Marginal Utility

by Ken Houghton

I am not always kind to Brad DeLong. (see here, for instance. Or here. Or here.) This is more in sorrow than in anger, as he appears to still believe we have—or can return to—the political environment of 1998, 1999, or even 2000 (a position the consequence of which, he notes, to his credit).

But for sheer DeLong smackdown, it takes a pro. Or in this case two pros, responding to this comment of DeLong's at Max's place:

I wouldn't call Medicare and Medicaid a problem, but an opportunity. We project that our doctors and nurses will be able to do lots of cool expensive stuff that we want to see happen, and we have to figure out how to pay for it. But this is a "problem" only from a weird point of view.

First, Barkley Rosser:

You're over here in Defend Social Security Central after the stuff you just put up over on your blog? [presumably this, though possibly this as well] Did those people you worked with in the Clinton Treasury really get to you that deeply? And who did appoint those folks to the SSA back in the late 1990s who came up with those off-the-wall ridiculous "intermediate" forecasts that lead clowns like Sebastian Mallaby to their odiferous pontifications?

Maybe Medicare and Medicaid are not "a problem," but their finances are a problem right now. [Social Security] still has a rising surplus while they are in deficit, and worsening. You have said that we need to do something to (about) [Social Security] because there is a 40% probability that it might be in serious financial trouble in 2050? Medicare and Medicaid are in serious financial trouble with a 100% probability right now!

Now that's a dignified rant, slamming the details in and twisting the knife in the first 'graf, melding the twain in the second. Roddy Piper would be proud, but we might expect DeLong-as-Hulk-Hogan to rise from the mat.

But it's a tag-team match, with better choreography (possibly choreoanimated by Paula, not Alfred, Marshall?). The definitive smackdown comes from Dean Baker:

I note [Brad DeLong's] comment here that the problem of Medicare and Medicaid is that we expect doctors to be able to do all sorts of cool things, but we just don't know how we will pay for it.

Well, for our Hamilitonian friends there [reference and context] should be some easy answers if they were consistent in the positions they advocated. For starters, how about free trade in highly paid professional services. If we made our licensing standards for doctors fully transparent and made it as easy for hospitals to hire foreign doctors as it is for Wal-Mart to import shoes, then we would have no shortage of highly trained doctors from places like India and China who would be happy to work in the United States at less than half of the wages of U.S. doctors.

For a second step, how about getting rid of the patent protection that makes drugs and medical equipment so expensive. Wal-Mart is selling most generics for $4 a prescription, if we didn't have patent protection, nearly all drugs could be sold for this price. All that nifty new medical technology would also be available at very low cost (how much labor and material go into a cat-scan reading?), if it was not patent protected. Yep -- we have to find an alternative way to finance research, but if economists looked at where the money is (rather than how to drive down the wages of manufacturing workers), we would have dozens of mechanisms that are vastly more efficient than our corrupt system of patent supported research.

Finally, we would be looking to have a more efficient system of health care delivery. Administrative costs consume at least 20 percent of health care expenditures (much more if you add in the wasted time by businesses and individuals). A universal Medicare type system would be far more efficient.

The fact is that we know how to deal with our health care cost problems, but the special interests block reform and the economists are willing to accommodate them.

I was hoping there would be a reply from DeLong, but I'm now convinced that this is it:

Will shall be the sterner,
heart the bolder,
spirit the greater
as our strength lessens

from the greater context here:

The most interesting part of this, for me, is the last paragraph. Matthew Yglesias is serving notice that, at least as far as he is concerned, Rubinomics is dead. Rubin and us spearcarriers moved heaven and earth to restore fiscal balance to the American government in order to raise the rate of economic growth. But what we turned out to have done, in the end, was to enable George W. Bush's right-wing class war: his push for greater after-tax income inequality.

We will try to argue for fiscal prudence and stability in the councils of the Democratic Party. But I fear this is a bellwether—that we will lose, because the choice will be presented as between (i) left-wing things that are good for the nation, and (ii) centrist things that simply enable another round of right-wing class war by the rich and their minions a decade hence.

Dealing with reality is a bitch sometimes.