The Conscience of a Liberal Summary
The Conscience of a Liberal
by Paul Krugman
Chapter 1: The Way We Were (by Jerry)
In opening his call for new social welfare infrastructure in America, Krugman describes how he joined many Americans in protesting the country during one of its greatest times, the 1950s and 60s. Krugman does not discount the necessity and importance of the Civil Rights and anti-war protests, but in academically-developed hindsight, he illustrates that America transitioned from a pre World War II era of economic disparity to a post-war era of vast economic equality. Krugman contends that Roosevelt's New Deal policies, coupled with unprecedented bipartisan cooperation throughout American governmental institutions, blessed the country with these pecuniary fortunes, thereby creating the middle class. After discussing America's bounty during the 1950s and 60s, the author begins to develop his theory regarding its collapse: movement conservatism.
Krugman defines movement conservatism as a radical force that possessed the Republican Party with the drive to regenerate the pre World War II inequality in America by repealing the New Deal measures that created the middle class. The author asserts that movement conservatism's seeds were planted in the 1960's with Reagan's governance of California and William F. Buckley. The seeds took root with Nixon, and then movement conservatism blossomed when Reagan entered the White House. While Bill Clinton wilted the conservative tree somewhat, Krugman hold's that George W. Bush perfectly embodies movement conservatism's ideologies and that movement conservatism blossomed fully with Bush's re-election in 2004 when Bush attacked the New Deal at its fundamental base, Social Security.
Krugman not only explains the evolution of movement conservatism, but the 2008 Nobel Laureate in Economics engages in economic heresy by stating that economic trends do not establish the political order. To the contrary, Krugman states that the economic environment lags political developments. He lists four pieces of evidence to support his argument. First, the pre World War II economic inequality did not reemerge following the removal of wartime controls. Instead, New Deal prosperity reigned for thirty years in America. Second, the staying power of New Deal prosperity did not retreat until after movement conservatism had captured the political helm for over a decade. Third, economists have begun to understand that technological innovation was not the cause of the new economic inequality because even the most highly educated Americans have not realized appreciable financial gains unless they reside in the top one percent of the American population. Fourth, the rightward shift in politics and the resulting economic inequality is unprecedented among advanced countries. Krugman explains that the Democratic Party in America has remained steady since the time of Roosevelt. Instead, Republicans have shifted right significantly. Krugman supports this contention by analyzing how Clinton's policies were often to the right of Nixon, while Bush's policies far surpassed the conservatism of Gerald Ford.
Krugman closes the chapter with the idea that Americans have had enough of movement conservatism and its concomitant disparity in income. Krugman believes that America began the transition in 2006, when Democrats regained control of the House and Senate. However, he cautioned that one election does not make a trend. After the election of Barack Obama as president and the further strengthening of the Democratic position in the House and the Senate in 2008, Krugman appears politically perspicacious.
Chapter 1 left me with two questions, one rather conspiracy theorist and one legitimate. First,is it possible that George Bush, at the behest of movement conservatism, went to war in Iraq to preserve his post September 11th popularity and retain control of the White House for four more years? Next, how can middle class Americans who claim that they support the middle class embrace a party that wants to destroy the very policies that created the middle class?
"Chapter 2: The Long Gilded Age" (by Rhea)
Chapter two opens with comparisons of Bush era inequality of income to that of pre New Deal America. In 2005, distribution of wealth to the top ten and one percent of Americans mirrors the average for the 1920's. One must remember, however, that while distribution reflects the past, the standard of living has drastically increased thanks to the development of social programs.
Before expanding upon resemblances, Krugman breaks to name the era between the 1870's and the 1930's as the Long Gilded Age. This period is characterized by great economic inequality.
This chapter reveals a main theme of the text. Krugman argues that middle-class societies must be created via political persuasion. In other words, middle class societies are not the natural sequence of events of a developing society.
So why did Americans allow for such prolonged inequality? Why did they not demand a political structure which addressed their needs? Other countries had developed welfare states, and America had the knowledge and resources to make changes. To begin, voting rights were a privilege of the upper class and were not extended to all. Next, the Republican Party was dominant and had three times the funding to devote to campaigning, which essentially assured a spot in the White House. Additionally, election fraud was abundant. As one gentleman stated, it's not the vote it's who counts the vote.
Cultural and racial tensions split the nation. Americans were classified as rural or urban, immigrant or national, and by race. Such issues inhibited groups from joining together to overcome inequality. American's needed a transformational leader to establish the middle class. Such divides are still prevalent today, but to a far lesser extent.
Further extenuating conservative dominance is the phenomena that popular opinion was accepted as fact. It was widely accepted that taxation was detrimental, attempts to alleviate poverty were wrong, and those who opposed pure capitalism were radicals.
Though Federal legislation rejected any movement towards a welfare nation, states began to take smaller steps. States began to develop workers compensation and age-based pension laws. However, such steps were slow and small and it took the Great Depression to unite the nation.
The topics of this chapter are an eerie reflection of today. Throughout the early 2000’s Americans willingly accepted the ideology of the conservative party. Many Americans simply refused the challenge the extravagant behaviors of the reigning party. I often wondered what it would take for Liberals to gain accreditation. It now appears, after the election of a Democratic president, that it required another great financial crisis.
Chapter 3: The Great Compression (by Jerry)
After summarizing the history of the Long Gilded Age in Chapter 2, Krugman continues to develop his thesis that political changes have led economic changes throughout America's history. Thus, Krugman discusses "The Great Compression," a term first coined by the economic historians Claudia Goldin and Robert Margo. "The Great Compression" refers to the time between the 1920s and the 1950s when America's economic inequality narrowed significantly. While Krugman relies on his earlier statements that New Deal bipartisanship contributed to "The Great Compression," he becomes specifies some other reasons as well.
Krugman states that America's wealthiest citizens exercised far less buying power than they did in the 1920s. The author attributes this decrease in buying power to one main factor: taxes. America's wealthiest citizens relinquished up to ninety percent of their income to taxes by the 1960s. Interestingly, America's economy did not collapse, and the wealthy did not substantially change their investing habits. For instance, Krugman illustrates that in the corporate sector, sixty-seven percent of pretax income was invested in labor and thirty-three percent was invested in capital in 1929. By 1955, those numbers remained essentially the same at sixty-nine percent for labor and thirty-one percent for capital.
At the same time that America's wealthiest citizens were contributing more of their income to the country, America's emerging middle class recognized an explosion in purchasing power. Members of the middle class earned higher wages, and they received greater social welfare benefits, either from work or from the government. Specifically, retirement benefits, health care benefits, and unemployment insurance programs solidified during the New Deal and became the expected way of life during the 1950s and 1960s. The middle class enjoyed these benefits do to the rise in unionized labor, increased employment and wages, and governmental bipartisanship previously mentioned.
Krugman illustrates that the decrease in economic inequality was apparent throughout America in the 1950s and 1960s. For example, Long Island's Gold Coast transitioned from an environment dominated by mansions to an environment dominated by tract housing and charitable or social organizations. Furthermore, the ease and popularity of automobile ownership facilitated this neo-suburban lifestyle. (This following statement is not in this chapter; instead, I took Krugman's arguments to the next logical step.) Finally, Eisenhower's interstate highway system, another form of government spending by the way, aided the growing middle class by providing a means to use their new automobiles. As a result, the economy improved because corporations sent workers to new geographic locations with greater ease and decreased costs and tourist destinations blossomed due to the ease of taking family vacations.
More information raises more questions. If the wealthy will not invest their after tax earnings in the face of higher taxes, why did this not happen in the 1950s and 1960s? If taxes are bad for the economy, why did higher taxes help lead America out of an economic depression? Finally, is government spending not good if it creates jobs and serves as a source of labor competition for the private sector, which will increase wages and working conditions?
"Chapter 4: The Politics of the Welfare State" (by Rhea)
In 1948, the fear of change named Harry Truman the 33rd President of the United States. Americans had watched a Republican controlled Congress diminish the progress of the New Deal, and feared the outcome of a Republican White House. Political progress was at a standstill throughout the Long Gilded Age, but an increasingly privileged lower-economic class embraced liberal ideals. By the early 1950's, policies and programs associated with the New Deal were enduring and conventional.
Many factors contributed to a nation more inclined to endorse a welfare state. To begin, naturalized immigrants, usually Democrats gained the right to vote. The South, a place of explicit discrimination, also shaped the political landscape. Still demoralized by the loss of the Civil War, Southern Democrats could win via effectively campaigning against Lincoln. Additionally, the South stood to reap great benefits from the New Deal for the South was predominately poor. Potential gains associated with a welfare state swayed southern, whites to vote liberally. (Remember, the South still held deeply rooted beliefs on equality and abandoned ship as Democrats promoted civil rights. This explains why the Southern states are traditionally Red States.)
Unions also provided leverage for the Democratic Party. The Democratic Party is characterized as unorganized and the unions provided the structure the party needed. Unions also provided financing and willing supporters. They were also a means of informing blue-collar workers and influencing them to get out and vote.
So how were Republicans able to gain votes? Throughout the late 1950's and the 1960's it was difficult to distinguish between the economic policies of each party. Therefore, voter’s income played a smaller role in their decisions. Consequently, many low and middle income individuals voted for Republican candidates.
While I agree with Krugman's statements on change, it is interesting to note that change was the motto for of recent President-elect Barack Obama.
Chapter 5: The Sixties: A Troubled Prosperity (By Jerry)
Krugman captures the subject of this chapter with its title. Accordingly, Krugman dichotomizes America by juxtaposing America's prosperity with America's rising social and political tumult in the Sixties. Specifically, Krugman discusses the civil rights movement, the explosion of crime, the growing welfare rolls, the Sixties' counter culture, and Vietnam.
Despite the social upheaval that occurred during the Sixties, middle class Americans continued to realize economic growth. In 1966, the federal minimum wage equaled approximately $8.00 per hour in today's wages, which is twenty-two percent higher than today's federal minimum wage at the time of this writing. Additionally, Americans enjoyed greater coverage under health care, unemployment, and disability insurance than they do today. However, movement conservatism and neoconservatism learned how to exploit the Sixties' climbing social unrest.
Krugman explains that a good portion of the Sixties' disquiet resulted from issues surrounding the civil rights movement, especially Johnson's push for enactment of the Civil Rights Act and the Voting Rights Act. Krugman touches on the gross violence and the recalcitrant rejection of federal intervention with Jim Crow laws.
Urban disorder and rising crime became another factor that soiled the Sixties' historical legacy. While crime rates are hard to predict, and later, to describe, Krugman illustrates that the African-American migration from the agricultural South to the urban North and West contributed to the urban unrest that struck during the Sixties. For instance, while African-Americans were moving into the inner cities in the Northeast and on the West Coast, American jobs were moving from the inner cities to the suburbs. Therefore, African-Americans did not enjoy the boon in economic prosperity that white Americans did. Furthermore, police brutality plagued cities across the country, but African-Americans did not fear authorities in cities outside the South like they did in the Southern cities. As such, African-Americans felt emboldened to act against social injustice. This, coupled with African-Americans' frustrations with the ineffectiveness of peaceful demonstration to effect change, led to more violent behavior in the face of racial atrocities.
In regards to welfare rolls, Krugman states simply that this government program grew because people began feeling comfortable with its function and due to new civil rights laws, they were not negatively persuaded from pursuing this help. However, Krugman cautions that many facts and figures surrounding welfare were grossly exaggerated. For example, Krugman notes that AFDC (welfare) payments totaled $4.9 billion in federal spending while Social Security payments accounted for $39 billion in federal spending in 1970. While this chapter does not list these statistics, federal spending totaled $195.3 billion. This demonstrates that AFDC payments consumed only 2.5 percent of all federal payments.
For all the notoriety that hippies and Vietnam garnered, Krugman shows that these forces may not have had the impact that people attribute to them. In fact, Krugman states that one possible reason for the rise in the Sixties counter culture was the economic prosperity. In other words, the cost of experimenting with unemployment and social acceptance was low because jobs were plentiful. As the author demonstrates, the unemployment rate soared from 3.5 percent to 6 percent near the end of the hippie movement. Krugman highlights that a number of technological changes also contributed to the social change in the sixties, such as birth control and an entire generation that had watched television since birth.
Finally, Krugman debunks the myth that Vietnam killed the Democrats. For instance, Krugman shows that the Democratic composition of the House of Representatives and the Senate fluctuated, but ultimately grew from 1967-68 to 1975-76. As Krugman scribes throughout the chapter, and the book, movement conservatism killed the Democrats.
Krugman writes that the explosion of "intellectual" movement conservatism blossomed in the Fifties and began to mature in the Sixties with Reagan's election as Governor of California. While this ties into the next chapter, Reagan captured the well-funded "scholarship" of conservative think-tanks, and he articulated in a message that the new conservative base could understand. Furthermore, with the Democrats alienated the South with civil rights legislation and the Republican Party courting them with alternative rhetoric, Democrats lost their faithful, southern constituency.
"Chapter 6: Movement Conservatism" by Rhea
A young, brash, and media savvy group of well financed conservatives, headed by William Buckley, led movement conservatism. Among their objectives was the continued disenfranchisement of Blacks. They viewed this as acceptable, for Whites were the majority and therefore entitled. Their ideology was echoed in Buckley’s novel God and Man at Yale. Unlike Generalissimo Franco, the new conservatives needed to find a broad, popular base to take control of the Republican Party.
Goldwater proved to be a false glimmer of hope, but Reagan soon captured the spotlight. In 1964 Ronald Reagan delivered a speech later called “the most successful national debut.” Reagan’s rant filled the minds of listeners with unfounded claims and statistics. His antics appealed to the outlook of many.
Although a genuine threat, the fear of communism further aided movement conservatism. Many American’s felt that communism should be eliminated and not contained. Following the ideology of McCarthy, some viewed containment as an indicator of weakness. Movement Conservatism took advantage of rampant paranoia to attract followers.
The movement also caught the eye of the business sector, first attracting mid-sized business owners. Throughout the 30’s and 40’s organized labor greatly increased employee benefits, posing a substantial threat to mid-sized businesses. Big business could handle the increased costs and small businesses were not a target of unions. Movement Conservatism gained the support of such owners, and hoped to expand to regions not yet dominated by organized labor.
Increasing its scope, Movement Conservatism was also backed by neoconservatives. The Great Depression drove support for government involvement in economic affairs, but as the air cleared many reverted back to old conceptions. Respected Chicago economists, although perhaps dishonest, called for separation of government and economics. Additionally, sociologists spoke out against liberal ideology. Both groups were supported with generous financing, which later went to the development of conservative-minded organizations. These foundations only endorsed and printed material which met rigid conservative ideology.
Reagan’s advancement of the movement was later eclipsed by Richard Nixon. However, Nixon was a transitional leader leading the exploitation of Republican politics. Movement Conservatives disliked Nixon’s policies. However, the movement regained strength due to foreign affairs and perceived economic crisis.
Chapter 7: The Great Divergence (by Jerry)
Krugman opens this chapter by focusing on a major debate among modern economists, which involves whether a majority of Americans have fared better financially since 1973, the year generally accepted as the point that the post WWII economic boom ended. Of course, Krugman recognizes the big picture surrounding this debate and that is that economists must entertain this debate at all. However, Krugman does not avoid the debate by arguing that by having the debate, Americans must suffer worse financially than they did in 1973. Instead, Krugman confronts the debate fully and fairly by discussing both sides of the controversy.
First, Krugman explains that complex issues of measurement surround the debate. He explains that while Americans enjoy greater prosperity on average, median income has deteriorated significantly. He accomplishes this through a "Bill Gates-in-a-bar" analogy. For instance, if Bill Gates walked into a bar, then the average wealth of the people in the bar would increase dramatically; however, the median income of the bar's patrons would not fluctuate at all. Krugman argues that the bar represents an accurate microcosm of America financially, not because Americans are impecunious drunkards, but because only a small portion of the American population has benefited from an increase in income despite our steadily increasing level of production. In fact, median household income, adjusted for inflation, has grown by only sixteen percent from 1973 to 2005. Although Krugman does not numerically state the increase in the number of dual income households over this time, he argues that the increase in dual income households accounts for the sixteen percent rise in median household income. According to the U.S. Department of Labor, Krugman's argument is valid. The Department of Labor's website states that the number of dual income households had nearly doubled between 1980 and 2005 ([]). In an attempt to strip away the impact of dual income households on the rise in median household income, Krugman shows that the median wages of men aged thirty-five to forty-four have actually decreased by twelve percent. Considering that this is the demographic that typically would have supported a household in the early 1970s, it appears that Americans face tougher financial times now than they did in 1973, which of course signals growing financial inequality among Americans over the last three decades.
Returning to the Bill Gates-in-a-bar analogy, Krugman explains why average income has risen dramatically while median income has grown phlegmatically, if at all. Krugman illustrates that only the top one percent of American earners has realized greater economic gain since 1973 than it did during the postwar boom. Moving up the income scale, the top tenth of one percent of American earners has witnessed a fivefold increase in income, and the top one hundredth of one percent has realized a sevenfold increase in earnings. Therefore, the growth in the members of the super wealthy classes have driven the climb in Americans' average income.
To demonstrate the reasons for this widening inequality, Krugman evaluates arguments offered by two groups of economists. One group states that growing international trade and immigration have depressed the wages of unskilled labor in the U.S. while technology has driven the demand and compensatory rewards for skilled, educated workers. Krugman certainly acknowledges that immigration of unskilled labor into a market will depress the wages of that market's indigenous labor force; however, he demonstrates that the rise in immigration has not warranted such a dramatic decrease in unskilled wages across the board. Similarly, Krugman asserts that imports have not been of the scale to explain such an effect. In fact, the economists that posit this argument admit that this is the case because they use technology to fill the gaps that are unsupported by immigration and imports. As a matter of fact, technology has become a religion to these economists in the way that societies throughout history have referenced God when no other cause manifested to describe an otherwise unknown occurrence. Since technological advances demand highly skilled workers, these economists contend, then these skills dictate higher salaries. Krugman disposes of this argument as well by comparing CEOs and schoolteachers. Both may hold master's degrees, yet schoolteachers have benefited from modest gains in income while CEOs have enjoyed salary increases from thirty times that of the average worker in 1970 to over three hundred times that amount today. As such, Krugman attributes the expanding American income inequality to changing institutions and norms.
As discussed in previous chapters, unionized workplaces have diminished dramatically since the 1970s. Unions advocated for wages that increased with productivity as well as health and retirement benefits. Since the decline of unionized workplaces, wages have not continued to keep pace with productivity. To illustrate, Krugman compares GM in 1969 to Wal-Mart today. In 1969, GM production workers earned the equivalent to a little more than $40,000 per year in today's money. In contrast, Wal-Mart's non-supervisory employees receive about $18,000 per year. Additionally, Wal-Mart's employees do not experience the same non-wage benefits that GM employees did in 1969 despite an institution such as Wal-Mart, with no foreign competition, being a better candidate for unionized labor than a manufacturer such as GM. Finally, unions and political and social institutions no longer stigmatize the Brobdingnagian compensation packages lavished upon CEOs. As such, CEO salaries have increased at the expense of many corporate constituencies, including employees and corporate shareholders. Furthermore, this increase in CEO compensation has not been accompanied by an increase in CEO productivity. Instead, the market has accepted extraordinary CEO compensation as a positive signal that the company is paying to recruit and retain superior executive talent, and the market punishes the stock of companies who do not comply with this new paradigm.
Can shareholder activism fill the void of unions and refocus attention on undeserved CEO compensation? Will clawback provisions offer an effective mechanism to align the interests of CEOs with the interests of the shareholders they supposedly serve?
One transcendental theme of Krugman's book is how income inequality has increased over the last thirty-five years. Krugman offers the decline of unionized labor as a reason for this. In this chapter, Krugman states that rising CEO pay and celebrity pay has contributed to this inequality as well. Interestingly, and I did not see this in Krugman's discussion, celebrities have relied on unions to increase their pay over the years, e.g. []; []. Additionally, even corporate leaders are somewhat united in compensation practices, e.g. []. If celebrities and corporate directors should be allowed to unite, why should the average American worker be denied the same freedom?
“Chapter 8: The Politics of Inequality” by Rhea
This chapter seeks to identify the cause of partisan divide. Some claim that such a divide is abstract, yet reality crushes any such claims. Bipartisanship is clearly demonstrated by Presidential tax policy; Republicans decrease tax on the wealthy and Democrats increase tax on the wealthy. This is just one example, but party lines are clearly drawn. Republicans endorse cut cuts for the wealthy, minimization of government, and elimination of welfare programs. Democrats support tax increases on the wealthy, and government enhancement of a welfare state.
Inequality arose through many channels. Radicalization of the right wing, rooted in Movement Conservatism, drove such inequality. Reagan’s radical policies were constrained by strong Democratic presence in the legislative branch. After Reagan, Republicans sought to revoke the policies of the New Deal; some policies going as far as to annul the estate tax. As there have been no equivalent radical acts by the Democratic Party, one can assume that Republican radicalism has driven bipartisanship.
Today, various think tanks and foundations incentivize Republicans to be extremists. They found campaigns, ensure posh post-political positions, and publicly scrutinize those who don’t endorse far right-wing antics. These foundations also aid in influencing the general public with skewed, pro-conservative facts and partial truths. The institutions have also established the permanence of movement conservatism, as Republicans across generations share the same beliefs.
Bipartisanship is now the norm, but the true causation is unclear. Krugman attributes this to the growth of Movement Conservatism, aversion towards welfare, anticommunism, and racism. However, this is not the complete answer. As will be discussed in the following chapter, Krugman thinks that Republican antipopulist economic agenda may be the missing piece of the puzzle.
Chapter 9: Weapons of Mass Distraction (By Jerry)
In chapter 9, Krugman discusses the microeconomics of voting and dispells a long standing myth in that voters have been duped by the GOP. Particularly, voters must experience a utility to vote that exceeds their utility of not voting, and Krugman says that a candidate's promotion of voter self-interest is not enough to create this utility shift. While he states that the GOP has used linguistic chicanery in building their support base, especially in regards to national security, Krugman argues that issues such as class and race have divided American voters more than other issues, such as war and religion, have.
In regards to race, Krugman revisits Reagan's rhetoric that he employed to win the White House. For instance, he discusses Reagan's contrived story of a "welfare queen" in Chicago. Additionally, he note the significance of Reagan choosing Philadelphia, Mississippi, the site of a 1964 lynching of three civil rights workers, as the opening location for his 1980 presidential campaign. As we have seen from other chapters in the book, Reagan also openly supported discrimination by private landlords based on race or other immutable individual characteristics. Accordingly, Reagan's and Johnson's social positions helped shift the Southern white vote to the Republicans. However, due to the 2008 voter turnout of African Americans and younger voters, Barack Obama's election appears to have reversed this trend.
Other enumerated factors that have shifted voter support in favor of the GOP are patriotic rhetoric, the evolution of the Christian evangelical neoconservatives and their rising political impact through voting and policymaking, the growing numbers of immigrants, illegal or otherwise, who are not able to vote, and vote blocking, such as what occurred in the 2000 election when Katherine Harris purged a large number of African American voters from the voting rolls who were misidentified as felons.
"Chapter 10: The New Politics of Equality" (by Rhea)
The chapter opens with discussion of the 2006 Democratic victory in Washington. What would come of a Democratic House and Senate? Was it a signal of changing times or a response to Bush “strategery.” In the summer of 2007, 74% of Americans were dissatisfied with the overall performance of the United States. Despite strong national economic indices, the majority of citizens frowned upon current economic conditions. Strong national numbers did little to decrease growing inequality or improve average living conditions. Nor did they hide the fact that corporate profits and executive salaries were reaching record highs.
Will future policies focus on correcting economic inequality and insecurity? And if so, will history repeat itself? Krugman argues that this is unlikely. First, Clinton’s failure to popularize his health care reform could have been salvaged through improved communication and leadership. Additionally, current economic frustrations are increasing the call for government interference. Lastly, Movement Conservatives have lost the ability to distract and persuade the general public. Iraq and policies on national security have negatively contributed to conservative credibility.
However, national security is likely to play a major role in shaping future policy. Republicans have worked long and hard to establish an identity as being tough on national security. Bush and his counterparts were able to intensify and extenuate coverage of his “war on terror.” This effectively minimized coverage on economic conditions. Bush’s schemes were effective for quite some time, but today aversion with the management of the Iraq War is the norm. Krugman argues that this will likely have long-term effects on American politics. Bush’s failure in Iraq can be accredited to mistakes common to movement conservatism. Dedication to decreasing taxes on the rich led to insufficient funding in Iraq. Corruption and lack of accountability were also prevalent throughout the war. Therefore, it is unlikely that Republicans will be able to rely on their policies on national security to win elections. However, historically Republicans have won without a focus on national security. This was accomplished by a focus on race. Will conservatives continue to use race as a source of strategy?
Today, race is not a strong point of movement conservatism. Krugman first states that America is becoming less white, specifically non-Hispanic white. Growth of the immigrant population usually shifts political control to the right; however, immigration is an issue which has long divided the party. Movement Conservatism is grounded in those who favor white dominance over blacks. As stated by Krugman, it is difficult to be anti-black without also discriminating against immigrants. Republicans have fought this trend with attempts to keep minorities disenfranchised. Additionally, it appears that racism does not carry the same weight it has in years past. (We just elected the first black President) This lessens conservative’s abilities to gain votes associated with racial tension.
It seems today that voters are looking for answers. Voters are no longer naïve and are willing to question the government. Based on the facts stated above, Movement Conservatism is at a halt. Liberals need to find solid ground to sustain control and influence. They can’t simply be the lesser of two evils.
Chapter 11: The Health Care Imperative (By Jerry)
Krugman begins this chapter by discussing the argument against guaranteed health care for Americans. He writes that opponents of guaranteed health care argue that while life is unfair and gives certain people bad breaks in regards to their health and their access to health care, others, who do not suffer these misfortunes, should not be burdened with subsidizing the corrections of other peoples maladies. However, Krugman asks, "Is this the right thing to do?" Well, according to some polls that Krugman discusses, it is not the right thing to do. In fact, a majority of Americans support guaranteed health care for all Americans. Furthermore, politicians, i.e. movement conservatives, recognize this and do not publicly admit that they do not think everyone is entitled to health care insurance. Instead, the simply deny that there is a problem with health care in America; they play to fears that guaranteed health care will diminish individual choice and the quality of care; they claim it is not possible, or they amalgamate portions of all of these arguments to fight against universal health care.
Sadly, these arguments are just another attempt to promote economic inequality within our health care system, so approximately 45 million Americans go uninsured every year while another 16 million are underinsured. Moreover, nearly forty percent of private bankruptcy filings are attributable to burdensome medical bills. Since I worked in the health care industry for nearly twelve years before attending grad school, the following paragraphs are based on my observations and perspectives; however, it was encouraging to see that Krugman supports every one of them in this chapter.
While there is a moral hazard involved with making one person pay for the health care of another person, especially when the needy person created his or her health condition, there are worse moral hazards at play in supporting private health insurance. Private health care insurance programs generate profits in two ways: by selecting the least risky clients and by finding ways to deny coverage for the clients that they have selected. By allowing insurance companies to select the least risky clients, our society allows these insurance companies to profit from denying health care coverage to other individuals based on profit motivations. Second, our current system allows private health insurance companies to violate their contracts with their insured by trying to find loopholes to deny coverage despite the fact that these insureds may have paid every single premium on time.
In addition to the moral hazard mentioned above, people frequently state that they do not trust the government and a bunch of bureaucrats to run their health care. I have one simple question for these people. Do they trust CEOs to make those same decisions? If so, why? Private insurance is more likely to deny coverage for health care than a bureaucrat because the private insurance is driven by personal financial motivations where a government agency will likely not reimburse its employees with financial incentives.
Doctors often complain that they do not want bureaucrats telling them what treatment that they can and cannot offer. However, doctors are told what treatments that they can and cannot offer every day by people at insurance companies. I do not believe that the doctors fears are well-founded anyway. Medicare denies claims far less frequently than private insurance companies do ([]). Additionally, I believe that doctors will be able to operate with less stress under a government system because they will know what one payer provides instead of trying to discern the payment policies of multiple payers. Therefore, the economic condition of medical offices will improve because they will not need to spend time trying to obtain authorizations for coverage or appealing reimbursement denials. This of course will allow doctors to see more patients and generate more revenue. Cost of care analysis will be simple and straightforward. Finally, it will facilitate business planning because physicians will be able to employ demographics to analyze how their patient base will change over a certain number of years. After all, do physicians really believe that the government wants them to go out of business?
Do you ever wonder why new pharmaceuticals gain approval faster in European countries than they do in America? Sure, different regulatory standards dictate the approval process, which by no means argues that European standards are less stringent than ours, but they are different. Another reason is that the government is involved in the pharmaceutical process from an early stage because European governments pay for medications. Therefore, the European governments approve drugs on safety and economical issues nearly simultaneously. For instance, if a European government finds that a drug is safe but determines that its cost outweighs its marginal benefits so decides not to pay for it, then the pharmaceutical industry will not develop the drug. This should be good news for pharmaceutical manufacturers because it will allow them to allocate research and development costs more predictably and efficiently. Of course, some people would say that the government is not in a position to decide the costs and benefits of pharmaceuticals. Is a private insurance company in this position because the do it all the time? Furthermore, it seems from data in Krugman's chapter that the government is in a better position to do this than insurance companies because the average life expectancy in Western European countries is far greater than America's life expectancy is.
At this point in my discussion, I just want to say that private health care entities are creating their own demise. They continuously increase costs, which leads people to seek alternative solutions, sort of like the recent hike in gasoline prices. I imagine in a few years that we will have a number of health care companies asking Congress for a bailout like the automakers are doing now.
Even though people argue that the private sector must do a better job than government at providing care, many studies demonstrate the superiority of government systems. First, for every dollar spent on health care, fifteen percent of that dollar is consumed in administrative costs under private plans on average versus five percent consumed by government plans on average. Is this any surprise considering the disparity in salaries between the two? Additionally, as my previous internet link and Krugman's book shows, insureds consistently choose government plans over private plans when given the option. On a personal note, my step-father has been a Medicare beneficiary for fourteen years. During the beginning of this process, he elected to let Medicare provide his benefits. After a couple of years, he went with a private Medicare HMO. After the first year, he reelected Medicare and has remained with Medicare ever since. By the way, he is a Republican. The reason that people choose government plans over private plans is not only because of the greater efficiency with which government programs operate, but because they have greater choice with government plans. While private plans have a certain number of doctors, hospitals, outpatient clinics, etc., that people can choose, Medicare patients can go virtually anywhere. Finally, if the government actually operates hospitals and employs physicians as well as administer the plan, then tort litigation will decrease because the government can dictate how, when, where, and why it is sued and who sues it. Therefore, health care costs will decrease for this reason as well.
Another excuse that people offer for the impossibility for guaranteed health coverage is the inability to pay for such a system. Interestingly, my families employer-sponsored health insurance premiums have consistently cost over $300 per month. Since government health programs, such as Medicare and the V.A., typically operate more efficiently than private health programs, I imagine that we will notice an increase in our real income because we will be paying less in taxes to support a government health plan than we do in premiums to run a private health plan.
As Krugman's book and the above demonstrates, guaranteed health care is possible in America and should be implemented immediately. It will improve the quality of life of every American and improve the economic prosperity of the country itself due to greater productivity and decreased economic burdens that require bankruptcy. Of course, the plan must be comprehensive in that it must not only cover physiological conditions, but mental health issues as well.
"Chapter 12: Confronting Inequality" (by Rhea)
In this chapter, Krugman discusses methods to reduce economic inequality. He first states the following reasons why equality is vital: lack of economic progress for lower and middle class Americans, and the American dream of being able to better yourself from the class you were born into. Great inequality has negative effects on society and politics.
Income inequality is problematic if it leads to social inequality, and it has. The wealthy live extravagant lifestyles filled with life’s luxuries. While the lives of the rich seem unfair to many, the damaging aspect is that many simply cannot afford to meet basic needs. To finance common needs such as housing and education many Americans are forced to take on large sums of debt. This results in more and more families and individuals declaring bankruptcy. Many attribute the rise in bankruptcy to more and more people trying to mimic the luxurious lifestyle of the wealthy. Studies however show that this is not the case, as many Americans are spending to provide opportunities for their children. It has been proven that the more opportunistic ones upbringing the more likely he or she is to succeed. Chances of upward social mobility are much lower in the United States, but why? To begin, we lack the national health care and other amenities provided by most developed nations.
The impact of inequality goes beyond the average family and leaks into our political system. As Krugman has repeatedly stated, abundant financing goes a long way in politics. Particularly damaging is the how income in politics tends to support Movement Conservatism ideology.
Lastly, inequality breaks the bonds of society. A society in which people are labeled “us” and “them” doesn’t support policies for the greater good. We need to be the “United” States of America.
So how do we decrease income inequality? Krugman first points out two forms of income inequality: market Inequality and inequality of disposable income. Market inequality is continuing to increase and is nearing the rates of the 1920’s. Market inequality generates taxes for the government which is then redistributed to various entities. Inequality of disposable income, income after taxes, is less than market income but greatly affects the living conditions of many. Krugman states that one way to reduce inequality is to distribute a larger percentage of market income. This appears to be an absurd concept to Republicans, and many claim this would disincentivize people to work. Krugman states that lower GDP in France is a reflection on French work ethic instead of a negative impact of greater income distribution.
If the United States elected to adopt such policies, what impacts would we see? To begin, we would need to revise many existing tax policies, particularly tax cuts for the elite. Adopting progressive taxation would generate the capital needed to finance many national welfare programs. Existing loopholes must also be identified and eliminated. A particularly damaging loophole is taxing capital gains at a lower rate than ordinary income and the ease with which one can declare income as capital gains. Again, it would be difficult to gain support for these concepts.
The government should also take initiative to reduce market inequality. The first step was taken when Congress increased the minimum wage in 2007. Krugman disputes the popular argument that increasing minimum wage will increase unemployment rates. Additionally, increasing the minimum wage will put upward pressure on wages for employees at the bottom of the food chain. Lastly, an increase in union membership would help to reduce inequality. Countries with high unionization rates do not have nearly the same income inequality as the United States. Unions work to assure that members enjoy the same wage increases as most middle-class Americans. They also promote same pay for the same job. As stated in previous chapters, unions also spread information and encourage members to vote and become actively involved in politics. Having more union members, typically middle-class, involved in politics will increase support for Democratic policies.
If we as a society don’t take measures to reduce vast inequality, are we setting ourselves up for yet another Great Compression?
Chapter 13: The Conscience of a Liberal (By Jerry)
Krugman ends his book, and I end this discussion, by demonstrating an interesting paradox, which is that while Republicans have invoked patriotism and conservatism, Democrats have become conservative in trying to preserve nearly seventy years of history while the Republicans have tried to dismantle these institutions. Democrats have become the true patriots in trying to protect all Americans while Republicans have pushed for inequality. Democrats have tried to extend Democracy by affording rights to people imprisoned in the "War on Terror" while Republicans have tried to horde Democracy at the expense of America's global credibility. In fact, it seems that movement conservatism has tried to create the same type of government found in Iraq: an authoritarian theocracy.
Krugman closes the book with the call to be liberal, which means being simultaneously progressive and conservative. Krugman argues that this is not a paradox because to be conservative, we should complete the New Deal and move it forward, which will progress America. I will add one thing to Krugman's argument, and that is that not only health care should be guaranteed, but college education should be as well. As recent numbers have shown, the rising cost of college education has outpaced health care, food, and energy over the last twenty years. If we are to remain competitive on a global stage, this must change.
And finally, since no one has yet answered one of my initial questions, I will reintroduce it here: how can middle class Americans who claim that they support the middle class embrace a party that wants to destroy the very policies that created the middle class?