Tuesday, July 07, 2009

Pessimism

PHUTATORIUS
The Economist recently criticized President Obama's kid-glove handling of Congress. The short version of Lexington's critique is that Obama writes the agenda, and Congress writes the laws. Nowhere was this more evident than in the case of the economic stimulus plan: Obama described the size of the bucket, and the Democratic Congress filled it up. This practice became a pattern with the climate change bill (The Economist, again) — although to be fair, lawmakers in the House had to load the law up with giveaways and postpone its efficacy (if not its effective date) for another ten years, just to win a majority.

Because, for better or for worse, I take my cues from The Economist, I'm afraid for the country. Here's why.
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Unlike many of the Republican naysayers, I actually believe that certain of America's bigger problems actually require government intervention. I've said my peace on the economy. But the energy and health care sectors, too, have seen the Invisible Hand failing to manage matters with any kind of deftness or dexterity. Let's consider why and how:

* Health Care. — The failures of the health care market are well-documented. It just isn't working. The principal reason for this is that there is no demand curve. Any reasonable person would rather be broke or bankrupt than sick and dying. If you need to spend $200 grand on a lifesaving chemotherapy, you do it. You plunk down the money and you figure out the rest later. Thus, spiraling costs. And there's the fact, too, that the structure of our health care system is an historical artifact of a market distortion: Stateside employers began to provide health insurance benefits to their workers during World War II, in an effort to compete for talent after the government imposed wage controls. Employers are expected to bear this burden today — and what's worse, employees come of age with the expectation that someone else ought to be paying for their health care. (Aha! cries the Republican — see here the long-term unintended consequences of government interference in the market! Yes, GOPer. Duly noted.)

* Energy. — The energy markets are failing us. Demand from developing countries will considerably outstrip production in the near and mid-range future. This isn't even a concern we can forget about in the short term. We saw inklings of what is coming last summer, when gas prices shot up over $4 per gallon. Prices are creeping back up again. As hundreds of millions of Chinese and Indians lift themselves out of poverty in the coming years, there simply won't be enough fossil fuel production to sustain them and us. This means skyrocketing energy costs, if not something worse — like war. Which brings us to the next factor that calls for government intervention in the energy markets: national security. Terrible, horrible regimes like those in Iran, Venezuela, and Saudi Arabia perpetuate themselves on the strength of their oil production. State-owned gas and oil companies in Russia leverage the energy demands of Europe and former Soviet states for the political ends of the kleptocrats in the Kremlin. And worse, we compromise ourselves, we give in on important Western values, in our thirst for oil. We may not be overthrowing democratically-elected governments anymore in Iran, but we do support oil-rich regimes with grievous human rights records. Our need for oil poisons our foreign policy and, to be frank, we'd be better and more principled in our dealings with the rest of the world if we could shake this rotten dependency.

Note that I haven't even talked about the global warming and environmental considerations, which somehow still manage to be controversial among intelligent people. (Shout-out here to V'torix.)

Our energy markets are, of course, distorted by the affirmative intervention of the last Administration in favor of Big Oil. We can ascribe this policy to shortsightedness (voters like the incumbents more when they aren't getting squeezed at the pump) or to venality (oil barons scratch Republicans' backs, and Republicans scratch theirs), but whatever the cause, it's exactly the opposite of the policy we should be pursuing. Giving fossil fuels a market edge when they are already the incumbent technology is emphatically the wrong policy. We need to strike that and reverse it. Government needs to subsidize renewable energy. For our economic interest, for our national security, for our foreign policy, and — what the heck – for the Earth.

And now, the turn:

I earnestly believe that we need the government to tackle these issues — and more than just considering them, we need the government to muck around in the markets. That's the only way these problems get fixed. But then I look over at the two bodies charged with the constitutional power to act on the economy, on health care, on energy — and my heart climbs into my throat, and then it breaks. I have absolutely no faith in the ability of the House of Representatives, or for that matter the Senate, to come up with anything on these issues other than shortsighted, self-serving packages of special-interest giveaways and unintended consequences.

I lack this faith not because of the particular 535 persons who are occupying the seats in the two chambers (although I have to say, quite a few of them are doozies). The problem is our political system. The two parties gerrymander the House districts to protect their seats: as a result, the truly contested elections are primaries that bring the most identifiably partisan — and therefore extreme — candidates into the Capitol. So we have extremist ideologues from both parties dominating the House. Add to this the warped incentives that flow from our politicians' concluding that they win more votes with obfuscatory and infantilizing commercial spots than they do by taking real, principled positions on the issues, and now we have special interests buying and selling our wild-eyed legislators with the campaign contributions that nourish the all-important Media Buys.

It's no wonder the stimulus bill became a Christmas tree, a receptacle for pet projects and pork. It's no wonder, either, that the climate change bill is a toothless pack of giveaways. So now we turn to health care and energy policy, and I cringe, and I again feel like a man without a political home. It's bad enough to live life as a social liberal/economic conservative. Now consider the predicament of the poor blogging soul who shares both the Democrats' conviction that government intervention on certain critical policy issues is absolutely necessary and the Republicans' despair over the ability of a government — and specifically, this government — not to butcher the job.

Somebody tell me everything is going to be all right.

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