Category Archives: Politics as Usual

For Posterity: Charles D. Hayes



Some of the collected thoughts of writer Charles D. Hayes:


The really scary thing about hard-right Christian fundamentalists is not just their fervent belief in a prophesized Apocalypse to come, but in their eagerness to help bring it about. In their view, it’s a vengeful comeuppance overdue nonbelievers.

This is why having Steve Bannon at the helm in the Trump Administration represents a clear and present danger to this country. Steve Bannon is bat-shit crazy.

So, we have a mentally unstable president and his chief adviser is an admitted apocalypticist and Trump supporters just want us to give these people a chance. If irony were water, we would all drown.

* * *

During the 2016 campaign, recall that Donald Trump said he was beholden to no one, he couldn’t be influenced by contributions, then why are his Cabinet appointees big campaign contributors?

Remember how he was going to hire only the very best people? Then, why does he appoint a Secretary of Education, who has demonstrated that she is clueless about the major philosophical issues facing public education? She is, however, a major contributor, so this is glaring proof of a Trump lie. 

Political propagandists advocate telling the same lies repeatedly, until they are accepted as truth. Trump says one thing and does another, so often, that any objective analysis shows clearly that he is the most dishonest person in the history of presidential politics and that’s really saying something.

We know that telling lies repeatedly convinces gullible citizens. So, in this case the best defense may be an overwhelming offense with the antidote to Donald Trump being an endless repetition of the truth.

Trump supporters need to be the target of an unrelenting barrage of facts, it may not breach their partisan gullibility, but it may impede their ability to promote a Kellyanne Conway version of reality.

* * *

Citizens who genuflect approval when executives earn hundreds of times more than workers, but who balk at raising the minimum wage have been rendered ethically incapacitated from having swallowed whole, the psychological power of hierarchical authority, overriding their own ability to offer judgments about ideas as morally intuitive as the concept of justice.

* * *

I’m confident I’m having an experience like millions of other folks as we keep trying to resume something akin to life before the election, but nothing is working. I keep going over and over the fact that this is unlike any election that anyone alive has ever experienced, since we now have a President of the United States who could not pass a citizenship test with an online tutorial. Every new day when you turn on a television or computer for the day’s news, it’s like listening for breaking glass. Each day you think, well we are still here, no nukes, no war, so far, not yet anyway, and still it doesn’t help all that much, because tomorrow is another day and a president with a serious personality disorder who is mentally unfit is like a fuse in search of a match.

The extreme right-wing ideologues that Trump surrounds himself with are despicable people with contemptible ideas, but for the most part we are relying on them, because they aren’t completely bat-shit crazy, so we must depend on them to keep the bull subdued, when in the china shop, or talking to China, or North Korea, or Iran, or Mexico. So, onward we cope, hoping it will get easier while not believing it for a minute.

* * *

I’ve read several posts lately in which conservatives have argued that liberalism is a mental disease. Just think, if only that were the case we could spread the germs and infect those who lack the common decency to support the need for universal healthcare.

Thank goodness for the pandemics in 1935, 1938, 1964, 1965 and the more recent one’s that have given us Social Security, Medicare, The Civil Rights Act, the 8-hour workday and overtime pay, the minimum wage, the GI Bill of Rights, The Clean Water Act, The Family and Medical Leave Act, The Consumer Protection Agency, The Rural Electrification Act, The Affordable Healthcare Act, and many other examples.

But, as I keep pointing out, that we have had service men and women die on the battlefield, only to have some members of their own family die from a lack of health insurance is only something that could occur in a society that is still very sick.

* * *

The 2016 election was unique, in that, our media, in effect, normalized the bizarrely abnormal by reporting a “this versus that” campaign, while giving billions of dollars of free air time to one candidate simply because of his hot button appeal—an appeal driven by racism, misogyny, ethnocentrism and the fear and insecurity of people facing an unjust economic future.

The press should have brought the full force of investigative journalism to bear on Donald Trump’s business practices, and his foreign debt, and they should have been insistent on him releasing his tax returns. One candidate experienced extreme vetting, one simply refused vetting. 

That our media helped to normalize the abnormal is unfortunately something that’s going to be very hard to fix because now the buffoon is in-charge and his abnormal behavior finally seems to be awakening the press to the monster they helped win the White House. But what is to be done now is an open question.

Naked Capitalism: Why Repugs Struggled With Obamacare


Bill Black: Why the Republicans Cannot “Replace” Obamacare

Yves here. One possibility discussed elsewhere is the Republicans making changes that appear to preserve Obamacare features while actually degrading them. For instance, one proposal is to link the coverage of pre-existing conditions to maintaining “continuous coverage”. Without going into details, that is made difficult enough for many patients to achieve, for reasons of bureaucratic difficulty and rigidity. Many are sure to be unable to comply and be forced to obtain insurance at the applicable rates for individuals with that ailment or go uninsured because there is no policy available.

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

I have just listened to Lawrence O’Donnell’s program on Friday, January 27, 2017. It was a strong program, but I offer these friendly amendments on his discussion of the Washington Post story titled “Behind closed doors, Republican lawmakers fret about how to repeal Obamacare.” O’Donnell and his guests spoke exclusively of how difficult it was for the Republicans to come up with a plan to replace Obamacare and making the point that the leaked transcript of the closed Republican meeting proved that the Republicans had no plan. The thrust of the comments was that the explanation for the difficulty was the technical complexity of the issues and differences of policy views among congressional Republicans. Neither explanation is accurate. The problem is much more basic, and explains why Republicans did not use their exceptional leverage to amend the draft Affordable Care Act that would have improved it, why they have not come up with a replacement plan in seven years, and why they will not be able to come up with a replacement plan in the future.

People have forgotten that President Obama and Democratic Senators made extraordinary efforts to get Republican support for the bill in the Senate. The “gang of six” (three Democratic and three Republican Senators) deliberations stalled the bill for months. Had even a single Republican Senator been willing to support a superior health insurance plan, Obama would have leaped at the opportunity to support his or her amendment improving the bill. Senators knew that Obama was desperate to attract even a token Republican Senator to support an Affordable Care Act bill. Senators knew that this meant that every Republican Senator had unprecedented political power to amend the bill by adding superior provisions – in return for supporting the amended bill. No Republican Senator took advantage of that power because any change to the health insurance bill that would have improved it was anathema to Republicans.

The problem is not that Obamacare is such an excellent program that it has no superior replacement. The problem is that the superior programs are unacceptable to the Republicans on ideological grounds. Indeed, the Congressional Republicans detest the superior alternatives because they are superior. The superior programs would have a far broader governmental role than does Obamacare. The Republicans do not want effective domestic governmental programs because it would discredit their claims that the government programs invariably fail.

Obamacare’s model is a far-right Heritage Foundation plan that Mitt Romney convinced Massachusetts to adopt when he was governor. Heritage’s design deliberately, for ideological reasons, minimized the governmental role and cost containment. The price of President Obama’s deal with the health insurance companies not to use their lobbying power to kill his Obamacare proposal was his willingness to minimize the role of the government and not include effective cost controls in the bill. The Republicans will not increase the role of government for political and ideological reasons. The Republicans will not impose effective cost controls on insurers and medical providers for the same reasons that Obama refused to do so. They fear the insurers and medical providers’ lobbying power and fear the loss of campaign contributions.

Experts anticipated the problems Obamacare is experiencing. The weak cost controls, limited competition, and the small numbers of participating insurers will continue to lead to premium increases and high deductibles that will make coverage illusory for many working class Americans. Cost increases under Obamacare are smaller than anticipated. The Great Recession’s severity led to many years of minimal inflation.

The Republicans could create a superior system by offering a public option that would create competitive pressures to contain cost, extending Medicare to all citizens to reduce the cost of providing care through private insurance, or providing a national health system. Each of those options, however, is unacceptable to them on ideological grounds. That self-inflicted restraint means that there is no superior alternative to Obamacare. That is why the Republicans have not developed, much less proposed, much less enacted a “substitute” plan for Obamacare over the last seven years. That is why the Republicans cannot develop a superior plan even though they control totally the federal government. It has nothing to do with the fact that medicine and private insurance are “complicated” or that Republican legislators differ in the degree to which they are willing to return millions of Americans to uninsured status. There are, of course, limitless ways to replace Obamacare with inferior plans. The leaks of the closed-door Republican meeting prove what we knew – the Republicans fear the political cost of replacing Obamacare with an inferior private insurance plan.

My prediction is that the Trump administration and the congressional Republicans will continue to take steps to exacerbate Obamacare’s difficulties in order to produce the breakdown of the existing system in several states. Then they will repeal it as a failure and blame it on Obama. They will add a fig leaf that purports to forbid insurers from denying “access” due to the applicant’s preexisting medical condition, but that access will be illusory due to the combination of cost and very high deductibles. Trump’s representative at the Republican meeting indicated this strategy (in the administration’s characteristic dishonest manner).

Even as Bremberg [who heads Trump’s domestic policy office] offered few details about what the president plans to do, he emphasized that last week’s executive order “repeatedly” used phrases “such as ‘to the maximum extent permitted by law’ ” to enable his political appointees to start dismantling the ACA [the Affordable Care Act, a/k/a Obamacare] by executive authority.

“The president has now officially given direction [not only] to HHS, but to all of these agencies that have responsibility . . . to exercise all available discretion to begin helping the American people and to begin fixing our health-care system.”

The dishonesty, of course, is characterizing “dismantling” Obamacare as “helping the American people” by “fixing our health-care system.” The strategy is to “dismantle” key provisions of Obamacare without replacement. The administration designed the dismantling to degrade Obamacare to the point that it breaks down in multiple states and provides a pretext for its repeal.

When Trump and Republicans state that they “have” a “superior” plan to replace Obamacare they are lying. They are lying because they refuse for ideological reasons to replace Obamacare with a superior plan. There is too much emphasis on Trump’s daily lies as if they were an unprecedented departure from the consistent practice of the Republican Party for over a decade. Congressional Republicans have been lying constantly for over seven years about their claim that they have a “plan” to enact a superior replacement for Obamacare.

Steve Russell: The Decline and Fall of Sears





When I was a kid, the “wishbook” from Sears, Roebuck, was perhaps the most potent symbol of capitalism, a smorgasbord of reasonably priced consumer goods from all over the world.

Sears sold two wheel transportation under the Allstate brand, Vespa scooters from Italy and Puch motorcycles and mo-peds from Austria.

Sears had apparently bought army surplus Enfield rifles from England and if memory serves you could get one “as is” for under $20 and a sexed up version less a lot of wood and metal for a bit more. Order your military rifle and it shall be delivered to your door, until Lee Oswald ordered an Italian military rifle by mail and did major mischief with it.

Sears has fallen on hard times when it could have put its business plan on line and become Amazon. Instead, it moved to brick and mortar and has gone the way of most brick and mortar stores.

Sears stock was victimized by one of the bear raids made possible when Bush 43 neutered the SEC. The naked short rule went unenforced and the uptick rule was flat repealed to the detriment of ordinary Americans who had no idea why that mattered.

At one point during the Great Recession, a bear raid had knocked the stock down so far I was having a nostalgia attack and wanted to buy some–only to discover that more shares were sold short than existed in the float. I had not yet seen Bush 43’s tracks in that crazy state of affairs but the sheer absurdity of it scared me off big time.

Good thing, too, for me personally, because I would have let emotion into a trade and gotten hosed. Letting emotion into stock trading is an error like the one addressed by the maxim, “Never fall in love with a car” when shopping for transportation.

Anyway, yesterday the Wall Street Journal sent a bulletin to my iPhone saying that Sears–impecunious again–was about to sell the Craftsman brand to raise cash.

Oh, no! Craftsman to me always stood for excellent hand tools, well designed and well made and backed by a legendary warranty. Bring your broken Craftsman hand tool into Sears and they hand you a new one, without asking where or when you bought it, whether you abused it, etc.

Craftsman tools were mostly if not exclusively made in USA, and it never dawned on me that the company was somewhat protected in the US market by the oddball sizes our tools required in a world of metric.

Don’t get me started on British Standard–the bottom line was a garage that wanted to work on everything needed three sets of tools. Does anybody but me remember that we were on track to go metric when President Reagan reversed the decision of the Carter administration to join the rest of the world? Another Reagan idiocy, right up there with tearing down the solar panels Carter had installed on the White House roof.

Either Carter’s solar energy turn or Carter’s metric turn would have saved more US jobs than all the tweets Donald Trump offers to the same end.

Anyway, I was all “Oh no, not Craftsman,” thinking that the iconic brand could be acquired by some outfit making cheap tools in Taiwan or wherever and they would trade on the reputation of the brand until they managed to destroy it. Another victim of unregulated globalization.

This morning I read that the buyer is Stanley Black & Decker. I’m too old to use hand tools much anymore, so why do I feel like I’ve dodged a bullet?

Naked Capitalism on TrumpCare


TrumpCare: ObamaCare, Medicaid, Medicare, and the Veterans Administration

By Lambert Strether of Corrente.

Assuming that Trump takes office on January 20, we can expect health care policy to shift from the left side of the Overton Window to the right, even as the only solutions that remain “on the table” are neoliberal and markets-first non-solutions. Let’s begin by setting the baseline for a rational and humane health care policy — i.e., not neoliberalism — as a universal benefit.[1] From Richard D. Lamm and Vince Markovchic in the Denver Post:

U.S. is on fast track to health care train wreck

In 2015 we spent $3.2 trillion on health care, which was $10,000 per person in the U.S., ($25,000 for a typical American family). This is 17.5 percent of the U.S. Gross Domestic Product (GDP). To put this in perspective, this is more than twice what most other developed nations spend on health care while insuring all of their residents. This year we are on track to exceed that amount with it being 18 percent of GDP.

Even with the implementation of the Affordable Care Act, we still have 28 million people with no health insurance, and many more are under-insured due to rising co-pays and deductibles….

Of the $3.2 trillion health spending, 70 percent goes directly to fund the cost of our healthcare. The remaining 30 percent is spent on administration and profit, which is more than twice that of any other nation. In 2014, studies published by the Institute of Medicine, Rand Corporation, and the Center for Medicare/Medicaid Services estimated that out of total health care spending, as much as $900 billion, or about one third of our total spending, can be attributed to waste, fraud and abuse.

This current system is unsustainable, but who will tell the American public? We suggest that the solutions to the real problems of health care are hardly being talked or written about.

The ideal health insurance system is one that: provides free choice of hospitals and doctors; provides insurance coverage to all at all times (i.e., not tied to an employer); is affordable and will remove all risk of medical bankruptcy. This system should have an administrative cost of less than 5 percent and have everyone in the risk pool, thus making premiums affordable. We have such a system now: Medicare covers all persons over 65, those on total disability, and all renal dialysis patients.

Medicare, with all the fraud and other issues, still operates with about 3 percent to 4 percent overhead. That is much less than the profit and overhead added by U.S. health insurers, which is instead 15 percent to 20 percent. In addition, Obamacare, Veterans Affairs and Medicaid each add another entire layer of expensive bureaucracies. All these, along with the government being unable to bid for drugs purchased under Medicare, add up to unnecessary cost and waste in our system.

Similarly, there would be tremendous cost savings if under Medicare as a single payer, it is authorized to negotiate for hospital care on a more cost-efficient and more comparable basis across the nation.

So, the health insurance companies are parasites who should be removed. Now, I don’t know why Lamm and Markovchic don’t just lower the age for Medicare eligibility from 65 to zero, like Teddy Kennedy proposed. And I also don’t know why Democrats (including Sanders) aren’t prefacing every statement they make on heatlh care with “Of course, Americans deserve Medicare for All. Until then….” Instead, they’re digging in to defend a flawed system that hasn’t covered 28 million people, instead of going on the offense for the universal benefit. (That’s the difference between “resistance” and “revolution,” I guess. The one is reactionary; the other is, er, progressive.)

Anyhow, it is what it is and we are where we are. Absent a universal benefit[1], we get health care silos: ObamaCare, Medicare, Medicaid, and the Veterans Administration, among others. In this post, I’m going to take a very quick look at the current news in each silo. All the silos are in decay and disrepair — except from the standpoint of those who profit from them, of course — and all suffer from neoliberal infestations, but the forms of decay and the degrees of infestation differ. So the post will be a bit of a patchwork, but then the health care system itself if a patchwork. As always, I welcome comments from readers with informed experience interacting with these systems, for good or ill.

ObamaCare: Repeal and Replace, But How, When, and with What?

On ObamaCare repeal, Chuck Schumer suggests: “It’s a political nightmare for them. They’ll be like the dog that caught the bus.” Heaven forfend Schumer should defend a universal benefit, but on this he could be right. Throwing 30 million people off the rolls[2] is a heavy lift, even for Republicans. That’s because there’s really no popular consensus for doing it:

But the euphoria of finally acting on a long-sought goal will quickly give way to the reality that Republicans — and President-elect Donald Trump — have no agreement thus far on how to replace coverage for about 20 [or 30] million people who gained insurance under the health-care law.

Obamacare continues to be viewed unfavorably by Americans, but the politics of undoing the law are complicated. A Kaiser Family Foundation poll after the election showed 26 percent want to repeal it, while 17 percent want to scale it back. Nineteen percent want to move forward with implementation and 30 percent want to expand it.

It’s also not clear what would happen to Republican border states like Tennessee and Kentucky, that benefited signifacantly from Medicaid expansion under ObamaCare.

So the Republicans want Democrats to hold hands with them as they jump off the cliff. Let me know how that works out:

Some Republican aides say they may pursue a replacement through a series of small bills as opposed to one big measure. Leading Republicans such as Senate Majority Whip John Cornyn of Texas have said they want Democratic buy-in on a replacement plan. Breaking a filibuster would require the support of at least eight Democrats.

(Of course, reconciliation requires a bare majority, and the filibuster can be altered or abolished when the Senate adopts its rules at the start of a session.)

So the Republicans are toying with various ideas, some of which involve kicking the can down the road (“three year delay”), or even off the road entirely:

Now comes the American Enterprise Institute’s conservative health wonk James Capretta with an idea that cuts to the chase: Why not just “grandfather” all the people currently receiving benefits via the ACA and make whatever the new “replacement” system turns out to be prospective for new people seeking assistance?

It is also worth noting that Republicans have not had much luck in the past convincing people to accept radical policy changes by grandfathering those most immediately affected. George W. Bush’s proposed partial privatization of Social Security was supposedly only going to affect people aged 55 or younger. The same was true of Paul Ryan’s original Medicare voucher proposal.

(ObamaCare enrollment hit a record high this year, so I wonder if people were acting on rational expectations of a grandfathering solution. I know I thought of it.) So the 115th Congress should be interesting. However, if the 21st Century has taught us anything, it’s that it’s always possible to make a bad situation worse. Remember the ObamaCare rollout debacle? Does anybody believe the Republicans will do any better at a rollback?

Medicare: Balance Billing

Naked Capitalism covered ObamaCare’s balance billing problems back in 2013:

One of the proofs that Obamacare is really about helping insurers and Big Pharma rather than ordinary Americans is its failure to do much about the seamy practice known as balance billing.

Say you have a scheduled procedure, like getting a stent. Like most Americans who have health insurance, you are in an HMO or a PPO. Your doctor, who is in your network, schedules you for the operation at a hospital in your network. You assume the only thing you need to worry about is a fairly minor co-pay and recovery.

But weeks later, you find that the anesthesiologist wasn’t in your network, and you are hit with a $12,000 bill for his services. And this sort of scamming (hospitals knowingly putting people on a surgical team that they can bill at huge premiums to negotiated rates) is routine. And of course, if the ambulance takes you to an emergency room that is not in your network, the outcome can be catastrophic.

And now, the Trump administration is considering expanding this pleasant practice to Medicare:

“[B]alance billing” [is] why the American Medical Association is strongly supporting Donald Trump’s pick of [the aptronymic] Rep. Tom Price (R-Ga.) to lead the Department of Health and Human Services, which oversees Medicare. … In 2011, Price (an orthopedic surgeon himself) introduced a Medicare “reform” bill in Congress that, among other things, would have brought balance billing to the program. This

Balance billing is basically illegal for Medicare patients…

Permanently obliterating the financial security of helpless families with no or bad insurance as a loved one dies slowly and painfully of a chronic illness is a nice little profit center for providers. But it pales in comparison to the gravy train they might get if they can bring balance billing to Medicare. Seniors use far more care than the younger exchange population, and there are a lot more of them — 55.5 million, versus 12.7 million people on the exchanges. Perhaps most importantly, they’re quite a bit richer on average. Many seniors have been scrimping their whole lives to save for retirement, in keeping with decades of agitprop from conservatives and Wall Street, and the more sociopathic among the health-care population are licking their chops at the prospect of being able to devour those nest eggs.

(I like Ryan Cooper. The man can write.) So, like I said, it’s always possible to make things worse…

Medicaid: Privatization in Iowa

Let’s start out by noting that Medicaid has a serious neoliberal infestation problem:

More than two-thirds of states contract out some or all of their Medicaid program to private companies. The benefits of the practice and its impact on quality and cost of care have been unclear, however.

The Des Moines Register:

HHS believes 57% of Medicaid beneficiaries were enrolled in Medicaid managed-care organizations as of July 1, 2011, compared with 10% in 1991. The consulting firm Avalere Health projects that 75% of Medicaid beneficiaries will be covered by managed-care organizations starting in 2015. A recent U.S. Government Accountability Office report, using fiscal 2011 data, found Medicaid managed-care plans received about 27%, or $74.7 billion, of federal Medicaid expenditures.

The rush into Medicaid managed care came despite limited evidence that the plans save money for states and the federal government.

Iowa’s Republican governor Terry Branstad controversially privatized Iowa Medicaid services, on the (ostensible) premise that the state would save money (see Lamm and Markovchic, supra). Oops:

Iowa Medicaid payment shortages are ‘catastrophic,’ private managers tell state

In a Nov. 18 letter to Iowa Medicaid Director Mikki Stier, a UnitedHealthcare executive also warned of financial problems. Kimberly Foltz, chief executive officer of the company’s Iowa branch, wrote to Stier that she appreciated the state’s efforts to address some of the issues, “but overall the program remains drastically underfunded.”

Foltz wrote that experts from the Milliman firm, who were hired by the state, underestimated by 40 percent how much it would cost to cover the tens of thousands of poor Iowans who were allowed to sign up for Medicaid under the federal Affordable Care Act.


The mistake “suggests there were material flaws in the rating projection,” [Foltz] wrote.

Oops. (Had UnitedHealthcare no data to check Milliman’s figures?)

Foltz wrote that one way to help make up for the shortfall would be to allow the managed care companies to negotiate down how much they pay pharmacies to fill prescriptions. She suggested her company could cut those rates by nearly 90 percent. Hill said the contracts are written in a way that would make it difficult for the managed care companies to opt out unilaterally. But she said the companies could argue that the state and its actuarial firm, Milliman, did not properly estimate the costs of covering care for Iowa’s poor and disabled residents. “Conceivably, that could be a material breach of the contract,” which could allow the companies to bail out of the project, she said.

A nice Christmas gift for Terry Branstad. (The 90% figure seems to me remarkable.)

Of course, the real solution to cost problems is to abolish the insurance companies altogether, and use the power of single payer to beat back Big Pharma. But then you knew that.

Veterans Administration: Creeping Privatization

Finally, let’s take a look at the Veterans Administration. (I’m by no means an expert in the VA, and so readers will correct me, but my general impression is that the VA rations by queuing but can’t admit it, which has caused them political problems. But once you’re in, the care is good, which presumably explains why veterans themselves don’t want to “privatize” it. However, I think privatization as a frame is slightly deceptive, as we shall see (even if Sanders adopts that frame).

So, here’s Trump doing the Trump thing, which is — and do not underestimate him! — translating policy into vivid phrases voters can grasp immediately:

TRUMP: “We think we have to have kind of a public-private option, because some vets love the VA. Definitely an option on the table to have a system where potentially vets can choose either/or or all private.”

Brilliant of Trump to hijack the virulently memetic phrase “public option” — the bait and switch vaporware “progressives” used to suppress single payer advocacy in 2009 — with the conservative-sounding “public-privateoption.” And here Trump explains how such an option would work from the user’s perspective. Poltico:

Trump has insisted that what he wants is not to hand the veterans’ support mission entirely to the private sector. “No, it doesn’t have to be privatization,” he said in May. “What it has to be is when somebody is on line and they say it’s a seven-day wait, that person’s going to walk across the street to a private doctor, be taken care of, we’re gonna pay the bill.”

He has also proposed that all veterans be able to use their veterans’ IDs to get care at any hospital or doctor’s office that accepts Medicare.

Vets could use their ID cards! It’s brilliantly simple![3] It’s also a bridge too far for veterans:

But veterans’ groups see that as a major step toward privatization because it would allow veterans to opt out of the VA health care system. That is different from the recommendations of a recent federal Commission on Care, which pushed for the VA to oversee a network of qualified private health care providers to supplement VA-run hospitals and clinics.

But there’s less to this distinction than there seems to be at first sight. Trump proposes “walk[ing] across the street to a private doctor”; and the Federal Commission proposes “walk[ing] across the street to a certified private doctor.” Since the VA actually delivers health care, both solutions “allow veterans to opt out of the VA health care system,” and so both destroy the universality of the benefit. The Commission on Care (PDF) explains certification:

VHA credential community providers. To qualify for participation in community networks, providers must be fully credential ed with appropriate education, training, and experience, provide veteran access that meets VHA standards, demonstrate high-quality clinical and utilization outcomes, demonstrate military cultural competency, and have capability for interoperable data exchange.

Oh. Credentials. Not that I don’t want medical personnel to have them, but isn’t this rather a dog-whistle for liberals? And:

[A]ddressing veterans’ needs requires a new model of care: rather than remaining primarily a direct care provider, the VA should become an integrated payer and provider.

So, from being the American equivalent of the UK’s National Health Service, a “direct care provider” (even if the vile Tories are gutting it), the Commission proposes that the VA become more like Canadian Medicare for All, a single payer system. I told you it was a patchwork!

Now, let’s step back for a minute. The Commission was set up in 2014 under Veterans Access, Choice, and Accountability Act (VACAA), which was designed to solve a queueing crisis through “choice,” i.e., by allowing veterans who are unable to get an appointment in a reasonable time to seek care outside the VA. Now, a suspicious mind would put this under the heading of a neoliberal pattern for destroying a universal public benefit: 1) Underfund the service; 2) Wait for the inevitable problems; 3) Publicize them; 4) Push through a privatizing solution; 5) Rinse and repeat until the public service is destroyed. The VACAA was quite small. The Commission’s proposals are not so small. And in a decade or so, if the neoliberals get their way, the VA will be where Iowa is today, even if it does pass through a single payer phase on the way.

That’s why I think the privatization frame is a little deceptive. Yes, the ultimate goal, as with all neoliberal programs, is privatization. But it can take place a little at a time. For example, from Stars and Stripes:

Concerned Veterans for America, or CVA, is a veterans advocacy group in the Koch brothers’ political network and has been one of the most vocal critics of VA since the 2014 wait-time scandal.

The CVA is poised to become more influential under the new administration, as President-elect Donald Trump has tapped the group to help overhaul the veterans health-care system. The most controversial proposal by the group is an expansion of veterans’ health-care options in the private marketplace – which critics, including traditional veterans advocacy groups and Democratic lawmakers, say could lead to the dismantling of the current VA..

But CVA has not proposed a wholesale transfer of VA’s services over to the private sector – which is what “privatization” usually describes.

No, there is no “wholesale transfer.” Now. That’s for later, as with the Tories and the NHS.


So, what we have is a number of different battles on different fronts: ObamaCare, Medicaid, Medicare, and the Veterans Administration. It would be nice, and politically useful, if all these battles could be seen as a single theatre of war: Are we to have a humane and rational health care system — a universal benefit — or are we to have TrumpCare: An expensive and lethal mess?


[1] In of the earlier stories on Trump administration health care policy, the Times suggested that the Republicans seek a universal benefit. See FAIR, “Media Legitimizing GOP’s ‘Universal’ Health Plan That Doesn’t Exist.” I’ll believe it when I see it. The Democrats didn’t do it, so why would the Republicans?

[2] The 30 million figure comes from the Democrat nomenklatura at Think Progress, who helpfully calculate the number of deaths that will result. Ironically, they never calculate the lives saved with Medicare for All.

[3] Heaven forfend that any adult could use, say, their Social Security card for the same purpose.

The Price of Greed

Follow the Money: Nominee for Secretary of Health and Human Services Traded Health Care Stocks and Owned Tobacco Stocks While in Congress

By Roy Poses, MD, Clinical Associate Professor of Medicine at Brown University, and the President of FIRM – the Foundation for Integrity and Responsibility in Medicine.  Originally published at Health Care Renewal

At least the US president-elect seems to be making the problems of conflict of interests and health care corruptionless anechoic.

Dr Price’s Stock Portfolio

The latest relevant big story was first picked up by Sheila Kaplan writing in Stat. It seems that Dr Tom Price, once a practicing orthopedic surgeon, then a Congressman, and now Mr Trump’s pick for Secretary of DHHS, owned and owns lots of health care related stocks:

his stock portfolio includes investments in pharmaceutical, medical device, and health insurance companies, the heart of the industries he would be overseeing as secretary.

In particular,

Among Price’s holdings are some in Innate Immunotherapeutics, Ltd., a biomedical company in which another lawmaker is a major shareholder. According to his financial disclosure statements, on Aug. 31 he bought between $50,001 and $100,000 worth of stock the firm.

Representative Chris Collins, a New York Republican, is a director of the company, which develops drugs to treat multiple sclerosis. He lists assets in the firm worth between $5,000,001 and $25 million. Price also purchased a smaller amount of stock in Innate Immunotherapeutics in 2015.

Collins is also a member of Trump’s transition team.

In March, Price invested between $1,001 and $15,000 in AmgenEli Lilly and Co.; PfizerBiogenBristol-Myers SquibbZimmer Biomet, a medical device company; Aetna; and Athenahealth. Also that month, Price sold the same amounts in GileadAbbott Laboratories, and Thermo Fisher Scientific.

So for readers of Health Care Renewal, this is very familiar. We have discussed ad infinitum the conflicts of interest that may affect physicians, particularly due to financial relationships with big health care corporations. The issue is that physicians swear oathes to put the health of their individual patients first, and to support the public health in general. Yet the interests of, for example, drug, biotechnology, device companies may be at odds with this primary mission. Such companies in this age of promoting “stock holder value” may primarily be about increasing revenue by selling as much of their products as they can, and let the Devil take the hindmost. Yet physicians ought to use drugs and devices judiciously, and only when their benefits for individual patients outweigh their harms. The concern is that physicians who have financial interests in such and other health care related companies may consciously or unconsciously allow their professional decisions to be influenced by their personal financial advantage.

Dr Price appears to be a member of the US House of Representatives full time, and no longer a practicing physician. But he has not relinquished his Georgia medical license (look here). So he should still be bound by his oath as a physician.

Dr Price’s Active Stock Trading

But wait, there’s more. Last week, the Wall Street Journal noted that Dr Price was not simply a long-term owner of stocks, he was an active trader.

President-elect Donald Trump’s pick to run the Health and Human Services Department traded more than $300,000 in shares of health-related companies over the past four years while sponsoring and advocating legislation that potentially could affect those companies’ stocks.

Rep. Tom Price, a Georgia Republican, bought and sold stock in about 40 health-care, pharmaceutical and biomedical companies since 2012, including a dozen in the current congressional session, according to a Wall Street Journal review of hundreds of pages of stock trades he filed with Congress.

In the same two-year period, he has sponsored nine and co-sponsored 35 health-related bills in the House.

His stock trades included Amgen Inc., Bristol Myers Squibb Co., Eli Lilly & Co., Pfizer Inc. and Aetna Inc.

This raises more issues. First, that Dr Price was actively trading these stocks suggests that his financial holdings might have been more salient to him than, say, a long-term investor who just buys stocks and puts them away in a retirement portfolio. This increases the likelihood that his stock holdings, and their recent performance, may well have influenced his decision making.

Moreover, this emphasizes that we should be concerned not so much about the effect of financial relationships on Dr Price’s clinical decisions – in fact, it appears that he is a full time Congressman, and hence is not practicing – but on his decision making as a national legislator with considerable influence on health policy and the public health. As a congressman, Dr Price also took an oath to “support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion, and that I will well and faithfully discharge the duties of the office on which I am about to enter.” So the concern is that the immediate profitablity of his actively traded stock portfolio might influence how Dr Price legislates.

As the WSJ article noted,

Mr. Price, an orthopedic surgeon who chairs the House Budget Committee, has played an influential role in shaping health legislation. He sits on the Ways and Means Committee’s health panel, which oversees Medicare. He also is a member of the Republicans’ Congressional Health Care Caucus that has called for repeal of the Obama administration’s landmark health overhaul.

Beyond just the issue of conflict of interest is that of Dr Price’s apparent comfort with the ethical and sometimes criminal track records of the companies from whose stocks he appears to have profited. We on Health Care Renewal have been documenting the ethical misadventures, and sometimes crimes committed by large health care organizations which claim they operate for the good of patients and the public, but seem more to operate for the benefit of their insiders, particularly top management. Many of the companies held by Dr Price have lengthy lists of such bad behavior. See the links above to some individual companues for many more, sometimes sordid details.

If Dr Price, who is not only a physician but a legislator with significant influence on health policy, is unaware of these companies’ track records shame on him. If he owned these stocks with full knowledge of the companies’ track records, more shame on him.

Dr Price’s Tobacco Stocks

But wait, there’s more.

The WSJ article also noted:

Mr. Price also has traded in shares of … tobacco stocks, including Altria Group Inc., whose products are regulated under the Food and Drug Administration, a part of HHS.

An article in Wired implied that Dr Price’s tobacco holdings may have affected his legislative decision making. Price voted against

a law that now requires the FDA to regulate tobacco as a drug.

That now goes beyond just a relatively simple set of conflict of interest issues. At least drug, biotechnology, and device companies make products meant to benefit patients and the public’s health, if used properly and judiciously. For that matter, insurance companies, like Aetna, are supposed to help patients afford needed medical care.

But tobacco companies are different. Although they are legal in the US, there is overwhelming evidence that their products are harmful to health, and this harm is not outweighed by any health benefits, nor any benefits to society other than the money tobacco companies can make from them. Most doctors now would recommend their patients stop smoking and, if they are not smoking, never start to smoke. It is extremely hard to reconcile Dr Price’s professional status and his ownership of tobacco stocks.

A physician legislator with a powerful role in health policy owning tobacco stocks may appear to be abusing his entrusted power for private gain. That is the ethical definition of corruption used by Transparency International(although it is not a legal definition.) No wonder that in a commentary in New York Magazine on Dr Price’s stock holdings suggested that they mean in Dr Price’s eyes

The appearance of corruption is totally fine.


Mr Trump’s ongoing behavior does have some silver linings. It is making the public more aware of the dangers of conflicts of interest and corruption, not just in health policy or health care. And it is also making the public aware how we have to follow the money, all the money that flows around our new plutocrat-in-chief to be, and his rich and well connected cronies.

If we cannot restrain the increasing pile of conflicted and possibly corrupt political appointments, we will be in for much worse than the health care dysfunction Health Care Renewal has been lamenting for more than 10 years.

Charles D. Hayes: The Trickle-Down Shakedown



One of the most change resistant views in America is the claim that we can’t afford living wages for all full-time employment. Few beliefs are so deeply ingrained in our culture.

People wedded to this idea believe it with a religious fervor equal to their faith in gravity and when challenged they will pull out text books authored by people who qualify as high priests of scarcity.

The religiosity of this acceptance is why geneticist David Suzuki has characterized conventional economics as a form of brain disease. To my thinking, it is simply a case in which the means have become more important than the ends.

We created an exchange system to thrive that metastasized beyond its purpose because of the power of a few to exploit the many. Bottom line examples all over the world show clearly that you can rig an economy for any purpose, it can be to sustain a middle class or mostly benefit the rich and once the rich have legally bribed most of the politicians the latter example is hard to control.

I internalized the trickledown ideology growing up and I used to believe it as they say with every fiber of my being. But after many years of study, in my view, the assumption that living wages for all fulltime employment are not possible in a country where our citizens often claim to be the greatest country on earth is pure unadulterated bullshit.

Three hundred years of global economic history shows decidedly that over time the growth of capital outpaces labor, unless there are safeguards to prevent it.

Competition in the production of goods and services leads to lower prices, competition among businesses for employees leads to higher wages. And this must be considered constantly in a robotic and digital app economy. There are lots of jobs being created that are tasks that need to be done, but they lack the political power needed to demand fair compensation.

Some of our most successful companies pay wages so low that taxpayers must subsidize their employees, and yet, when they announce their executive salaries, bonuses and stock options in the millions and millions of dollars we don’t hear complaints about them having to raise prices for their goods and services. Why is that?

But when employees at the low end ask for livable wages, well connected and well compensated economists will leap out of the woodwork screaming about how the country just can’t afford it.

The reality is that in America, public corporations are openly looted by executives and quid pro quo boards of directors. Even upon going bankrupt executives often bailout with multimillion dollar golden parachutes.

What makes living wages impossible is an echelon of wealthy individuals and corporations with the political power to gain a legislated freeride and escape paying their fair share of taxes.

Unfortunately, all they need to do is send their free market lobbyist missionaries out with messages that some poor fools somewhere are going to benefit at public expense and the distraction is complete, along with the notion that trickledown Kool-Aid is the only drink in town.

Charles D. Hayes: The Arrogance of Power



Watching snippets of Trump on his Thank You Tour, I keep wondering why someone doesn’t tell the con man he won. He is still in campaign mode. He is like a dog who has finally caught the car he was chasing and doesn’t know what the hell to do now. He is about to get slammed into the pavement by a job he is unfit and totally unprepared for, although, it is the country that will suffer the impact.

People keep attributing Trump with having a high IQ and this is total bullshit. They are projecting their hopes on Trump with the assumption that if he’s rich he must be smart. Trump speaks at a third to fifth grade level at best and his biographer claims his vocabulary is around 200 words, but it appears that 75 of them are taken up by “great.”

The troubling thing though, is that medical professionals have pointed out that Trump clearly shows he has all nine symptoms of NPD, Narcissistic Personality Disorder.

NPD must be why Trump is engaged in serial gloating and trolling for adoration instead of trying to bring the country together, which any sane President-elect would be doing now.

But then, getting attention is what makes him tick. The only thing I can come up with that might be positive providing we survive Trump’s presidency is that we are in for one hell of a civics lesson.

*  *  *  *

The great irony that I can never get my mind around is that the GOP’s policies undermine the very things in life they claim to value most. That conservatism is unconcerned about clean air and water and global warming makes no sense.

An ethos that glorifies obedience, and yet, is not adamant that people who work hard should be afforded a living wage and that this should takes precedence over an entrepreneur’s right to exploit people, undermines itself. Hard work as a virtue is the bedrock of conservatism, at least it used to be.

A political ideology built around reifying families, and yet, whose policies are overtly oppressive to families, is an anathema to the notion of being a “family values party.”

Both of our political parties need to reexamine their reasons for being. Liberals need to cut to the bone of what liberalism stands for and conservatives need to rethink what’s worth conserving.

I’m old enough to recall a time when Democrats were all about being for the working class and Republicans used to do the right things for the right reasons.

But, continuously cutting taxes while our deficit soars, our infrastructure crumbles, and digital app technology threatens employment, is not conservativism, it is instead, an expression of contempt, arrogance, political immaturity and greed.

The strangest thing of all, however, is the decision of working class America to reward the political party that is most responsible for today’s growing inequality with the expectation that these people, led by Donald Trump will fix the problem.

This is neither liberal, or conservative, this is naiveté bordering on lunacy. The sad reality, though, that I keep pointing out is that every time people start getting close to figuring out that they have been conned, someone is going to burn a flag.


How to Really Make America Great Again


Don the Con wheedled his way into the presidency with his brand of sloganeering and snake oil, sticking his opponents with his snide names and claiming he would “make America great again.” His administration appointments in the past several weeks provide a clue to what exactly that means: more trickle down, less regulation, and a heapin’ helpin’ of radical right. He has awakened the beast and now he has to feed it. Of course, he’s already backing off some of his signature bluster he used to rouse the rabble—maybe not a wall but a nice fence. Maybe he wouldn’t throw Hillary into jail.

But if he sincerely (and I use the term loosely) wanted to make America great again, statistics provide a wealth of information on how the United States has slipped relative to the rest of the developed world. What follows is just a portion of the categories we’ve fallen behind in, followed by extensive excerpts on some of these failings from the recent book American Amnesia: How the War on Government Led Us to Forget What Made America Prosper, by Jacob S. Hacker and Paul Pierson. As a New York Times book review remarked on the book’s thesis:

The country has been brainwashed by a powerful alliance of forces hostile to government: big business, especially Wall Street, spending unparalleled lobbying dollars to advance its narrow self-interest; a new wealthy elite propagating wrongheaded Ayn Randian notions that free markets are always good and government always bad; and a Republican Party using a strategy of attacking and weakening government as a way to win more power for itself.

In 2013, the Huffington Post ( published the following figures of our ranking in the world on these various categories:

“Child Well-Being in Rich Countries” ranks 29 developed countries, according to the well-being of their children, on numerous factors.

The U.S. ranks #26 overall for “Child Well-Being.” This overall rank includes: #26 for “Material Well-Being”; #28 for “Child Poverty Rates”; #25 for “Health and Safety”; #26 for “Infant Mortality Rates”; #26 for “Low Birthweight”; #22 for “Immunization Rates”; #27 for “Educational Well-Being”; #27 for “Preschool Enrollment Rates”; #25 for “Participation in Further Education”; #16 for “Educational Achievement by Age 15”; #29 for “Overweight”; #2 for “Exercise”; #29 for teen-pregnancy rates; #1 for “Alcohol” (U.S. receives the top rank for absence of drunkenness); #4 for “Smoking” (again, absence); #11 for “Fighting”; #12 for “Being Bullied”; #23 for “Housing”; #27 for “Homicide”; #3 for (lack of) “Air Pollution”; #23 for children’s self-reported “Life Satisfaction”; and #28 for “Relationships with Parents and Peers.”

A much broader ranking-system, from the World Economic Forum, is “The Global Competitiveness Report 2012-2013,” which ranks 144 countries, on a wide range of factors related to global economic competitiveness.

These include the following:

  • #34 on “Life Expectancy”
  • #41 on “Infant Mortality” (unlike the “Infant Mortality” rankings from UNICEF, this ranking is among 144 countries—thus some underdeveloped countries actually have higher life-expectancy than does the U.S.)
  • #38 on “Quality of Primary Education”
  • #58 on “Primary Education Enrollment Rate”
  • #28 on “Quality of the Educational System”
  • #47 on “Quality of Math and Science Education”
  • #12 on “PCT [Patent Cooperation Treaty] Patent Applications [per-capita]”
  • #14 on “Firm-Level Technology Absorption” (which is an indicator of business-acceptance of inventions), we are #14.

Trust is likewise only moderately high in the U.S.:

  • #10 on “Willingness to Delegate Authority”
  • #42 on “Cooperation in Labor-Employer Relations”
  • #18 in “Degree of Customer Orientation”

Corruption seems to be a rather pervasive problem in the U.S.:

  • #34 on “Diversion of Public Funds [due to corruption]”
  • #42 on “Irregular Payments and Bribes” (which is perhaps an even better measure of lack of corruption)
  • #54 on “Public Trust in Politicians”
  • #38 on “Judicial Independence”
  • #59 on “Favoritism in Decisions of Government Officials” (otherwise known as governmental “cronyism”)
  • #87 on “Organized Crime”
  • #29 on “Ethical Behavior of Firms”
  • #30 on “Reliability of Police Services”
  • #56 on “Transparency of Governmental Policymaking”
  • #37 on “Efficiency of Legal Framework in Challenging Regulations”
  • #35 on “Efficiency of Legal Framework in Settling Disputes”

Investors evidently find somewhat shaky ground in the U.S.

  • #33 on “Protection of Minority Shareholders’ Interests”
  • #23 on “Efficacy of Corporate Boards”
  • #19 on “Reliance on Professional Management”
  • #37 on “Strength of Auditing and Reporting Standards”
  • #80 on “Soundness of Banks”
  • #39 on “Regulation of Securities Exchanges”

* * * *

In American Amnesia, a well-annotated book for someone interested in their research, Hacker and Pierson write that the evidence of our drift downwards towards the Third World is evident in many ways:

Americans are no longer the tallest people in the world. Not even close: Once three inches taller than residents of the Old World, on average, Americans are now about three inches shorter. The average Dutch height for men is six foot one, and for women, five foot eight—versus five foot nine for American men and five foot five for American women. . . .

Because height is a powerful indicator of social and individual health, America’s relative decline should ring alarms. Our young are coming up short, relative not just to gains in stature of the past but also to gains in stature in other rich nations. . . .

So it is more than a little disconcerting that health is also where the United States does most poorly compared with other rich nations. In 2013, the prestigious National Academy of Sciences released a mammoth report with a self-explanatory title: U.S. Health in International Perspective: Shorter Lives, Poorer Health. “The United States is among the wealthiest nations in the world,” the report began, “but it is far from the healthiest. . . . Americans live shorter lives and experience more injuries and illnesses than people in other high-income countries.”

On virtually all measures, according to the report, the United States is losing ground rapidly to other rich nations. At midcentury, Americans were generally healthier than citizens of other rich nations, and as late as 1980, they were still not far from the middle of the pack. Since then, however other rich countries have seen rapid health gains. The United States has not.

Take life expectancy at birth—the easiest statistic to track, since death records are generally reliable and consistent across nations. The National Academies study looked at seventeen rich nations. Among these, the United States ranked seventeenth for men in 2011 (life expectancy: 76.3 years, a full 4.2 years shorter than the top-ranking nation). It ranked an equally dismal seventeenth for women (81.1 years, 4.8 years shorter than the top-ranking nation. . . .

The relative decline has been particularly steep for an unlikely group: middle-aged white adults. In a groundbreaking 2015 study, the Princeton University economists Anne Case and Angus Deaton (the latter the recipient of the Nobel Prize in Economics that same year) dug into the mortality statistics to examine how and why the American experience departed so starkly from the international norm. Their startling result: Whites ages forty-five to fifty-four were dying at higher rates in 2013 than they had been in 1999, even as every other rich country had seen dramatic drops in mortality in this age group. . . . The only other example of such a shocking loss of life in recent decades is the AIDS epidemic.

The authors noted that this is particularly true among those citizens who might have been Trump’s biggest supporters:

The trend was most devastating for whites with a high school diploma or less. In 2013 there were 736 deaths per 100,000 people within this group, up from 601 per 100,000 in 1999. (By comparison, the death rate for people in this age group in Canada fell from around 300 per 100,000 in 1999 to just under 249 per 100,000 in 2011.) But those who had gone to college but not received a degree saw no distinguishable improvement in death rates either—even as, again, such rates plummeted abroad. Only among whites with a college degree did death rates fall substantially over this period. In 2013, white adults in the forty-five- to fifty-four-year-old age group with no more than a high school diploma were more than four times as likely to die as those with a college degree.

To be clear, many measures of health are improving in the United States. But they are improving much more slowly than in other countries. One grim statistic commonly used by demographers is the chance that a fifteen-year-old will die before age fifty. For American women, it’s 4 percent: four in a hundred women die between fifteen and fifty. The average for other rich nations is around 2 percent, and, on average, death rates in these nations fell below 4 percent almost forty years ago. We are more than a generation behind.

A similar story can be told about infant mortality, or deaths of children before their first birthday. In 1960 infant mortality in the United States was lower than in the majority of other rich nations. In recent decades, however, America has seen limited improvement, while death rates for infants have continued to plummet abroad. In 2011 the average rate of infant death in other rich nations was 1 child for every 300 or so births. In the United States, it was roughly twice that—1 child for every 164 births. That year, the only countries in the Organization for Economic Cooperation and Development (OECD) with higher rates of infant mortality were Chile, Mexico, and Turkey.

This unimpressive performance is particularly striking because the United States spends so much more on health care than other rich nations do—roughly twice as much per person. Of course, medical care is not the only or even the most important determinant of health. But the United States does poorly even where health care matters most. For almost every cause—from injuries to diseases—death rates are the highest or nearly the highest in the United States. And we have the highest rate of what health experts call “amenable mortality”: deaths that could have been prevented with the provision of timely and effective care. Despite high spending, we are falling behind other rich nations in reducing such preventable deaths. We don’t see our relative decline because we are getting better at preventing death. But we’re getting better far too slowly for a rich nation.

This problem in our healthcare system—a lack of universal insurance, the stranglehold Big Pharm has on pricing, and so forth—is well documented elsewhere, but the authors don’t stop there. They touch next on education, where we once led the pack:

As the Harvard economists Lawrence Katz and Claudia Goldin show in their revelatory The Race Between Education and Technology, we bolted decades ahead of other Western nations in the spread of elementary and then high schools during the twentieth century, and we were the world leader in college education in the immediate decades after World War II. No more. The United States is now a mediocre performer in international education rankings. . . . The United States now ranks twentieth out of twenty-seven OECD nations in the share of young people expected to finish high school.

A measure of that, of course, is attributable to the school-to-prison pipeline, duly noted:

Another reason is that young adults behind bars disappear from the statistics. In most rich nations, this distinction makes little difference because incarceration is so rare. In the United States—which incarcerates roughly ten times as high a share of the population (eight in a thousand versus fewer than one in a thousand in most other advanced industrial democracies)—it makes a real difference, especially for demographic groups with the highest rates of incarceration. Indeed, the high school dropout rate for young black men is more than 40 percent higher when we include in our count the incarcerated, wiping out all the apparent gains in their high school completion since the late 1980s. Here again, conventional indicators present an overly sunny picture of our relative performance.

The big story, however, is our relative decline in higher education. The United States has many of the finest institutions of higher education in the world. The problem is that the share of young people getting a degree is rising much more slowly in the United States than in other OECD nations. One reason is the erosion of public support through federal grants and state universities, leaving students and their families much more reliant on loans. Once without peer, the United States has fallen to nineteenth in college completion in the OECD, and the gap in completion between higher-income and lower-income students has widened. Older Americans are the most educated in the world. Younger Americans, not even close.

Much of the discrepancy can be laid on the inequality of educational opportunity. The push now—among people like Trump’s choice of Betsy DeVos to lead the Education Department—is for public funding of charter schools, in the form of vouchers. These schools have shown to be no better (and often worse) than their public counterparts. They not only siphon funds from public education; the money is also used to pay CEO salaries and the like. And as some reports have noted, the net effect in some states is that the schools are now more segregated than they were in the Fifties.

And if the United States as a whole is in the breakdown lane, some Americans are barely getting on the road. At least as striking as our poor performance among the young is how unequal educational opportunities in the United States are. Decades after de jure integration of schools and the famous 1966 Coleman Report on the subpar schooling of the poor, we remain a nation with gaps in educational quality, funding, and outcomes that are far greater than the norm for developed democracies. These gaps not only thwart the upward progress of tens of millions of Americans but hold back our economy overall.

Since the 1960s, the divide in test scores between children from high-income families and those from low-income families has grown by more than a third; it is now twice as large as the gap between blacks and whites. Yet the United States is one of the few nations that finances schools primarily through local property taxes, which magnifies unequal opportunity. As one OECD researcher puts it, “The vast majority of OECD countries either invest equally in every student or disproportionately more in disadvantaged students. The US is one of the few countries doing the opposite.”

Inequality of opportunity begins early, and it costs everyone. Good pre-K education, for example, more than pays off in higher growth and tax receipts and lower public costs, from social assistance to incarceration. Yet the United States ranks twenty-fifth in the OECD in the share of three-year-olds in early childhood education, and even lower, twenty-eighth, when it comes to four-year-olds.

And, of course, the big one: income. Here, the trends of trickle-down economics are most apparent:

Historically, economists have considered national income per capita the best single measure of the standard of living of middle-class citizens. For much of the twentieth century, it was. Since the early 1970s, however, the link has broken. The American economy is more and more productive, and national income has continued to grow smartly (if more slowly than before). But these gains have not translated into substantially higher wages for most Americans. The typical hourly earnings of American workers—adjusting for inflation and including the escalating cost of medical benefits—rose only 10 percent between 1973 and 2011. That works out to an annual raise of 0.27 percent.

But American families have grown significantly richer, right? Yes and no. Between the early 1970s and the late 1990s, the typical household’s income increased from around $49,000 to almost $57,000 (after adjusting for inflation). Yet the wage stagnation of the 2000s and the financial crisis that closed out the decade wiped out all of the gains created by the strong economy of the 1990s, leaving typical households about where typical households were in 1989. . . .

Just as important, the overriding reason the typical family earns a little more today is not more pay per hour but more paychecks per household, as women have moved into the paid workforce. This change isn’t because the United States has led the world in female employment. (In 2010 America was seventeenth in the OECD in the share of women in paid employment, down from sixth in 1990. It’s because US workers, both male and female, work many more hours than workers in other countries do—and the gap is growing. . . .

Where did all the growth go? The answer, it turns out, is simple: It went to the top, especially the very top. When it comes to inequality, the United States once looked relatively similar to other rich countries. Today it’s the most unequal rich nation in the world by a large margin. However else that matters, the increasing concentration of income at the top drives a wedge between overall economic growth and the income gains of most households. When a rising tide lifts all boats, economic growth is a better measure of ordinary Americans’ living standards than when a rising tide lifts only yachts.

You can see the disparity even more clearly when you look at wealth: housing, stocks, bonds, and all the other assets that people hold to weather economic shocks and build their future. Americans’ average net wealth is an impressive $301,000, the fourth highest in the world, behind only Switzerland, Australia, and Norway. Median net wealth—the amount held by someone exactly in the middle of the distribution—is another story. The typical American adult has just $45,000, which places the United States nineteenth in the world, behind every rich country but Israel (including such “economic heavyweights” as Spain and Taiwan). The obvious reason for the difference is that wealth is so unequal across American households. The richest 1 percent own more than a third of the nation’s wealth; the top 10 percent, more than three-quarters. No other rich country comes close to this level of concentration at the top.

Beginning with the Reagan years and its huge tax cuts for the upper crust, wealth disparity has skyrocketed. And the vaunted notion of the Horatio Alger success story—going from rags to riches—has been laid bare.

Today, however, the frontier is gone, and so is America’s mobility advantage. Indeed, the United States now has close to the lowest level of upward mobility in the advanced industrial world: lower than in Tocqueville’s France, lower than in Sombart’s Germany, and lower—much lower—than in our northern neighbor, Canada. Roughly two in three Americans born in the bottom fifth of incomes either stay there (42 percent) or rise just into the next fifth (23 percent). An American boy whose dad is in the bottom fifth has only a 30 percent chance of climbing into the top half. A Canadian boy has a 38 percent chance. This 8-point difference might seem small, but it’s not. With 138 million American men, 8 percentage points represent 2 million boys escaping the bottom fifth into the top half.

Again it’s the youngest of the young who are most disadvantaged. The United Nations Children’s Fund (UNICEF) has compiled a composite index of the “material well-being” of children in developed countries, which takes into account various measures of childhood poverty and material deprivation (lack of access to regular meals, for example). In the most recent report, the United States ranked twenty-sixth out of twenty-nine developed nations. First in the standings was the Netherlands, where soon-to-be-giants are born. UNICEF has produced its index since the early 2000s. The United States was one of only five nations that were ‘below average at that time yet failed to improve kids’ material well-being in the following decade. The other four were Greece, Hungary, Italy, and Spain.

The government role in research and development of new science and technology, once a hallmark of American exceptionalism, has shrunk to the extent that it could, as the zealots suggest, be drowned in a bathtub:

Though government promotion and funding of science has a long history, it expanded dramatically during World War II and continued afterward with the National Science Foundation (NSF), National Institutes of Health (NIH), and other public agencies that supported training in science and engineering and financed research in the private sector and academia. In the quarter century after World War II; the United States didn’t just lead the world in R&D funding. It owned the field. Well into the 1960s, the federal government spent more than the combined total of all R&D spending by governments and businesses outside the United States. The fruits of these investments ranged from radar and GPS, to advanced medical technology, to robotics and the computer systems that figure in nearly every modern technology. Far from crowding out private R&D, moreover, these public investments spurred additional private innovation. The computer pioneers who developed better and smaller systems not only relied on publicly fostered breakthroughs in technology; they also would have found little market for their most-profitable products if not for the internet, GPS, and other government-sponsored platforms for the digital revolution.

That was then. Over the last half century, R&D spending by the federal government has plummeted as a share of the economy, falling from a peak of nearly 2 percent of GDP in the mid-1960s to around 0.7 percent in the late 1990s, before rebounding slightly in recent years. Between 1987 and 2008, federal expenditures were essentially flat once inflation is taken into account (rising 0.3 percent a year). The United States now ranks ninth in the world in government R&D expenditures as a share of the economy. The majority of this spending, however, is for defense-related projects, which have fewer positive spillovers than nondefense R&D does. Take out defense, and the United States ranks thirty-ninth in government R&D spending as a share of the economy. . . .

We are not talking just about dollars and cents. We are talking about lives. Consider one chilling example: drug-resistant infections. As America’s breakthroughs in antibiotics recede into the past, bacteria are evolving to defeat current antibiotics. For more and more infections, we are plunging back into the pre-antibiotic era. In the United States alone, two million people are sickened and tens of thousands die each year from drug-resistant infections—mostly because private companies see little incentive to invest in the necessary research, and the federal government has failed to step in. . . .

And health research has fared better than most areas. Public investment of all sorts and by all tiers of government has reached the lowest level since demobilization after the Second World War. Until the 1970s, gross investment by the public sector—R&D plus investment in physical capital—averaged around 7 percent of GDP. It fell below 6 percent in the 1970s and 1980s, and below 4 percent in the 1990s and 2000s. It is now at 3.6 percent and falling. The biggest crunch is in infrastructure: roads, bridges, water supplies, communications networks, public buildings, and the like. These are among the most productive investments governments make, with average rates of return that are probably several times higher than those of typical private investments. And American infrastructure was once the envy of the world: The interstate highway system started under President Eisenhower—a Republican—eventually stretched over forty-two thousand miles, at a cost (in present dollars) of $493 billion. But the investment paid off, accounting for almost a third of the increase in the nation’s economic productivity in the late 1950s and around a quarter in the 1960s.

American infrastructure is no longer the envy of the world. The World Economic Forum, the Davos-based center of business-oriented thinking, ranks the United States fifteenth in the quality of railway structures, sixteenth in the quality of roads, and ninth in transportation infrastructure. The American Society of Civil Engineers estimates that the United States would have to spend $3.6 trillion more than currently budgeted just to bring our infrastructure up to acceptable levels by 2020. China and India are spending almost 10 percent of GDP on infrastructure; Europe, around 5 percent. Even Mexico spends just over 3 percent. The United States has not broken 3 percent once since the mid-1970s.

And this doesn’t begin to address the problems of pollution so blithely ignored by the powers that be as well as the ecological risks—i.e., global warming—facing the nation.

[T]he United States, once the unquestioned leader in addressing pollution and other ecological risks, lags behind the rich world on most measures of environmental performance. It emits more carbon dioxide per person than any affluent country besides tiny Luxembourg—roughly twice as much as Germany and Japan, and more than threetimes as much as France and Sweden. The widely respected Yale Environmental Performance Index, which assesses air and water pollution and other key environmental outcomes as well as measures relevant to climate change, ranked the United States thirty-third in the world in 2014—two spots down from its similarly uninspiring ranking of thirty-first a decade earlier.

We have seen how far we have to go in tackling the dangerous warming of our planet—a challenge that cannot be addressed without the leadership of the world’s sole superpower and second-largest carbon emitter. But consider a very different emerging challenge where lack of an effective response is literally weighing down America’s future.

A larger share of Americans are obese than in any other rich country. Defined as having a body mass index of 30 or higher (roughly two hundred-plus pounds for a five-foot-eight person), obesity now afflicts more than one in three adults and one in six children, compared with around one in seven people or fewer in most European countries. Individual medical costs associated with obesity are on par with those of smoking. In the aggregate, obesity accounts for a tenth of health spending in the United States, generating $270 billion in total economic cost due to medical bills, mortality, and disability. When additional consequences of obesity are factored in—lower earnings, lost work time, reduced productivity—the costs are even more staggering.

The basic causes are no mystery: Americans have become more sedentary, and they consume more calories than they once did. Even small differences in activity and diet can add up: One soda a day—a twelve-ounce can, not the megacups that are served at fast-food restaurants (KFC’s “Mega Jug” is sixty-four ounces)—adds up to 55,000 additional calories and fifteen extra pounds a year. And once again, adding up all these individual changes across the population leads to enormous effects (no pun intended), such as $270 billion in higher health spending a year. It’s often said that obesity is a personal problem. But people’s basic biological desire for fat and sugar hasn’t changed in the last few decades; their environment has. And American food policy—including federal subsidies for sugar and high-fructose corn syrup—has played a major role in shaping that environment.

Want a vivid image of how American bodies have changed? The average American woman now weighs around 165 pounds. According to the US Centers for Disease Control and Prevention (CDC), that’s essentially what the average American man weighed in 1960. (Today’s average man is around 195 pounds.) Americans were once the tallest people in the advanced industrial world. We are now not just among the shortest but also far and away the heaviest. Where once we towered over others when standing, now we only do so when everyone is lying down.

So you want to make America great again, Mr. President-elect? These are just some of the ways we’ve been found lacking, and it’s not because we don’t give free rein to the banksters or Wall Street CEOs, or a bigger share of the pie to those one-percenters. And the cure isn’t cutting regulations for our long-suffering corporate overlords or letting them park even more money offshore. The facts are there for all to see, though in your fact-free administration this may be a problem.

Judge Steve Russell on the Electoral Dilemma


There’s a movement afoot to convince enough Trump electors to switch sides that Clinton wins.

My first reaction was, “Sore losers!”

I’m persuaded my first reaction was wrong. Of course, I’m still smarting from Al Gore winning the popular vote and losing the Electoral College.

What’s wrong with trying to bend the Electoral College toward the popular vote?

Aren’t we in danger of exacerbating “the problem of the faithless elector?”

Why is it dangerous to highlight a structural problem?

We could at least have a debate about whether we want to continue an institution crafted to enhance the representation of rural areas.

The argument I’ve seen to keep the Electoral College is that switching to the popular vote would result in candidates aiming resources at the big media markets.

So it changes the definition of battleground states. The argument about driving money to where the people are is not up against some golden age when there was a 50 state strategy.

The structural issue is clouded by the fact that the boonies vote Republican and the cities vote Democrat. This is bassackwards to how it used to be and it might turn again. The Constitution is not for right now–it’s supposed to be for always. It’s hard to amend for a reason.

The Founders, collectively, feared democracy, and the Electoral College was a product of that fear. Read the original Constitution and notice that the only power nub thrown into the checks and balances was the House of Representatives.

Senate? Elected by state legislatures.

POTUS? Elected by the Electoral College.

Supreme Court? Appointed for life.

The House is uber-democratic. Every seat up every two years. Reapportionment every ten years to keep districts the same size. Still, the Democrats get more House votes but the Republicans get more seats because the GOP used the last reapportionment to put cities in the middle of pies, dividing the left votes in right districts. Exhibit A: Austin, Texas.

The GOP now runs the whole shebang and, despite campaign rhetoric, the GOP has a history of running up the national debt. Look for a BIG tax cut next year. In Trump’s plan, 51% of the cuts go to the one percent. There will be three brackets: 15%, 25%, and 33%.

On the spending side, Trump wants to drastically increase “defense” spending. There will be war on the CFR and repealing all those regulations should save some money. We will also quickly remember why the regulations were put in place.

There is nothing to stop the GOP from driving us over a fiscal cliff, but I’m thinking the downside will show pretty quickly.

I’m much more worried about foreign affairs. Authoritarians like Trump historically keep power by appealing to solidarity in the face of foreign enemies. If there are no enemies that are scary enough, it’s necessary to create them.

Faithless electors–if they are evil at all—are the lesser evil.

The History Lesson That Hasn’t Been Taught


The Big Con: what is really at stake in this US election

Big government helped make America great but it was so successful its effect has become invisible. Anti-Washington hatred helps only the super-rich and puts progress at risk for millions living with wage stagnation and rising inequality


Do you remember, your President Nixon?

Do you remember, the bills you have to pay?

Or even yesterday?

David Bowie, Young Americans

The collective memory of America is short. During the 2010 midterm elections, it seemed like every other house in my north Dallas neighborhood sported a “Had Enough? Vote Republican!” yard sign. As if it had been two hundred years, instead of two, since the US economy was on the brink of collapse, with panicked credit markets, huge banks and insurance companies about to topple into the void, a flatlining auto industry, the Dow Jones plunging toward 6500, and job losses topping 700,000 a month, not to mention the wars that had turned the budget surpluses of the late Bill Clinton years into massive deficits, all courtesy of a two-term Republican president whose party controlled Congress for six of the last eight years. Yes, please! Take us back to the good old days of 2008!

Two years. The perpetual fog of American forgetting-gas had done its work. If two years are all it took to erase the memory of the worst economic meltdown since the Great Depression, then we shouldn’t hope for much awareness of that earlier crisis some 80 years ago, though there are a few old heads still around who lived it, and the experience of those times can be found readily enough in the archives and histories of the era.

The country, to put it mildly, was different back then. Life was harder, and in places like the Texas hinterland – which today forms the big beating heart of the state’s Republican base – it was a close approximation of 14th-century European peasant hell. The vast majority of rural Texans lived without electric power, which meant no refrigeration, no water pumps, no indoor plumbing, no furnaces, no electric stoves, no incandescent lights, no motors to power machines for milking or shearing.

Even for those of us only one or two generations removed from the farm, it’s almost impossible to conceive just how different life was, although the phrase “nasty, brutish, and short” comes to mind. Among the best guides to that time is “The Sad Irons” chapter of The Path to Power, the first volume of Robert Caro’s biography of Lyndon Johnson, which delivers a harrowing portrait of life as a medieval slog plunked down in the middle of 20th-century America. To take just one aspect of the slog: water. “Packing water” from the source – a stream or a well – to the house was a daily beatdown that often fell to the farm wife. As Caro writes:

A federal study of nearly half a million farm families … would show that, on the average, a person living on a farm used 40 gallons of water every day. Since the average farm family was five persons, the family used 200 gallons, or four-fifths of a ton, of water each day – 73,000 gallons, or almost 300 tons, in a year. The study showed that, on the average, the well was located 253 feet from the house – and that to pump by hand and carry to the house 73,000 gallons of water a year would require someone to put in during that year 63 eight-hour days, and walk 1,750 miles.

Laundry was done outside, an all-day, muscle-intensive process that began with a huge vat of boiling water suspended over a roaring fire – imagine that on a July day in Texas – next to which someone – almost always the farm wife – would stand “punching” clothes with a paddle or broomstick, the human equivalent of an automatic washing machine. Cooking was done with wood stoves, which were kept burning most of the day – summer and winter – for meals and baking, which in turn required constant tending – firewood in, ashes out. Because of the lack of refrigeration, most meals had to be prepared from scratch. In order not to starve in winter, a family had to can fruit and vegetables in summer, a hellishly hot process that went on for days and required the utmost precision. The wood stoves were also used to heat irons for pressing clothes, actual six- or seven-pound slabs of iron that had to be scrubbed, sanded, and scraped every few minutes to remove the soot. Farm wives dreaded the tedium of ironing day; hence, “the sad irons”. Caro goes on:

A Hill Country farm wife had to do her chores even if she was ill – no matter how ill. Because Hill Country women were too poor to afford proper medical care they often suffered perineal tears in childbirth. During the 1930s, the federal government sent physicians to examine a sampling of Hill Country women. The doctors found that, out of 275 women, 158 had perineal tears. Many of them, the team of gynecologists reported, were third-degree tears, “tears so bad that it is difficult to see how they stand on their feet.” But they were standing on their feet, and doing all the chores that Hill Country wives had always done – hauling the water, hauling the wood, canning, washing, ironing, helping with the shearing, the plowing and the picking.

Because there was no electricity.

This state of affairs wasn’t limited to Texas. In the early 1930s, more than six million of America’s 6.8m farms were without electricity. From sundown to sunup these farmers and their families practically lived in the dark. Most kerosene lamps provided 25 watts of light at best, barely sufficient for reading, and they were dirty, difficult to use, and dangerous. Many farmers preferred to do their pre-dawn chores in the dark rather than risk having a kerosene lamp in the barn. Radio, of course, was out of the question. The news and entertainment available to urban America were effectively blacked out in rural areas.

Then the Great Depression transformed what was an extremely hard life into an impossible one. With prices for crops, in real terms, falling below what they’d been in colonial times, financial disaster began to overwhelm rural America. By the end of 1931, 20,000 farms a month were being foreclosed, with even greater numbers on the horizon. Farmers’ pleas for relief – among them, a moratorium on foreclosures – were rejected by President Hoover, who in effect told America to quit whining and go chew on its moral fiber. Hoover seemed ignorant of a basic fact of human nature: people tend not to be models of obedience when they’re starving to death. “They had put their faith in government,” as one contemporary reporter said of the farmers, “and government had failed … they reached a point where they could stand the strain no longer and moved toward open rebellion.”

You’re not likely to find this episode of American history in the school books. In Iowa, the Farmers’ Holiday Association organized a strike in which farmers refused to bring food to market for 30 days. The strike soon spread to the Dakotas, Kansas, Minnesota, Missouri, Nebraska and beyond. Roads were picketed, then blockaded to enforce the strike. Telephone operators coordinated with striking farmers to warn them when soldiers or lawmen were headed their way. When 60 strikers were arrested in Council Bluffs, Iowa, a thousand farmers marched on the jail and forced their release. Four thousand men occupied the Lincoln, Nebraska, statehouse, and another 7,000 marched on the statehouse in Columbus, Ohio with the intention of establishing a “workers’ and farmers’ republic”. Across the midwest, farmers began to band together in armed groups to stop foreclosures; lawyers and judges were threatened with hanging, stripped and beaten, and in at least one case, murdered. “Rebellion in the Cornbelt: American Farmers Beat Their Ploughshares Into Swords” was the title of a December 1932 article in Harper’s that described the farmers’ increasing desperation and militancy.

The cities were no calmer. Five thousand men took over the Municipal Building in Seattle. Thousands of unpaid teachers in Chicago mobbed the city’s banks, and in New York, a Communist party rally in Union Square drew 35,000. Twenty-five thousand “Bonus Marchers”– first world war veterans – occupied Washington, setting up camp with their families on the Mall; Hoover had them routed by US soldiers using teargas and fixed bayonets. Campaigning for re-election that fall, the president was greeted by snarling crowds and chants of “Hang Hoover!” A gridlocked Congress dithered and bickered, inspiring one columnist to label it, “The Monkey House”.

To scholars it’s known as “the mixed economy”, the combination of dynamic free markets, effective government, and a strong labor movement that characterizes the world’s most prosperous nations. Strict laissez-faire capitalism created extraordinary wealth in late 19th- and early 20th-century America. It also created extraordinary concentrations of economic and political power that threatened to undermine democracy, along with such virulent side-effects as frequent bank panics, wild vacillations of boom and bust, extreme social and income inequality, and monopoly control of major industries. The Gilded Age robber barons – the Goulds, the Vanderbilts, the Morgans and Rockefellers – did quite well under laissez-faire. Most of the rest of Americans were still stuck in the ditch, with little to no economic security, life expectancy of roughly 45 years and horrific infant mortality rates that claimed 300 babies per 1,000 in the cities.

Recognition was growing that the extraordinary pressures of industrial capitalism required an updating of the social contract. Theodore Roosevelt acknowledged as much when he said in 1910, “The citizens of the United States must effectively control the mighty commercial forces which they have called into being.” But it took the leadership of another Roosevelt, Franklin, along with the existential crisis of the Great Depression, to galvanize the political will that brought about this transition from laissez-faire capitalism to the mixed economy.

A mural fresco titled The New Deal, at the Leonardo Da Vinci art school in New York City.
A mural fresco titled The New Deal, at the Leonardo Da Vinci art school in New York City. Photograph: AP

Roosevelt gave it a name, the New Deal, and it transformed American life so thoroughly that it’s become invisible to us, as taken for granted as the air we breathe and the ground beneath our feet. Or as, for instance: electricity. As Caro shows in The Path to Power, 30 million farmers and their families lived in the preindustrial dark not because of technological obstacles – many lived within sight of power lines – or prohibitive cost to the utility company – plenty of farmers offered to pay the expense of running a line out to their homes – or that utility companies couldn’t make a profit on rural lines – studies in Minnesota and Alabama showed that rural lines were profitable – but because rural electric service wouldn’t be as profitable for utility companies as the urban market. The companies based their decision, as companies do, on capital risk and rate of return. Considerations of fairness, fellow feeling, or the greater social good simply didn’t factor into the corporate calculus.

This is known among economists as “market failure”. Sam Rayburn, the Texas congressman who led the legislative fight to bring electricity to rural America, stated it plainly during debate on the House floor: “When free enterprise had the opportunity to electrify farm homes – after 50 years, they had electrified 3%.” The Public Utilities Act of 1935 and the Rural Electrification Act of 1936 – crucial New Deal legislation – “brought the lights” to rural America over the strenuous opposition of the utility lobby, which put out fake “spontaneous” mass mailings to members of Congress (one of the first instances of astroturfing in American politics) and pushed a whisper campaign alleging that President Roosevelt was insane. John Carpenter, president of Texas Power & Light – there’s a freeway named after him in Dallas – so loathed Sam Rayburn that he offered to spend any amount of money to defeat him in the next election. Rayburn won. The lights went on.

Another example: banks. When Roosevelt took office, the banking industry was in freefall, a “market failure” that threatened to finish off what was left of the US economy. The system of government support and regulation established by the New Deal over banks – deposit insurance, capital requirements, the Glass-Steagall Act (separating commercial and investment banks) – and over the financial industry in general – such as the Securities Act of 1933, AKA the “Truth-in-Securities Act”, and the Securities Exchange Act of 1934 (if you think Wall Street is a rigged game these days, it’s a seminary compared with the fraud-fest of the Roaring Twenties) – made bank panics and market crashes a thing of the past. From the mid-1930s into the early 1980s, the US financial industry enjoyed remarkable stability. Bank failures were rare, isolated events. The bipolar booms and busts of laissez-faire capitalism became the much more manageable phenomenon of the business cycle. This began to change with deregulation, starting with the bipartisan overhaul of the savings and loan industry in the early 1980s. “All in all, I think we hit the jackpot,” said President Reagan as he signed the Garn-St Germain Act into law. Not quite. Within a few short years, there was no savings and loan industry, thanks to the frenzy of speculation and self-dealing that followed passage of Garn-St Germain. The biggest bank crisis since the Great Depression had erased an entire sector of American finance, leaving the American taxpayer on the hook for $160bn – a huge amount of money at the time, chump change compared with what was coming. The New Deal framework continued to be dismantled through the 1990s – Glass-Steagall bit the dust in 1998 – and, just as importantly, regulation was never extended to new markets in financial exotica like credit default swaps and derivatives. Banking and finance grew increasingly volatile, culminating (so far?) in the Great Recession of 2008, when only massive government intervention saved the economy.

The air we breathe. The ground beneath our feet. New Deal initiatives produced much of the infrastructure that we rely on to this day, the roads, waterways, airports, bridges, sewers and water mains, courthouses, libraries and communications networks. The omnibus Farm Relief Act of 1933 saved and stabilized American agriculture, and began establishing the institutions that would make farming an economically feasible way of life for future generations. The national framework of social insurance – social security, unemployment and disability benefits, work programs and workers’ compensation – protected citizens from the kinds of risks that private markets couldn’t or wouldn’t insure. The final piece of the mixed economy got its due with the Wagner Act (1935), which established the rights of workers to unionize and bargain collectively with employers, helping to ensure that rising productivity would be reflected in rising wages.

A Works Progress Administration (WPA) crew rebuilding the Morris Canal in New Jersey. Much of the infrastructure of modern America was built by New Deal inititatives.
A Works Progress Administration crew rebuilding the Morris Canal in New Jersey. Much of the infrastructure of modern America was built by New Deal initiatives. Photograph: MPI/Getty Images

The New Deal saved capitalism – saved it from the big-time capitalists, though many of the big-timers didn’t see it that way. Fred Koch, the multimillionaire father of the future multibillionaire brothers Charles and David Koch, had this to say in 1938: “the only sound countries in the world are Germany, Italy, and Japan.” He found Germany to be a heartening counter-example to Roosevelt’s New Deal: “When you contrast the state of mind of Germany today [1938] with what it was in 1925, you begin to think that perhaps this course of idleness, feeding at the public trough, dependence on government, etc, with which we are afflicted is not permanent and can be overcome.”

The comparison is instructive. Adolf Hitler became chancellor of Germany in January 1933. Five weeks later, Franklin Roosevelt was sworn in as US president. Two leaders, both taking office at the same time, both faced with the economic and social chaos of the Great Depression. To say that they took vastly different approaches, with correspondingly divergent outcomes, would be an understatement on the order of a piano falling on your head. History shows that Fred Koch was about as wrong as a human being can be, and Nazi Germany is only the half of it. By every measure – life expectancy, infant mortality, income, education, productivity, corporate profits, scientific and technological innovation – the mixed economy ushered in by the New Deal was a huge success. Within a generation, the United States was enjoying the fastest sustained growth in recorded history, and, moreover, the prosperity was shared broadly, with income rising faster at the bottom and middle of society than at the top.

By the 1950s, there was broad consensus in America that the mixed economy was “an established and useful reality”, to borrow a phrase from a Roosevelt-era president of the US Chamber of Commerce (he was referring to collective bargaining). President Eisenhower, Republican, five-star army general and no big liberal, much less a communist (though he was accused of being one by the John Birch Society, which counted Fred Koch – him again – among its founders) broadened social security, expanded federal support of science and technology, and pushed for major infrastructure programs. Such was the political consensus that his legislation initiating the interstate highway system passed Congress with one dissenting vote in the Senate, and by voice vote in the House. In private, he mocked the arch-conservatives who dreamed of dismantling the New Deal. “There is a tiny splinter group … that believes you can do such things,” he wrote in a letter to his brother Edgar. “Among them are HL Hunt … a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”

“You don’t miss your water till your well runs dry,” the late, great Sam Cooke sang in one of his more melancholy songs. Around 2009, 2010, around the time we were crawling out from under the wreckage of 2008 and saw that the Wall Street crowd had come through just fine, thank you, that seems to be when a critical mass of the American population began to realize that, hey, we were missing something; that maybe our well was running dry. People were angry. We had good reason to be. We saw great prosperity at the top, scant trickle-down toward the bottom. In Texas, and especially in rural Texas – where, by the way, electricity and access to electronic media have been settled facts of life for years – the Tea Party rose with a mighty roar to rage against liberals, the government and the newly elected Democratic president.

If that rage seems somewhat misdirected, here’s an explanation: 40 years of well-funded, highly organized laissez-faire proselytizing and government-bashing have done a number on the American mind. The country got conned by a profound ideological shift, starting in the early 1970s as hardcore free-market, anti-government advocates launched a concerted effort to change the political landscape. Jacob Hacker and Paul Pierson’s recent book American Amnesia ably tells the story, from the business elite who funded the movement (Charles and David Koch prominent among them), to the conservative thinktanks that developed the ideology, to the political actors who machined it into policy. The movement’s shock troops included tough-talking ideologues like Grover Norquist, president of Americans for Tax Reform, who said: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” Ayn Rand, author of romance novels for business moguls, became a movement icon with her depictions of rugged capitalist heroes taking on wimpy liberals and overbearing governments. One of Rand’s inner circle, Alan Greenspan, would serve as chairman of the Federal Reserve Bank from 1988 to 2006, where he presided over the broad deregulation of the financial system. (Later he would profess “shocked disbelief” at the meltdown of 2008, and allow that he’d “found a flaw” in his Randian ideology.)

Demonstrators gather in Zuccotti Park to voice and discuss their frustration with the economy and Wall Street in 2011.
Demonstrators in New York voice their frustration with the economy and Wall Street in 2011. Photograph: KeystoneUSA-Zum/Rex Shutterstock

A very narrow slice of America – the 1% – reaped spectacular wealth from this political sea change. When Forbes magazine published its first annual list of the 400 wealthiest Americans in 1982, there were two billionaires on the roster, and the entire 400 had a combined net worth of $225bn in today’s dollars. By 2014, 113 billionaires were left off the list because they didn’t make they cut ($1.55bn); the combined net worth of the Forbes class of 2014 was $2.3tn. Meanwhile, earnings for working- and middle-class Americans stagnated even as we worked more hours, took fewer vacations and kept increasing our productivity. These days it’s not uncommon for hedge fund managers to make $1bn a year. CEOs routinely pull in annual compensation in the tens of millions of dollars. Even assuming these people are very good at what they do, you have to wonder: is anyone really that good?

According to them, yes. What’s more, they’re liable to tell you they did it all themselves. Sanford Weill, Citigroup’s former chairman who clocked $785m over a five-year period, declared, “We didn’t rely on somebody else to build what we built.” A few years later, Citigroup would be rescued by the government to the tune of $476bn in cash and guarantees. More recently, tech venture capitalist Chamath Palihapitiya asserted, “If companies shut down, the stock market would collapse. If the government shuts down, nothing happens, and we all move on, because it just doesn’t matter.”

Granted, a thriving mixed economy depends on individual initiative, innovation and risk-taking. But it also depends on the institutions and social structures that only well-functioning governance can provide, such as: laws, both civil and criminal. Private property rights. Secure and enforceable contracts, copyrights and patents. Stable banks. Well-regulated international commerce, including treaties, trade agreements, secure borders and customs controls. “I can guarantee that if you don’t have a legal structure you will not have innovation,” said Jim Dempsey, executive director of the Berkeley Center for Law and Technology, in a 2015 article in Wired. “Instead you will have chaos … every innovator survives on the oxygen of multiple regulatory systems.”

The wealth that results from private enterprise is very much a social construct. President Obama famously overstated the case when he said in 2012, “If you’ve got a business – you didn’t build that.” Margaret Thatcher, Great Britain’s ideological twin to Ronald Reagan, equally overstated the case with her famous pronouncement, “There is no such thing as society.” The truth is it takes both, and there’s no readier example than the cellphone most of us are never without. In American Amnesia we find the story of Dr Vannevar Bush, FDR’s science czar during the second world war, and how Bush, at Roosevelt’s urging and with strong bipartisan support from Congress, set the path for America’s huge postwar spending on research and development in science, technology, and medicine. As Hacker and Pierson write:

The fruits of these investments ranged from radar and GPS, to advanced medical technology, to robotics and the computing systems that figure in nearly every modern technology. Far from crowding out private R&D, moreover, these public investments spurred additional private innovation. The computer pioneers who developed better and smaller systems not only relied on publicly fostered breakthroughs in technology; they also would have found little market for their most profitable products if not for the internet, GPS, and other government-sponsored platforms for the digital revolution.

If, as the authors of American Amnesia point out, you crack open that smartphone, you’ll find that every component is the product of research that the US government either funded or carried out directly: lithium-ion batteries, GPS, cellular technology, touch-screen and LCDs, internet connectivity, algorithmic applications. The internet itself is a government creation; the Department of Defense developed its precursor, the Arpanet, in order to connect with computing centers at major universities.

The smartphone: a triumph of US government investment.
The smartphone: a triumph of US government investment. Photograph: Samuel Gibbs for the Guardian

So we can only stand amazed at the Olympian chutzpah of Silicon Valley billionaires when they talk about creating libertarian utopias that will transcend government. Venture capitalist Tim Draper has proposed making Silicon Valley its own semi-autonomous state. Google’s Larry Page wants to construct a “Google Island” where tech research can proceed free of government meddling. PayPal’s Peter Thiel, whose fortune was built not just on the internet but through helpful government regulation (such as the Securities Exchange Commission’s rule limiting losses on identity theft; how many of us would put our credit card information on the internet if the downside was losing everything we own?) is a prime mover of the Seasteading Institute, dedicated to the creation of manmade island nations beyond the reach of government.

When faced with this sort of nonsense, one can’t help but think of the little boy who declares independence from his family, and runs away as far as the tree house in his backyard. The worldview of Thiel and company is about as juvenile as that, a kind of nerdy romanticism that recalls the capitalist fantasies of Ayn Rand. If not for the collective (Randians break out in hives when they encounter that word) efforts of American society, the industry in which tech moguls have so fantastically prospered wouldn’t exist. But it’s even more basic than that. The development and widespread availability of vaccines and antibiotics following the second world war are due in large part to initiatives carried out by the National Institutes of Health, the Department of Agriculture, and other government agencies. Longevity, quality of life – like wealth creation, these are social constructs. But it’s even more basic than modern medicine, and reaches back before the New Deal, to some of the very first initiatives of progressive government. The sharp improvement in mortality that began in the early years of the 20th century was largely the result of many more children surviving into adulthood. The cause was simple, though it took huge investments by government to make happen: cities began to clean up their water supplies. Filtration. Chlorination. Basic stuff we take for granted. If a good many of us are alive today, breathing and walking and talking and in some cases making a career out of raging against the government, it’s because our great-granddaddy didn’t die from cholera or typhoid way back in the day.

The air we breathe. The ground beneath our feet.

The New Deal goal of broadly shared prosperity has taken a beating the past 40 years, and the damage shows. By virtually every measure relative to other rich nations, the US has lost ground since the 1970s. We’re shorter (height is an excellent indicator of social conditions), we don’t live as long, more of our babies die before their first birthdays, wages and educational achievement have stagnated, and inequalities of wealth and opportunity are higher than at any time since the late 19th century. Mortality rates for middle-aged white Americans have actually risen the past 15 years, especially for non-college-educated whites. Maternal mortality rose 27% nationwide between 2000 and 2014. In Texas, the maternal mortality rate doubled between 2010 and 2014.

The very rich, of course, can buy what they need – healthcare, clean water, political clout. They have their walled compounds and private islands to retreat to. As for the rest of us – for instance, all the good citizens out there in rural Texas, Tea Party Texas, the hard country that was transformed by the New Deal – one tries to imagine how it might look in 70 or 80 years if current trends continue. Crumbling roads, jerry-rigged bridges, worn-out farms. A grudging, “market-based” energy grid. Clean water a rarity, and healthcare that’s hit and miss. Perineal tears, perhaps, are once again commonplace. A far-fetched scenario, surely, but no harder for us to imagine in 2016 than the lived reality of rural Texas 80 years ago.