Friday, July 22, 2011

Crises can make for bad decisions – part 2

One of the ways that humans deal constructively with crises is to break the problem into manageable parts. U.S. economic woes will benefit from this approach.

One piece is Social Security. A moral fix is relatively simple (cf. Ethical Musings: Expand Social Security?).

A second piece is the federal budget, excluding Medicare, Medicaid, and Social Security. Again, a morally sound fix is relatively simple. First, reduce defense spending for wars that the U.S. will never fight. No nation currently has the ability to challenge U.S. global military superiority. Spending upwards of $50 billion on a new fleet of hyper-bombers is an immoral waste of resources. Second, invest in education. Education helps lift people out of poverty, whether the person is in Africa or the U.S. Many education initiatives have proven ineffective. Eliminate those programs. Adopt new initiatives; don’t reduce education spending (cf. Ethical Musings: Musings about higher education - part 2). Third, eliminate tax loopholes that benefit special interests at the cost of the public good.

The hard pieces are fixing Medicare and Medicaid. As I have repeatedly argued, the U.S. healthcare system is dysfunctional (cf. Ethical Musings: Healthcare coverage for all and Ethical Musings: Free markets and healthcare). Part of the answer consists in more intentionally rationing healthcare (the U.S. now rations healthcare based on ability to pay). David Brooks sketches the problem with poignancy in his column, “Death and Budgets” (New York Times, July 14, 2011). By 2050, the cost of caring for Alzheimer’s patients alone is projected at $1 trillion annually. Promises of a cure for cancer have proven elusive in spite of the billions expended. When is palliative care rather than treatment morally justified? Who, with what medical conditions and under what circumstances, should have access to the latest proposed but unproven treatments? How will we as a nation fund healthcare for people (should the economically advantaged pay for their own care, the poor fend for themselves, and the middle-class rely on insurance or does a better approach exist)?

Ayn Rand’s most popular book, Atlas Shrugged, remains popular. In that novel:

One memorable moment in "Atlas" occurs near the very end, when the economy has been rendered comatose by all the great economic minds in Washington. Finally, and out of desperation, the politicians come to the heroic businessman John Galt (who has resisted their assault on capitalism) and beg him to help them get the economy back on track. The discussion sounds much like what would happen today:

Galt: "You want me to be Economic Dictator?"

Mr. Thompson: "Yes!"

"And you'll obey any order I give?"


"Then start by abolishing all income taxes."

"Oh no!" screamed Mr. Thompson, leaping to his feet. "We couldn't do that . . . How would we pay government employees?"

"Fire your government employees."

"Oh, no!"

Stephen Moore, in the Wall Street Journal column from which I excerpted the above quotation (“'Atlas Shrugged': From Fiction to Fact in 52 Years,” January 9, 2009), appends this paragraph immediately after the excerpt:

Abolishing the income tax. Now that really would be a genuine economic stimulus. But Mr. Obama and the Democrats in Washington want to do the opposite: to raise the income tax "for purposes of fairness" as Barack Obama puts it.

Moore’s sarcasm hides three vital points. First, he presumes that everybody wants as much income as possible. That presumption is patently false. Most people are satisficers, more interested in sufficiency than maximizing income. Eliminating the income tax will cause few of these people to work more; some may, to the detriment of society, work less to earn less. Why would people want less income? Because they value time with family or friends or the freedom to pursue other interests more than they value money.

Second, Moore ignores the essential services that government provides. People who want to live in a nation without reliable government services should relocate from a developed nation to a third world country that lacks a reliable transport infrastructure, well-regulated (i.e., reliable, truthful, and safe) businesses, adequate national defense, etc. The U.S. government for all of its multitudinous faults provides a remarkable set of services for a bargain basement price when compared to other developed nations.

Third, fairness is important. People begin life unfairly. Nobody chooses his or her family of origin; nobody chooses her or his genes. In other words, the two primary determinants of human existence – genetics and nurture – are utterly beyond an individual’s control. By virtue of genetics and nurture, some people are good at producing wealth and others are not. By virtue of genetics and nurture, people are individually unique and collectively able to achieve far more than is possible as any single individual. Rand’s philosophy of individualism is profoundly flawed because she ignores that reality. Government plays an essential role in helping to level the playing field (i.e., improving fairness). Equal access to free public education is integral to this leveling. Income transfers to the elderly, the ill, and in support of children are also ways in which government levels the playing field. Taxing the wealthy more than the poor (progressive tax rates) are fundamental to fairness.

Moore and Rand are both wrong. In times of crisis, including the current economic struggles, pulling together as a single community of communities will produce better and greater results than devolving to individualism.

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