OK, I admit it. I’ve become addicted to Planet Money on NPR, and it has started to teach me about economics.
I was thinking about this while reading the news over dinner. For example, could we make it so that what the government invested in were purely public goods? You know, like lighthouses. In particular, I’m thinking about using the government to invest in things that provide public services and public benefits: highways, transit, science, research. Things that bring long term benefits to the country but don’t make sense for private enterprise. Further, let’s get the government out of those areas where private enterprise is doing just fine. All those tax benefits for private companies: why is the government supporting them? If we’re going to give money to industries, let it be industries that will ultimately improve the economic growth of this country in the long term. In other words: let’s invest in education, science, and energy research. Look at the economic engine that DARPA’s investment in the Internet proved to be?
I was also thinking about health insurance. Planet Money has had some good pieces on this, pointing out that one of our biggest problems today is employer-funded health insurance. It came about in the 1940s when employers could not raise wages, so they competed by adding perks. But employer-funded health insurance makes us not realize the cost of our health services. They like to use the thought experiment of employer-provided food insurance. You could go to approved grocers and buy all the food you want for a $40 co-pay. Would you make good economic decisions? Would you buy the expensive imported beer or the Budweiser? But by now, this form of health insurance is so tied up in our benefits package, it is suicide to propose getting rid of it. Still, I was trying to think what the alternative might be? Giving larger salaries and letting employee’s pick their plans and pay 100% of the cost? Would people pick the insurance companies that got the best deals on costs and negotiated the rates the best?
Planet Money has gotten me thinking about the interconnectedness of our economic actions. It has also made me realize that most of our elected officials don’t understand economics. I mentioned this last night: if you’re having financial trouble at home, you don’t just cut expenses: you work to bring in more income, and you make sure that everyone in the family is equally sacrificing and giving their fair share. We’re not doing that. We’re like the family with the spare bedroom and the rich uncle loafing on the couch, who we feed and cloth but doesn’t contribute to the house. We need to make the rich uncle contribute if he’s going to live in the house, and we need to rent out Wyoming.
In past economic downturns, there have been two traditional solutions. A good war and war spending. That won’t work here: we can’t afford the deficit war spending. The only other solution has been a government funding stimulus — not in the forms of checks to families, which are never large enough, or tax cuts to families, which work to pennies in the scheme of things, but in the forms of government programs that create jobs. We can’t do deficit spending to create these, so we need to cut our spending that is not creating jobs (again, some of those subsidies to profitable companies come to mind, as well as programs we can privatize), and start spending on research and education that enables people to work, and to work innovating the next idea that will make this country great.
If you haven’t figured it out by now, I strongly recommend people listen to the Planet Money Podcast.