The idea that health care reform could be the final act of liberalism has received a lot of attention on the Web this week, and Atlantic contributor Mike Konczal joins the debate with a complex and thoughtful post in which he calls for a more muscular working class with "stronger bargaining power." This is the most provocative section:
Without a strong middle and working class you don't have natural constituencies ready to fight and defend the implementation and maintenance of a safety net and public goods. The welfare state is one part, complimenting full employment, of empowering people and balancing power in a financial capitalist society.
This is collapsing in real-time. One working definition of an approach to liberalism is "It's best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme" (Karl Smith, Wilkinson). I'd ask where are all these increasingly wickedly-well funded programs? We just had to bribe the top 3% with massive tax cuts for the next two years in order to keep unemployment insurance extensions in place for another year. Unemployment benefit extension are a net job creator and should have been a no-brainer, but it couldn't pass without a massive bribe. This doesn't include the brutal battle for extending health care to an additional 30 million+ people. This is even after the Federal Reserve created an alphabet soup of wicked-good safety net for the top 3% of the financial system, it's difficult to get extra benefits for working-people in the largest post-war downturn.
Public universities are being defunded at exactly the moment when people are most focused on a "polarized" job market and a lack of supply of high-skills. Jeffrey Williams asks us to consider student debt as a modern equivalent of indentured servitude, and I think the comparison is correct.
Mike and I overlap on most macroeconomic policy points, but I had some critical reactions to this section.
First, government welfare is a pill, not a vitamin: It often comes with side-effects. Much of our safety net incurs a tradeoff between efficiency and fairness. Unemployment benefits are fair to the unemployed, but subsidizing unemployment probably produces more of it. Minimum wages are fair to low-skill, low-pay workers, but they probably keep some low-skill, low-pay workers out of jobs that would have been filled at lower wages. I support unemployment insurance and minimum wage laws, but it's important to acknowledge that important patches of the safety net don't necessarily support full employment.*