: Our lives as Travelers on this Spaceship Earth flying around the Sun every 365 1/4 days depends upon it.


Once the Cap is set, then the Market can find the most efficient, least costly way to stay within the Cap: We are able to make a lot of wealth while seeking ego based self-interest in making money using carbon, which is now made possible by our empathy based other(shared with everyone)-interest in sustaining the Spaceship Earth system. Cap&Trade is like Government&Market: Metaeconomics would prefer to label it as Trade&Cap, Market&Government... with the self-interest in the Trade (Market Forum) more fundamental, more important... individual liberty and freedom more important... but recognizing that the ego based self-interest in the Trade needs to be tempered and conditioned, made possible in this case by setting the Cap, generally best done through some process (Other Forums) of the Government. So, we work toward a low(er)-carbon, more sustainable Spaceship Earth System through Trade&Cap, MarketForum&OtherForum, Market&Government, integrated and fine tuned, jointly by empathy based, collegial efforts on the Right&Left-Isle.


So, the only substantive, logical reason anyone on either Right or Left Isle could possibly reject cap and trade is if they do not believe in 1st Law thermodynamics. Intriguingly, climate change deniers, based largely on wacko science, and heavily funded by oil, coal and gas industry money with a vested interest in burning as much as carbon as fast as possible, have been effective in causing too many to deny reality. Metaeconomics does not care: What it does care about, though, is clarifying that it is the shared other-interest claiming there are no limits of the atmosphere to handle greenhouse gases that leads to denying self-interest being expressed in cap and trade markets. The Left Isle implicitly believes in 1st Law thermodynamics, and sees the need for caps, and, as a result, favors expression of self-interest, wealth making efforts in Markets. The Right Isle might also give the Market a chance if they could start to believe in 1st Law, conservation of mass and energy law, thermodynamics? Intriguingly, Einstein believed that, along with the 2nd Law on entropy, these were the only two immutable natural laws that would never be overturned. So, Metaeconomics, which always favors empirical reality, can only say: Go figure.


So, what about health care? What is scarce? Could a Market&Government approach (as noted, the ACA is already such an approach) work in health care, too, just like it could in resolving many environmental issues, like the carbon problem? What is the equivalent of Trade&Cap in the matter of health care? And, finally, back to Ip (2019), but now asking the question that really needs to be asked: What shared other-interest is keeping the Right Isle from allowing the Market to work in health care, as it is already doing in the ACA, and the Left Isle now, according to Ip(2019), driving them away from the Market to greater reliance on the Government? In Metaeconomics Framing, why is the Left Isle leaning to re-balance the Affordable Care Act (ACA), which is a Market&Government approach already, toward the Government, while the Right Isle cannot see that the ACA could actually just be re-balanced more toward the Market with less Government, if they gave it a chance? It seems neither the Right nor Left wants to give the Market a chance? Again, what is going on?


Perhaps the most important point from Metaeconomics is the need to recognize the scarcity of healthy people, the scarcity of the possibility that anyone can get through life without a health issue. That is, everyone is born with pre-existing conditions, just by the nature of our genetic reality. We have a form of 2nd Law thermodynamics at work here: Everything eventually runs out of energy .... even when starting with bountiful energy, low entropy, full of life at birth, we eventually move to the point of maximum entropy... we are mortal, we all die, and we all have health issues on the way down the life path, on the Arrow of life. So, with in effect the life-span being scarce, and everyone having pre-existing conditions from birth, the Government (we the people, with our Government representing us) have to set the Limits. What is this Limit? It is simple, actually.


From birth onward, in the spirit of what we know works, building upon our Enlightenment experience since Adam Smith: Everyone has to buy into an insurance plan that will help deal with everyone's pre-existing condition that we will die from some health problem! This is the Cap of Trade&Cap. So, Insurance&RequiredInsurance, Market&Government, PrivateInsurance&Government. The ACA did set this limit, recognizing this scarcity of life, by requiring every one to purchase health insurance. For some unknown reason, the Right Isle refuses to see the reality of this limit on life, and removed the scarcity limit (just like they are unwilling to see 1st Law realty, they also are unwilling to see 2nd Law reality). What is this all about?


Another dimension pertains to the Money it takes to participate in an insurance Market. Left Isle seems more attuned to helping with the money currency of the Market as decision forum, providing either subsidized premiums or money to buy insurance, thus ensuring everyone can play in the Market. The Right Isle seems prone to not want to help with money, which precludes a lot of people from being in the Market. Metaeconomics cannot help either Isle decide about this matter of how to ensure everyone has enough money. It can point to Adam Smith's (1759/1790) other book, however, the one titled "On the Theory of Moral Sentiments" which points out that in a Good Capitalism everyone strives not only to "Be loved, but to be lovely." A willingness to help a bit, everyone throwing in a few coins in the offering plate, helps on both fronts.


That is, as Smith (1759) teaches, the conscience arising in the station of the impartial spectator must be brought forward in order to be both Wealthy&Happy, which comes from balance in Self&Other-interest... and, writ large, good balance and, more importantly, jointness in Right&Left-Isle, Market&Government. This is accomplished through Empathy tempering Ego (and, if religion and faith is your thing, God tempering Individual, Thou tempering I, as in the I&Thou of Metaeconomics...see I-Thou page within this Website). Leaving a substantial proportion of people out of the Markets due to not having sufficient currency to play in that decision forum will not lead to the Happy part of Wealthy&Happy, at least as Adam Smith saw it, and, certainly will not lead to Good Capitalism.


So, it is all quite simple, actually. The Right Isle needs to seriously consider admitting the possibility we face both a limit on the atmospheric capacity to process carbon releases and we all face a limit on how long we can live a healthy life without something occurring that will be costly. The Right Isle also needs to acknowledge that only Government can recognize and set the limits, 1) set caps on greenhouse gases, and, 2) require everyone to participate in the insurance markets. The Left Isle in turn, while understanding Government needs to set limits, needs to put more credence in the real possibility the Market is the best way to allocate scarce atmospheric capacity and scarce health care capacity. Finally, both Isles need to go back to Adam Smith's other book, Smith (1759/1790), and consider the human need on the part of everyone to be loved and to be lovely, in order to be good. Being good for own-self and for capitalism writ large depends upon it. Smith,, and the Economic Enlightenment more generally, was all about Right&Left-Isle, Market&Government.


References

Ip, Greg. Hey, Democrats, Give Markets a Chance. Wall Street Journal (April 3, 2019).

Smith, A. The Theory of Moral Sentiments, edited by D.D. and A.L. Macfie Raphael. Indianapolis, Indiana: Liberty Fund, Inc., 1759/1790

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