Hi Guys,
A few days ago MFOer Crash posted a video Link to an economist Richard Wolff lecture.
Until that moment, I had never heard of Wolff or his economic minority opinions or studies. Based on the commentary, I anticipated a perspective that departed from mine in a major way. For a better understanding, it is always a sound policy to examine alternate viewpoints for possible revisions and likely more productive decision making.
However, because the referenced video was 2 hours in length, I delayed viewing it until just now. Richard Wolff’s economics are definitely in the minority; it is in the underworld of economic thinking. That doesn’t automatically make it wrong. All science evolves, and what was once believed to be an erroneous model sometimes is later validated. That’s not likely to be the case in Wolff’s prescription for a better capitalistic economic model.
Here is the internal Link to the Wolff video:
http://www.mutualfundobserver.com/discuss/discussion/19847/economist-richard-wolff-explains-it-all-for-youIn the first half of Wolff’s video presentation, he properly identifies some past and present failures of our capitalistic system. That’s an easy assignment since the system’s inherent design bifurcates into both huge successes and dismal failures. These bifurcations sometimes merge into deep cycles. Classical Keynesian and Austrian economic schools are both imperfect at predicting and at eradicating these periods, although application of their principles can mitigate these cycles.
Wolff’s medicine is off the charts. He prescribes complete democracy in business management and decision making. He wants all workers to equally share in all decisions. For example, in his presentation, he suggested that workers should follow their current assignments and duties for the first 4 days of the workweek. On the fifth day, everyone meets together and identifies changes for the next week.
Can you imagine the chaos and productivity reduction if such a plan were executed? I expect bedlam and control disintegration. It is naive to believe that the Wisdom of the Crowd would generate superior outcomes. Strong, experienced leadership is what moves the ball down the field. Free markets with properly constructed incentives are far more effective than State economies that are controlled by well-intentioned (sometimes corrupt) amateurs. Human behavior is often misbehavior.
The evidence is overwhelming that huge State managed economies don’t work very well. Wolff doesn’t address these failures. He highlights a few minor successes (the Mondragon Corporation in northern Spain and some business supply store that services Yale students) that really demonstrate the challenges to applying his idea on a national scale. It simply will not work. Even Mondragon is now discovering the very real limitations of its pure cooperative model (Today, that model is not so pure).
Economic freedom encourages competition which delivers positive productivity gains which are transferred to the public in terms of a bigger economic pie. Sure the pie is not evenly distributed; the rich get a bigger slice, but so too do the poor. Measuring economic freedom is complex because of all the interactions. I like the Index of Economic Freedom assembled by the Heritage Foundation annually. Here is a Link to its website:
http://www.heritage.org/index/The Index is composed of 10 measurements that are divided into 4 categories. They are: (1) Rule of Law, (2) Limited Government, (3) Regulatory Efficiency, and (4) Open Markets. Several measures are buried within each category to total 10. Private Property is contained within the Rule of Law, and I believe that is a major factor why North America has outstripped South America on the economic frontier. Historically, thank you Great Britain; shame on Spain.
I don’t know what motivated Crash to post the Wolff talk, but I thank him for the exposure. Viewers must be especially discriminatory when watching Wolff’s presentation. It is not so much what he said that is wrong. It is not. It is more about what Wolff omitted in his talk that biased and distorted his presentation. Listener beware.
Richard Wolff is definitely within the economic underworld realm. He has precious little experimental evidence to support his far out position. I suppose it gets him speaking engagements in front of a disappointingly small audience as demonstrated within the referenced video. He soldiers on. So do I with a rejection of his basic idea.
Best Regards.
Comments
Regards,
Ted
http://bobzermop.hubpages.com/hub/Why-capitalism-works-and-socialism-doesnt#slide6678751
http://en.wikipedia.org/wiki/Frank_Zeidler
http://en.wikipedia.org/wiki/Bernie_Sanders
http://socialistparty-usa.net/
Personally, I think that's a great idea, and suggest that we initiate a management plan like that right here at MFO. Let's see now... we can rotate management between Professor Snowball, MJG, Ted, Crash, Tampabay, DavidMoran, Maurice and myself for starters. That certainly should give us a nice variety of management approaches, and make this a much more democratic forum to boot. We'll probably need to increase our "flag response team" to ten or twelve people, but that's a small price to pay for such a major improvement, and will also have the benefit of providing useful employment for a lot of folks who are obviously in need of same, including myself. Also, I would expect a full benefits package for all of us... that only seems fair, and I'm sure Maurice would agree on that as it would be "free" and Maurice and I like a lot of free stuff.
Regards,
Ted
Regards,
Ted
Oh, no --- does that mean you do not want to join the cell?
Now, here is some real redistribution:
\\\ ... one of the main things [ACA] does is raise taxes rather dramatically on a pretty small number of high-income people in order to give subsidized health insurance policies to a substantially larger number of low-income people.
I so hope this House GOP conference head Cathy Rodgers Facebook thing goes as viral as viral can be:
http://www.vox.com/2015/3/26/8296863/mcmorris-rodgers-obamacare
ACA seems structured to encourage the design of plans with high deductible, high out-of-pocket caps - that's the cost of making premiums "affordable". Even with cost-sharing available for those up to 250% of federal poverty level, the high deductibles are strong disincentives to using any insurance. Thus, benefits may actually be flowing somewhat to the better off - everyone pays premiums (less subsidies) while the less well off may be underutilizing the system. IMHO this is not a fatal flaw in the sense that it is fixable (and I believe even at the state level, where state insurance regulators set standards for ACA plans). That doesn't mean it's not a serious problem.
Where I think the critical flaw is, is in the concept of patient as "consumer" of insurance (ACA or otherwise). This year I've had two specialists ask me how I liked my new insurance plan. My response was: how should I know - they're the ones providing me service and handling the billing. I just give them a co-pay.
One doctor replied that he didn't know anything more than I did, which is why he was asking me about the insurer. After I discussed different options, the other said he wished he'd talked with me before he selected his own plan. These are rather disturbing comments, as they are coming from "inside the system".
I'm better at this than most. It's hard to imagine how others navigate the system, especially if they can barely deal with the deductibles. Which is what my PCP intimated.
WHO defines universal health coverage strictly in terms of the beneficiary, not the funder. "Universal health coverage (UHC) means that all people receive the health services they need without suffering financial hardship when paying for them."
Where you are asking for too much is in stating how health care is funded. Both ACA and SF's coverage rely upon employers funding care for their employees (or paying an additional tax). That sounds a bit different from assessing "the entire tax base", but is still okay.
Where you may not be asking enough is failing to demand that "all people receive the health services they need" - simply providing coverage, if not adequate or affordable is coverage in name only. That's a point I was making.
In 2013 WHO wrote that all OECD nations provided "universal (or quasi-universal) health coverage for a core set of health services and goods, except Mexico and the United States. Following the 2004 reforms in Mexico, the proportion of the population covered has grown rapidly to reach nearly 90%. In the United States, where 15% of the population was still uninsured in 2011, the Affordable Care Act will further expand health insurance coverage, from January 2014."
My takeaway from that is that the US falls (or fell) short of universal health coverage in terms of breath of insurance coverage, not in terms of how that coverage was funded. WHO did not look at the high deductibles and out of pocket caps in ACA plans that fail their requirement of not causing financial hardship, since those plans did not exist at the time. Had that information been available, WHO might not have been so sanguine.
Regards,
Ted
Or This: "Oh How I Love The Smell Of Napalm In The Morning !"
Can't help myself:
Regards,
Ted
(As a university TA long ago we taught this film also without sound, just having the students watch it, visually, a beautifully composed piece of work, among other things looking for images of loss of control throughout (body, and machine from vending to guns to bomb bays). Quite a remarkable and wide-ranging set of sphinctorial and similar analogs (arm salute, rising to walk). Kubrick was so bloody visual.)
Mein fuhrer, I can walk!
Yes, closure of this topic is overdue. For me, that became evident about midway through the postings when they headed south. They became very personal and vindictive. Beyond that point, little of substance was added. MFO prospers very well without these hostile, angry exchanges.
MFO’s policy appears to encourage freedom of expression. That’s what makes markets work, and contributes to MFO’s success story. Great! All opinions seem to be respected, are tolerated, and will be ignored when flawed. Personal attacks are not necessary. Given that Board members are mostly strangers, we likely measure each other by the sagacity and fairness of our submittals.
So, I’m deeply disappointed with the unhealthy flow on this topic. I had incorrectly anticipated better. I want any closure to raise the discussion bar back to a higher standard. I’ll try.
Let me close with a set of Links that feature famed economist Hernando De Soto. He acknowledges the failures of Communism in his beloved Peru and elsewhere, recognizes the shortfalls in Western Capitalism to be effectively adopted by Third World nations, and proposes a candidate cause/solution. That’s a challenging and innovative agenda. De Soto goes a long way in documenting the merits of his insight.
De Soto’s book, “The Mystery of Capital”, is terrific. I recommend it without reservation. It is a breezy and informative read. Here are a few remarks from his opening paragraph:
“Capitalism stands alone as the only feasible way rationally to organize a modern economy. At this moment in history, no responsible nation has a choice”.
Here are two roughly 8 minute video Links that nicely summarize the issues and his position on them:
Please access these fine presentations and the De Soto book. They establish the close correlation between property rights, unencumbered fair law, and individual prosperity. Some of De Soto’s field research with respect to the integrated wealth of the poor will surely amaze you.
I sincerely hope that this submittal reestablishes a decorum that is the hallmark of most MFO discussions. Yes it does matter for a civilized society and a civil discussion panel.
Best Wishes.