Opinion | The Economic Mistake Democrats Are Finally Confronting - The New York Times - 0 views
www.nytimes.com/...supply-side-progressivism.html
economics policy Democratic party progressive theory supply-side politics technology democrat
shared by Javier E on 20 Sep 21
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This is the driving theory of most of the progressive policy agenda, most of the time: give people money or a moneylike voucher they can use to buy something they need or even just want.
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The problem is that if you subsidize the cost of something that there isn’t enough of, you’ll raise prices or force rationing. You can see the poisoned fruit of those mistakes in higher education and housing. But it also misses the opportunity to pull the technologies of the future progressives want into the present they inhabit.
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The first problem is explored in “Cost Disease Socialism,” a new paper by the center-right Niskanen Center. “We are in an era of spiraling costs for core social goods — health care, housing, education, child care — which has made proposals to socialize those costs enormously compelling for many on the progressive left,”
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what Bastani sees clearly is that the world we should want requires more than redistribution. It requires inventions and advances that render old problems obsolete and new possibilities manifold.
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the authors urge conservatives to tackle costs directly. Too often, Republican proposals to cut government spending are just shell games that shift costs onto individuals. The conservative enthusiasm for moving Medicare beneficiaries onto (often more expensive!) private plans “risks being little more than an accounting trick — a purely nominal change in ‘who pays’ that would do little to address the underlying sources of cost growth.”
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A problem of our era is there’s too little utopian thinking, but one worthy exception is Aaron Bastani’s “Fully Automated Luxury Communism,” a leftist tract that puts the technologies in development right now — artificial intelligence, renewable energy, asteroid mining, plant- and cell-based meats, and genetic editing — at the center of a postwork, postscarcity vision.
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“What if everything could change?” he asks. “What if, more than simply meeting the great challenges of our time — from climate change to inequality and aging — we went far beyond them, putting today’s problems behind us like we did before with large predators and, for the most part, illness? What if, rather than having no sense of a different future, we decided history hadn’t actually begun?”
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There are sharp limits on supply in all of these sectors because regulators make it hard to increase supply (zoning laws make it difficult to build housing), training and hiring workers is expensive (adding classrooms means adding teachers and teacher aides, and expanding health insurance requires more doctors and nurses) or both. “This can result in a vicious cycle in which subsidies for supply-constrained goods or services merely push up prices, necessitating greater subsidies, which then push up prices, ad infinitum,” they write.
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Progressives have long known to look for problems on the demand side of the economy — to ask whether there are goods and services people need that they cannot afford. That will make today fairer, but to ensure tomorrow is radically better, we need to look for the choke points in the future we imagine, the places where the economy can’t or won’t supply the things we need. And then we need to fix them.
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In a world where two-thirds of emissions now come from middle-income countries like China and India, the only way for humanity to both address climate change and poverty is to invent our way to clean energy that is plentiful and cheap and then spend enough to rapidly deploy it.
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It is true that European countries free-ride off the high cost we pay for drugs, because it’s the U.S. market that drives innovation. But that doesn’t mean we’d be better off paying their prices, if that meant new drug development slowed. We don’t just want everyone to have health insurance in the future. We want them to be healthier, freed from diseases and pain that even the best health insurance today cannot cure or ease.
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It’s ludicrous to say that the pharmaceutical system we have now is oriented toward innovation. It’s oriented toward profit; sometimes that intersects with innovation and sometimes it doesn’t.
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We should combine price controls with new policies to encourage drug development. That could include everything from more funding of basic research to huge prizes for discovering drugs that treat particular conditions to more public funding for drug trials.
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Years ago, Bernie Sanders had an interesting proposal for creating a system of pharmaceutical prizes in which companies could make millions or billions for inventing drugs that cured certain conditions, and those drugs would be immediately released without exclusive patent protections. Focusing on the need to make new drugs affordable while ignoring the need to make more of them exist is like trimming a garden you’ve stopped watering.
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this is a lesson progressives are, increasingly, learning. This is clearest on climate. Much of the spending in the Biden agenda is dedicated to increasing the supply of renewable energy and advanced batteries while building the supply of carbon-neutral transportation options.
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In a blog post, Jared Bernstein, a member of President Biden’s Council of Economic Advisers, and Ernie Tedeschi, a senior policy economist for the council, framed the Biden agenda as “an antidote for inflationary pressure” because much of it expands the long-term supply of the economy.
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look closely and you can see something new and overdue emerging in American politics: supply-side progressivism.