The End of Loser Liberalism

I woke up at 3:30 feeling wide awake... eventually I gave up on falling back to sleep, so now I'm on my 2nd cup of coffee and just finished reading Dean Baker's "The End of Loser Liberalism: Making Markets Progressive". I highly recommend it; yes it's interesting but mainly because it's free, so why not?

The basic idea of the book is that Democrats should change their strategies to be more about having a different foundation for the free market rather than having the government directly alter the outcomes of it. He agrees with the goal of a progressive society where more money is distributed downward, but he thinks focusing just on government programs funded by taxing the rich is an ineffective way to accomplish that and a political disadvantage. For one thing, whenever you let debates be summarized as small versus big government, people intuitively gravitate towards supporting the side of "smaller government". He sees much what we currently refer to as "the free market" as a system rigged by the government to benefit the wealthy and corporations at the expense of average workers and smaller businesses, where there are many opportunities for progressives to become more "free-market" than conservatives. In that sense I think some of his ideas could get some support from some libertarian-ish conservatives.

A couple of examples...

We typically think of patents as part of the free market, but in many ways, it's a government intrusion in the free market that creates monopolies and inefficiencies. For example, when a drug company has a patent on a certain medicine, their government-enforced exclusive right to develop/distribute it allows them to sell for far above the market value. And that effectively moves money from average Americans to the wealthy. There's clearly a good goal behind the concept of patents... it covers the cost of new inventions and provides additional incentive for innovation. But the book suggests we look for other ways of doing that which wouldn't create the same inefficiencies in the market and would cost the economy far less as a whole. Baker's suggestion is having a public pool of money that is used as an immediate payment to reward things like new medical inventions. Yes, that would be a new government program with a cost, but it could cost far less than creating a bunch of monopolies. It keeps the incentive of new inventions while letting the market immediately do its magic to find the cheapest and most efficient way to develop and distribute the new medicine.

Another example is our policies in free trade. He agrees that free trade is a net benefit to the economy and is part of having a "free market". But right now most of our free trade agreements are set up only to expose poorer Americans to international competition while preventing the same for higher-income, higher-skilled workers. This, in effect, is the government tampering with the market to distribute money from the poor, who are forced to compete with cheaper foreign labor, to the rich, who can now buy cheaper products without the same international competition. For example, factory workers in America have been completely exposed to competition from foreign labor, but drug companies and doctors have been protected from this by our laws. If I can save a lot of money buying something made in a foreign factory, I can do so. But what about health care? Operations and medicine are usually far cheaper in other countries. In America, the average heart valve replacement costs $160,000. In India it costs $9,000. That's a $110,000 difference that would easily cover the costs of either traveling there or paying an Indian doctor to travel here, but you can't do that through our health insurance system. If Medicare or your private insurance company were allowed to "outsource" health care just like our cars and clothes can be, that could save you and our government tons of money. If progressives pushed for simply opening up health care to free trade, that would go a very long way to expanding access to health care using power of the free market.

I'm not saying I agree with everything in the book. I'm just saying it's all interesting, and I'd like to see some of the ideas experimented with.