Ross Douthat takes on the income inequality issue in a NY Times op-ed piece.   The issue of income inequality is at the very heart of liberal thought development.  It stems from the early 1800’s, when the excesses of capitalism (long hours, low wages, child labor, etc) demanded reform.  Britain passed the Poor Law to provide subsistence level support for all citizens.  By 1900 the call expanded beyond subsistence to an argument that all members of a just society had a right to a ‘living wage’, and that if the economy did not provide a job with a ‘living wage’ it was by no fault of the worker, and the just state should step in to ”make good” the promise of a living wage.   This was to be provided by taxing the rich; redistribution of income.

The problem was, how much redistribtion was the right amount?  The early writers took no position, and essentially adopted the Utilitarian principle of the ‘greater good’.  Applied, the idea was we should tax the wealthy and redistribute their income until it caused more harm than good.  This cavernous gap in ideology has remained an open question for over 100 years.  How to resolve it?

One of the more popular methods became comparasions of income between the top and bottom tiers.  I have not yet come to the exact argument as to why a widening gap between top and bottom is a de facto social injustice.  Nonetheless, it is widely considered a ‘bad thing’.  But is it?

Mr. Douhat introduces us to factors that effect changes in income inequality:

For instance, inequality is driven in part by low-skilled immigration: it nudges wages downward for native workers, and the immigrants themselves are taking longer to achieve upward mobility than earlier generations did…

Inequality is also driven by the collapse of the two-parent household, which disproportionately affects the poor and working class, depriving them of the social capital they need to rise…

Inequality is perpetuated by our failing education system — and especially by the bloated cartel responsible for educating the nation’s poorest children.

Lacking an objective statement of the ideal income equality, the US is usually compared unfavorably to European countries.  A 1994 paper by Richard Freeman and Lawrence Katz addresses the comparasion:

Why did wage inequality and educational wage differentials rise more in the United States than in other advanced countries?  We attribute the exceptional experience of the United Sates to the way shifts in the supply of and demand for skills work themselves out in the decentralized U.S. labor market, compared with how they operate in other labor markets.  Our explanation has three parts…

The first is that changes in the supply of and demand of labor skills substantially alter wages and employment of different groups of workers in the manner predicted by economists’ supply and demand market-clearing model…We further expect supply and demand to have their largest effect on young or less experienced workers on the active job market as opposed to experienced workers with substantial job tenure…

The second part of our explanation identifies…differences in wage setting and other labor market institutions across countries…The stronger the role of institutions in wage determination, the smaller will be the effect of shifts in supply and demand on relative wages…[E]ducation and training institutions also mediate the effect of market forces…Social insurance and income maintenance institutions also affect labor outcomes…generous income maintenance or unemployment benefits that allow workers to remain unemployed for a long period can reduce their willingness to take low wages to obtain work… 

For the third part of our explanation we turn to institutional changes, such as product market deregulation and changes in unionization…The important institutional changes in the 1980’s were the decline in trade union power, which was exceptional in the United States, and the decentralization of collective bargaining that characterized diverse European countries.  Both of these developments are likely to produce greater earnings differentials. 

To simplify, one explanation for income inequality is that the U.S. labor market is shifting towards higher paying jobs requiring education and away from lower paying jobs.  A bad thing?  Should we ‘fix’ the ‘problem’ by taxing the higher paid?  Mr Douthat concludes:

The European experience suggests that specific policy interventions — the shape of the tax code, the design of the education system — may matter less in the long run than the sheer size of the state. If you funnel enough of a nation’s gross domestic product through a bureaucracy, the gap between the upper class and everybody else usually compresses.  But economic growth often compresses along with it.  This is already the logic of our current fiscal trajectory: ever-larger government, and ever-slower growth.  That combination could eventually create the more egalitarian America that Democrats have long promised to deliver. The question is whether Americans will thank them for it.

The Wizard of Beck, By David Brooks

The baseline goal of health care reform is to provide quality care to the maximum number of people at an affordable cost.  Seems obvious, but in the endless debate about public versus private, death panels, the heavy hand of government or rapacious health insurance companies that basic goal vanishes into verbiage.

To this end, this article about the Swiss system is a useful tonic. It has the flexibility of  a private system, with the proviso that requires everyone to carry insurance and sets basic parameters regarding profitability and costs of coverage. Of course there are problems–how could there not be? Cost to individual citizens tends to run high, and there is some friction between doctors and insurance companies about allowable procedures. Still, the overall cost of the system is far below ours, and the quality of care is generally high. These virtues entitle the Swiss system at least to a hard look.

California’s 2/3 supermajority rule for spending legislation is addressed in an article for truthout.org by George Lakoff, Professor of Linguistics at the University of California, Berkeley.

To paraphrase George Tenet, this should be a slam dunk.  As a simple principle of democratic rule, legislation should be enacted by majority vote.  Lakoff is absolutely right that California law as it now stands in effect gives a one third minority of legislators veto power over the will of the majority.

Of course it is true that rule by simple majority at the moment would give Democrats the legislative advantage, but this will not always be so, depending on which way the electoral winds blow.  Whatever one thinks of pending legislation, budgets, etc., Lakoff has a strong case that the supermajority rule as it now stands is a recipe for gridlock and undemocratic on its face.

Choice works.  Just ask La Crosse, WI.

The folks there deserve credit for more than their famous boots, they have also pioneered ‘end of life’ care that works at the Gundersen Lutheran Health System; it preserves choice and dignity.  And it also happens to be less expensive.

From the Washington Post:

La Crosse became a pioneer in addressing end-of-life questions in the mid-1980s, after Hammes, a native of the city who has a doctorate in philosophy from Notre Dame, arrived at Gundersen as the director of medical humanities, charged with educating resident physicians about ethics. He noticed a “troubling pattern,” he said, in which family members struggled to make medical decisions, such as whether to continue dialysis after a stroke.

“We’d turn to the family and say, ‘We need your input. If your mother or father could speak now, what would they tell you?’ And the family would say, ‘If we only knew,’ ” said Hammes, 59. “I could see the distress. They were going to have to live with themselves, with the worry about making a mistake. This was unacceptable.”

The hospital began urging families to plan while people are healthy. For those who want help writing a directive, a physician will discuss the powers and limits of medicine and explain to family members what it means if they agree to serve as the “health-care agent.” They will also help people define the conditions under which they would no longer want treatment. Hammes said people often define this as “when I’ve reached a point where I don’t know who I am or who I’m with, and don’t have any hope of recovery.”

The directives are power-of-attorney forms that protect physicians and family members against liability, and the hospital makes clear to its doctors that they are expected to follow them. Today, more than 90 percent of people in town have directives when they die, double the national average…

…locals say it is because Gundersen and the town’s other hospital, Franciscan Skemp, have urged planning. “People here have their feet planted in the ground,” said Barbara Frank, a retired teacher. “They’re no-nonsense sorts of people, without a lot of illusion. That was the fertile soil upon which it was planted. But there’s no question it was helped by the two medical centers taking the lead and saying, ‘This is a good thing for you to do.’ “

By creating a culture of planning, this community has improved it’s citizens control of health care choices.  And by coincidence, it’s also turned out to be less expensive, as none other than Newt Gingrich explains:

Let me give you an example that I find fascinating. In LaCrosse, Wisc., the Gundersen Lutheran Hospital system is, according to the Dartmouth [Atlas of Health Care], the least expensive place in America for the last two years of life. They have an advanced directive program, and over 90 percent of their patients have an advanced directive. They have electronic health records, so everybody on the staff knows what the advanced directive is. They have a very strong palliative care program for using drugs to manage pain. They have a hospice program.The result is today, the last two years of your life in costs are about $13,600. The last two years of your life at UCLA are $58,000. Now, why should Medicare pay $58,000 for the same outcome if it could pay $13,600? You can say, well, Los Angeles is more expensive; they do a couple of more complicated things. So fine. So let’s say it ought to be $20,000 at UCLA. That’s still [$38,000] less than it currently is. …

The Gundersen experience demonstrates two things: 1) End of life planning can work, and 2) We don’t need government help to do it.  The Gundersen success begs the question why couldn’t Britain’s government run health care get this right (see Is ‘end of life care’ pro end of life)?  Mr. Gingrich suggests:

We don’t think the politicians can ever fix this because the hospital lobby is so powerful, and the doctor lobby is so powerful, and the pharmaceutical lobby is so powerful, and the medical technology lobby is so powerful. You’re not going to politically solve this, but if I could empower you to know that, people start making choices. We know, for example, that if a doctor knows price, 60 percent of the time they will prescribe the less expensive drug, just because of their common sense. It’s practical. We know that people are willing to look at practical outcomes.

Seems practical  to leave government out of it.

Where Did “We” Go?  By Thomas Friedman

The man who saw the meltdown coming had another troubling insight: it will happen again.

A specter is haunting Europe — the specter of Socialism’s slow collapse. Full article

David Brooks contributes to the case for obsoleting Left/Right labels. 

When democracy was an infant there was much discussion about the ability of an electorate to self-govern.  Would the voters have sufficient ‘virtue’, in the vernacular of the times, to govern themselves?  Would democracy replace tyrants, or become a new tyranny of the majority?  It depended on the virtue of the electorate.  

Mr. Brooks approaches the call to virtue from an even larger view:

Centuries ago, historians came up with a classic theory to explain the rise and decline of nations. The theory was that great nations start out tough-minded and energetic. Toughness and energy lead to wealth and power. Wealth and power lead to affluence and luxury. Affluence and luxury lead to decadence, corruption and decline.

He puts the contemporary problem nicely:

Our current cultural politics are organized by the obsolete culture war, which has put secular liberals on one side and religious conservatives on the other. But the slide in economic morality afflicted Red and Blue America equally.

If there is to be a movement to restore economic values, it will have to cut across the current taxonomies. Its goal will be to make the U.S. again a producer economy, not a consumer economy. It will champion a return to financial self-restraint, large and small.

It will have to take on what you might call the lobbyist ethos — the righteous conviction held by everybody from AARP to the agribusinesses that their groups are entitled to every possible appropriation, regardless of the larger public cost. It will have to take on the self-indulgent popular demand for low taxes and high spending.

Here here.  Let’s never mind left/right, blue/red.  Perhaps we start by asking of ourselves, what can we afford?