fresh voices from the front lines of change







Steven Pearlstein, in the ominously titled "What Bernie Sanders would do to America" at The Washington Post, warns that asking our government to do things like raising the minimum wage to $15, extending public education by four years, providing Medicare-for-All and especially paying for that by taxing corporations and extremely high-income individuals would "turn America into Denmark or Sweden."

He means that in a bad way.

Sanders' Proposals Would End The World As We Know It

Pearlstein turns to several "economists" to make a case against government doing things to make our likes better. These "economists" use their high "economist" perch on which they sit so far above us mere mortals, to explain that we can't have a government that does things for the people because "the trade-offs that go along with such a system" are "higher taxes and unemployment rates, open trade, slower growth, more income redistribution."

However, his "economists" do not make an economic case to support their argument. They make a political case to knock down Sanders' proposals. (P.S.: "Open trade?" What?)

Deep Economic Modeling That Involves No Economic Modeling At All

An example of the deep economic modeling that went into one "economist's" argument: "'There’s nothing wrong with it other than that Americans are not Danes,' said Princeton’s Alan Blinder, a top economic adviser to President Bill Clinton."

Another deep "economic" argument:

“The number one reason these policies are feasible in Denmark is that the country is extremely homogenous,” said Jacob Kirkegaard, a Dane who is a senior fellow at the Peterson Institute for International Economics in Washington. “The perception among the electorate is that the government will provide for me and for people who, in a linguistic, cultural and ethnic sense, are just like me.”

And another "economic" argument: "The danger for the United States is that it would wind up looking more like Italy and Greece than Denmark and Sweden."

Pearlstein's "economists" also worry that Medicare-for-All "goes too far." Pearlstein quotes one economist who actually did economic modeling, but does so only to have other "economists" knock this down using political, not economic arguments:

An analysis done for the Sanders campaign by Gerald Friedman, a University of Massachusetts economist, concluded that ... The average family ... would save nearly $6,000 a year, even after paying a new 8.4 percent payroll tax to the government instead of premiums and co-payments to insurance companies. At the same time, employers who offer insurance would save more than $9,000 per employee.

How does Pearlstein knock down the results of actual economic modeling?

But Kenneth Thorpe, a widely respected health economist at Emory University, argues that Friedman overestimated the administrative savings and reduction in drug prices that the government could negotiate on generic drugs and home health care, both fast-growing segments. And he said that Friedman badly underestimated the additional demand for medical services induced by the elimination of co-payments and deductibles, creating the health-care equivalent of an all-you-can-eat buffet.

Thorpe offers no data or other evidence that Friedman "overestimated" the savings or additional demand. He just states this. But he is an "economist," so Pearlstein draws on this title for credibility.

Free College Will Destroy Education By Filling Up All The Seats

As for extending public education through college, Pearlstein offers an "expert on higher education" who amazingly argues "low- and moderate-income students already pay little or no tuition." ... "'I’m not sure this is a wise thing,' Ehrenberg said. 'It won’t affect the ability of lower income students to get higher education.' "

Right. And apparently there is also no student debt crisis, since it's already free. It's all in our heads.

But even though the "expert" claims that any low and moderate income student can already go to college for free, Sanders' plan to extend public education by four years would "strain the capacity of public institutions as large numbers of students shift from private to public colleges."

Can they can already go for free, or will making it free strain the capacity of schools to handle all the people who will be able to attend?

Raising The Minimum Wage Will Destroy The Economy

Pearlstein finds an "economist" who tells us that even though minimum wage increases "can largely pay for themselves because of the reduced turnover and increased worker productivity that result from higher pay," Sanders' proposal to raise it to $15 is a "risk not worth taking." To explain this statement, Pearlstein cites another "economist" who explains, invoking no economic basis, that raising the minimum wage would actually hurt the people who get a raise because they would face "higher prices for what they buy, smaller pay raises or higher unemployment as firms replace workers with new technology."

Clearly a pay rate of $0 per hour would be best for all of us.

(Note: Raising the minimum age would reduce the size of government by reducing the need for food assistance and other aid programs.)

Taxing The Wealthy And Corporations Will End Humanity Itself

Pearlstein warns that raising taxes on the highest incomes is an absolutely terrible idea because "some business executives, hedge fund managers and well-paid professionals — or their spouses — will decide to hang it up and head for the beach." Others "will hire armies of lawyers and accountants to help them convert salary income to lower-taxed investment income — and then move investment income offshore, where it is not subject to any U.S. tax." (Actually the failure to report and pay taxes on offshore income is illegal.)

Also, "almost any economist" will tell you things that benefit high-income taxpayers at your expense. For example:

“Almost any economist would say that those taxes on investment will have a negative impact on economic growth,” said Len Burman, director of the Tax Policy Center. “It raises the costs for business of making new investment, so they will invest less. And it makes investors less inclined to own [stocks].”

This argument – if you tax investment income at normal income tax rates people won't make investments – is worth examining. Once upon a time people invested to make money. Money from an investment is income, just like money from a job. But currently certain investments are taxed at a lower rate than other income. This argument that people will not invest "as much" if they have to pay a normal rate of taxes on the resulting income implies that people will choose to just keep their money under a mattress instead of making money by investing it.

Changing The System Would Mean The End Of Everything We Know And Love

Finally Pearlstein uses an "economist" to explain that "it’s not possible to bring about radical change in one area without changing everything else. And even if Sanders did manage to pull off all those changes ... the process would generate disruption and uncertainty that would slow the economy for years."

Again, Pearlstein does not explain how investing $1 trillion in infrastructure repair, increasing the wages of people at the bottom of the economic ladder, enabling all Americans to get a good advanced education and providing health care for everyone "would generate disruption and uncertainty that would slow the economy for years." Instead, he refers to an "economist" who expresses a political opinion, not an economic argument.

Pearlstein quotes one of his economist sources to conclude, "'Revolutions in advanced economies are extraordinarily costly ... That’s why incremental change is preferred.'"

Isn't "incremental change" the Clinton campaign theme? Go figure.

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