America: Democracy or Dollarocracy?

A mere 15 years after buying it, I am finally getting around to reading Reinhold Niebuhr’s Moral Man and Immoral Society. Thoughtbasket readers will probably see numerous posts inspired by this book, likely spanning months, since that is how long it will take me to finish it based on my current reading pace.

The basic premise of the book is that while people, as individuals, are generally pretty moral, once they group together – as tribes, countries, companies, trade organizations – they often act in immoral ways. How Niebuhr bridges this dichotomy will require me reading beyond page 25, which is where I am now.

But in setting up the dichotomy Niebuhr discussed the forces that push man into society and ways that society enforces mores and rules. Writing in 1932, he says this:

“With the increased centralization of economic power in the period of modern industrialism, this development merely means that society as such does not control economic power as much as social well-being requires; and that the economic, rather than the political and military, power has become the significant coercive force of modern society.”

I don’t know whether to be relieved or disturbed that the economic elite have controlled our society for at least 75 years.

As the government throws trillions of dollars at Wall Street, with Goldman alumni seemingly running the Treasury department, and bankers using taxpayer dollars to pay themselves multimillion dollar bonuses (why isn’t that bonii?), it really seems like Simon Johnson is right and the financiers have taken over government via a quiet coup. But according to Niebuhr they took over government long ago, and while they have certainly managed to pillage the common man in the intervening years, the reality is that standards of living have increased since the 1930’s, so perhaps economic coercion isn’t that bad. That’s the relieved side of my brain.

US Income Distribution

The disturbed side of my brain, on the other hand, focuses on the pillaging. Note that in the above graph, standards of living have improved dramatically at the top end, but not so much at the bottom end. Not surprisingly, those who hold economic power ensure that society is set up such that most of the proceeds of growth accrue to them. Or, as Niebuhr puts it, “the dominant class….always paying itself inordinate rewards for its labors.” I wonder when and how we went from being a democracy deriving its “just powers from the consent of the governed,” to a society in which economic entities are dominant.

Should we blame greedy businessmen and craven politicians? Of course. But we need to look in a mirror too. Gary Cross discussed at length in An All-Consuming Century the trade-offs that labor organizations consciously made to ensure steady employment at a stable wage. Many of these trade-offs transferred power from unionized masses to the corporate elite. And as I’ve noted before, we all need to be more active and informed voters; when our representatives are more beholden to corporations than to people, we need to vote them out.

Another Data Point on Health Care Reform

Apparently there is an ongoing debate in ophthalmological circles about using Lucentis or Avastin to treat macular degeneration. These are two closely related drugs, both made by Genentech from the same molecule. Avastin has been approved for treating various cancers, but ophthalmologists have evidently been using it off-label for a while to treat macular degeneration. This off-label use is one of the reasons Genentech produced Lucentis, which has been approved for macular degeneration.

Why is this relevant to health care reform? Because Lucentis costs thousands of dollars per dose while Avastin costs less than one hundred dollars. Even worse, as I was told by an ophthalmologist over the weekend, insurance policies keep even those doctors who are worried about costs from using Avastin. Doctors pay $50 for a dose of the drug, but only get reimbursed $7, so they are losing $43 per treatment. If they use Lucentis, they get full reimbursement. One might argue (in fact, I probably would) that the ophthalmologists are making so much charging for the treatment that they should eat the $40 loss, but I doubt many of the doctors will listen.

I know that there are many complexities here: you can’t expect insurance companies to fund the use of unapproved drugs, and you want a drug approval system that errs on the side of safety, and there hasn’t been a head-to-head trial to see if Avastin is fully equivalent to Lucentis. But surely there is a middle ground, where drugs are sufficiently vetted yet we are not incenting doctors to prescribe thousand dollar drugs instead of fifty dollar drugs.

Even Sadder History of Lobbyists

I recently posted about how corporate lobbyists stymied consumer protection reform in the 1960’s and 1970’s. Now here is a quote from Baron Arthur Salter’s book Recovery, from 1932:

“Government is failing above all because it has become enmeshed in the task of giving discretionary, particular preferential, privileges to competitive industry.”

Ugh. Will the system ever be as responsive to individuals as it is to corporate interests?

On Making People Happy

A friend recently used the old line that “you can’t make others happy unless you’re happy yourself.” I disagree, and I told my friend so. As I recall, my exact words were “That’s ridiculous. I have a Ph.D. in making other people happy.”

I don’t really have a Ph.D. at all, in making people happy or any other subject, but I do like to make the people around me happy, and here are three techniques I sometimes use:

  • Listen: People like being listened to. I like being listened to, and my dad does, and my friends do, and I think pretty much everyone does. Listening validates people and indicates that you actually care what they have to say. Also, listening gives you good information on which to act.
  • Act: When you learn of an action that could make someone happy, do it. You might learn of this action from listening, or from reading (not their diary…that will NOT make them happy) or from simply watching. Or you could deduce it, eg. “women like flowers, Catherine is a woman, ergo….” It doesn’t matter how you get there; what matters is doing something nice for someone.
  • Compromise: Give in sometimes. You don’t always have to get your way. Like the time I wanted to go see Transformers 2 (because I think Megan Fox is a great actress) and my sister wanted to see Lorna’s Silence and (despite being really worried about what might happen to Optimus Prime) I gave in because it made my sister happy. And, it turns out, learning about Lorna and her Belgian snack shop wasn’t really that bad.

There you have it. A graduate degree in making people happy, in three easy steps.

The Sad History of Lobbyists

I recently finished reading a great book called An All-Consuming Century by Gary Cross, a professor of history at Penn State. In this book Professor Cross traces the history of American consumerism in the 20th century, exploring the various roles of consumers, marketers, politicians and temperance movements, and teasing out theories of why America is so much more consumery (my word, not his) than other countries.

There is too much in his book to summarize, and I’d prefer that you buy it anyway, because it’s a great book. It’s currently number 330,562 on Amazon and I’m sure that we can get it up in the two hundred thousands. Suffice it to say that in a society founded on egalitarianism, consumption can be a method of both differentiation and assimilation.

One of the side themes that emerges from Cross’ book, and the one this blog entry is actually about, is the role that corporate lobbying has historically played in keeping consumption up. At a time when the role and power of Wall Street and insurance company lobbying are being much discussed, it seems appropriate to note that it’s nothing new for big business to use its money and lobbying clout to push around the little guy.

In particular, Cross discusses how after a rush of consumer rights legislation in the 1960’s (Hazardous Substance Labeling Act, Child Protection Act, Clean Air Act, etc.), corporations figured out how to lobby in order to limit the scope of those laws. “By 1976, they had begun to learn how to lobby a more decentralized Congress and to use Public Action Committee funds and grassroots pressure groups to regain dominance.” (p. 158)  Moreover, as Cross makes clear, the deregulation that marked the Reagan era was the nexus of laissez faire ideologues and corporate lobbying, and it encouraged consumption by limiting constraints on corporate marketing and product safety as well as environmental impact. Cross: “…deregulators were not friends of the average consumer, for they allowed higher bank fees, cable TV rates, insurance premiums, and child care and health costs.” (p. 205)

The fact that corporate lobbyists have been harming our hypothetical little guy for decades doesn’t make it right. I’m sure that the moneyed and powerful have been pushing their interests for longer than that. But in a US congressional system that has become so driven by the need to raise vast sums of money, the power of lobbyists is greater than ever. Solutions? Campaign finance reform and term limits are both possible answers. But the strongest answer is for voters to be aware of what their representatives are doing and act accordingly. Hey Montanans: if you don’t like that Senator Baucus took millions from the insurance industry while writing the health care reform law, then vote him out. We the people have a fair amount of power, but we have to work to exercise it.

NY Times is Copying Me

I’m not here to criticize Nicholas Kristof; not only have I linked to him before, but he is a two-time Pulitzer Prize winner and a Rhodes Scholar. But his most recent column says exactly what I’ve been saying recently.

First he says that “universal health care is not an economic or technical question but a moral one.” That is precisely what I said in this post. Then he quotes the new study showing 45,000 annual deaths from lack of insurance. Just as I did in this post. Then he closes by calling America a “great nation,” which is pretty similar to my phrasing: “the greatest…country.”

I’m not saying that Kristof is plagiarizing me. Let’s be honest: I’d be freaking psyched if a NY Times columnist stole my words. I’m just saying that if you want to know what the Times is going to say a fortnight hence, read Thoughtbasket now.

Real Estate Ripoffs: No Repercussions

Back in February the New Yorker wrote an article about how Florida was sort of the epicenter of the real estate madness, full of frauds and crooks, and that the entire state was essentially a giant ponzi scheme. The story mentioned one man in particular, Sonny Kim, who sold 90 properties, netting $4 million. Here is a link to a story in the local paper about Mr. Kim. The buyers were mostly in on the scam, putting no money down, getting liar loan mortgages from foolish loan officers, and then walking away, sticking the bank (meaning the taxpayers) with the house while Mr. Kim kept his proceeds.

Here is how it works: “A common scam works like this:  Someone with cash buys a crummy house cheap. A mortgage broker signs on and finds an appraiser to inflate the value. The broker shops the loan application, with false data about the borrower and the house. Bank loan officers approve it.”

Sonny Kim bought one house for $100, and three months later “flipped it for the sum of three hundred thousand dollars, with the help of a no-money-down mortgage from a subsidiary of Washington Mutual Bank, which later foreclosed on the house.”

I saved the article, so that I could go back to it later and see what happened to these folks. According to the St. Petersburg Times, which broke the story, nothing has happened. Sonny Kim hasn’t been charged with any crime. The title agent who managed a third of Kim’s deal, and was arrested on other fraud charges, hasn’t been charged for these deals. Nobody at WAMU is in jail. So all the people who made money on these fraudulent deals are sitting pretty, spending their money on mojitos, while the taxpayers are footing the bill for the bailout. That seems wrong somehow.

In fact, here is a quote from another house flipper, who started his real estate career while on probation from a cocaine conviction: “I drive a Hummer and own a 1970 vintage Oldsmobile 442. I always wanted diamonds and now I own them legally and no one can take them away.”

Lack of Insurance Causes 45,000 Annual US Deaths

Here is a link to a new study which estimates that 44,789 Americans die each year because they lack health insurance. This is the study that Rep. Alan Grayson referenced when he faux-apologized for mocking the Republicans’ lack of a health plan.

This is a purely statistical study, and I am totally unqualified to assess its methodology. However, it is being published in a peer-reviewed academic journal, and was written by fancy-pants researchers at Harvard Medical School, so it’s probably a pretty decent piece of work.

I Agree With WSJ Op-Ed — Amazing!

This is truly a miracle! For the first time in memory, there is an op-ed in the Wall Street Journal with which I actually agree. Mostly. And it’s by Holman Jenkins, who is usually such a tax-cutting, market-loving, poor person-hating cretin that I am often amazed he is even literate. But here we are on the same page. He expresses his views in his usual caustic and hyperbolic fashion, but I’m on board with his analysis.

The issue is net neutrality, and the possibility of FCC regulations on the matter. Jenkins points out that while there is a theoretical possibility of carriers favoring their own content over 3rd party content, this has yet to actually happen. He also notes that carriers invest billions in the infrastructure needed to carry ever more data, and that they need to recoup that investment. Finally, he points out that if carriers do not charge differential rates to content suppliers, the obvious solution is to charge differential rates to content users, namely charging more for heavy bandwidth users, which is clearly an equitable solution. In all cases, I agree with Jenkins.

This is also rare for the Journal, but the first two letters to the editor regarding Jenkins’ column, which can be found here, are also quite reasonable.

Health Care is a Moral Issue

T.R. Reid, author of “The Healing of America: A Global Quest for Better, Cheaper, and Fairer Healthcare,” recently wrote an article for Newsweek comparing the American health care system to the systems in other developed countries. The subtitle of the article is “To judge the content of a nation’s character, look no further than its health-care system,” and you can imagine where it goes from there. Reid notes that the U.S. is the only developed country that does not provide universal health care, and he quotes the facts that result: 22,000 Americans die per year because they can’t afford a doctor, and 700,000 Americans go bankrupt each year due to medical bills.

Reid compares this to Europe, where they approach health care with an emphasis on equality, on providing service to everyone. Here are some key quotes from Europeans regarding their view on health care:

  • A French physician: “But when we get sick – then, yes: everybody is equal.”
  • A former president of Switzerland: “Because it is a profound need for people to be sure, if they are struck by the stroke of destiny, they can have a good health system.”
  • A Swedish health minister: “The formula is so simple: health care for everybody, paid for by everybody.”
  • The Czech constitution: “health care for all.”

Reid sums it up: “The principle seems so obvious to people in Europe, Canada and the East Asian democracies that health officials asked me over and over to explain why it isn’t obvious to Americans as well.”

In America, on the other hand, we approach health care with an emphasis on freedom of choice, particularly during this summer of health care debates. But it’s not true freedom, since those without insurance are, in fact, denied any choice at all.

Reid again: “In the U.S., in contrast, some people have access to just about everything doctors and hospitals can provide. But others can’t even get in the door (until they are sick enough to need emergency care). That amounts to rationing care by wealth. This seems natural to Americans; to the rest of the developed world, it looks immoral.”

Republicans this summer tried to frame the issue as industrious workers supporting the lazy unemployed and uninsured, but that’s a canard. This frame ignores reality. To look at reality, take two factory workers: one is employed by GM, and has thus insurance, and the other is employed by a small local factory which doesn’t provide insurance. They are equally industrious, equally hard working, but the one without insurance is more likely to skip his doctors visits and – statistically speaking – more likely to die. Or take Nikki White, who was industrious and employed, until she became too sick with lupus to work, thus lost her insurance, was unable to afford the care she needed, and soon died.

The issue is not one of who works hard. The issue is whether we, as a society, want to let the people who randomly get sick (or randomly don’t have insurance) go bankrupt or die, simply because of their random bad luck. As Reid notes, this is a moral issue, and I don’t believe that American morals have decayed this far. We are better than this. We live in America, the greatest and richest country in the world. This country was founded on the premise that “all men are created equal,” remember? Not “all healthy men” or “all wealthy men.” Do we really want to live in a country that allows people to die purely because of their financial situation? I don’t think we do.

FYI, here is a New Republic article on the moral dimension of health care.