Monday, June 26, 2017

The Weird Free Market Religion of the Conservatives: Three Recent Examples.

The free market religion of many conservative politicians bears little resemblance to what markets mean in economics.  I wasn't aware of that until I became obsessed with politics.  But now there are days when I read conservative market-focused opinions which make my eyes try to look in opposite directions. 

Take three recent examples:

First, the nightmarish fire at the Grenfell Tower in London was made more devastating by inadequate fire safety.  The New York Times:

The fire that destroyed a London apartment building, killing at least 79 people, provides a grim warning about the dangers of a regulatory approach President Trump has made official policy in Washington.
One of the safety failures under investigation in the fire is the lack of sprinklers in the 24-story Grenfell Tower. High-rises built in England since 2007 must have sprinklers, but older ones, like Grenfell Tower, built in 1974, do not have to be retrofitted with them.
And why don't they have to be retrofitted?  The answer has to do with the Demon of Regulations.  If you are a believer in the Free-Market God, you also believe in demanding that two or three old regulations must be abolished for every new one that is created.  Here's the UK take on that:

Speaking in February 2014 during Fire Sprinkler Week, some of the members of the British House of Commons were all for sprinklers, but not for regulations to require them.
“We believe that it is the responsibility of the fire industry, rather than the government, to market fire sprinkler systems effectively and to encourage their wider installation,” Brandon Lewis, who would later become housing minister for the Conservative government, said after praising the one-in, two-out formula then in use.

Butbutbut:  The customer in this particular case would have been the local government, because Grenfell Tower was council housing, that is public housing operated by the local council!  (This is why my eyes attempt to look at opposite directions while reading.)

Is the government supposed to act like a reluctantly-persuadable consumer in such markets, expecting the suppliers to talk it into buying sprinkler systems?   And if so, how do we model the fact that the people who are going to be housed in that building are not the people in the government who make those choices?  The incentives the latter have are very different from those the former would have.

Second,  the most recent health care proposal by the US Republican Senators seems to assume that markets are run the way an imaginary Santa Claus runs the Christmas presents industry:  If you work hard enough, you get good insurance for yourself and your family from your employer.   Here's Mike Pence, or Dear Vice President, with that market-based message:

So.  There's little need for Medicaid, the program which pays for health care for certain groups of the poor and for the majority of the elderly in long-term nursing home care, because it's interpreted as largely used by gormless and lazy able-bodied adults, who could buy their own health care coverage if they only bothered getting a job and showing some personal responsibility!

The truth is quite a bit different:

In reality, those who benefit from this $545-billion-a-year program are not so easily typecast. More than 70 million Americans, or 1 in 5, use this government program. And they come from all walks of life—including people you know.
It could be your grandmother—one-quarter of Medicaid enrollees are elderly people or disabled adults.
It could be the child next door. About half of Medicaid enrollees are children, many of them with special needs.
The rest are adults without disabilities who earn too little to afford health insurance otherwise. Many of them are working: Six in 10 able-bodied adults on Medicaid have a job. And 78 percent of Medicaid recipients are part of a household with at least one person working full time. Many of those who don't work are caregivers for other people.
According to the Congressional Budget Office, 14 million Medicaid recipients could lose their coverage if GOP plans to overhaul the Affordable Care Act (ACA) become law.

And sixty-four percent of the elderly in nursing homes are covered by Medicaid.  Many of those elderly come from the middle class, by the way, and many probably voted for Republicans.  The reason for such a high dependency on Medicaid to pay for nursing homes is the cost of long-term care (which Medicare does not cover).  Few families can afford, say,  $ 6,000 per month to keep grandpa or grandma in the nursing home, and few families can afford to do without at least one full-time earned income to give that care at home.*

The conservative view, reflected in the " Health Wealth Care" proposal (crafted by a small group of very wealthy white men), is firmly based on unquestioning faith in the God of Markets:

All employers are assumed to provide good health insurance without any regulations demanding them to do so, and health care markets are assumed to compete in price and to automatically result in the most efficient care bundles**.  Neither of those assumptions hold in reality.

But then, of course, the Wealth Care proposal is exactly that:  A device to move billions into the pockets the Republicans see as belonging to the rightful owners of that money.

Third,  have you noticed how comfortable we all now seem to be with the increasing market concentration in many industries?  That Amazon might purchase Whole Foods is perfectly fine.  That we might end up getting all our news from media owned by Rupert Murdoch or someone equally rich is just how things are.

There was a time when market competition meant the very opposite of one or few large firms taking over a market, because the latter situation is bad news for consumers, resulting in higher prices and less choice. We even used to have something called the Federal Trade Commission, to regulate the tendencies toward market concentration by enforcing the anti-trust laws of the nation.

Well, we still have the FTC and those laws, but it's not the American consumers they now seem to protect.


*  Anyone glibly assuming, as a money-saving proposal,  that a patient with dementia, say, could easily be cared for at home (probably by women and without pay) needs to be fed into a wood chipper, feet first, so as to maximize the pain of the experience. 

I understand that some voluntarily choose to do that care, out of love, but the sacrifice required is enormous and should never be just expected, especially by those who are never planning to do it themselves.  Besides, few families can provide 24-hour care which is needed for dementia patients.

**  The markets for health care are the textbook example of how and why markets fail.  If we used medical technology for those failings the list of diseases of health care markets would be almost endless.

This doesn't mean that markets cannot be used at all.  But it does mean that the ability of the markets to result in high-quality-low-price combinations is pretty limited outside the kinds of services people buy fairly routinely, and it does mean that the markets need regulation.