June 19, 2012 at 21:18:37
By Dean Baker (about the author)
Last week Washington Post blogger Greg Sargent picked up on a blogpost from Democracy
editor Michael Tomasky about how liberals should be touting the merits
of "government." That is a great idea, if the point is to advance the
conservatives' agenda.
It is astounding how happy liberals are to work for the right by
implying that conservatives somehow just want to leave markets to
themselves whereas the liberals want to bring in the pointy-headed
bureaucrats to tell people what they should do. This view is, of course,
nonsense. Pick an issue, any issue, and you will almost invariably find
the right actively pushing for a big role for government.
However, for conservatives the goal is not ensuring a decent standard
of living for the bulk of the population. Rather the goal is ensuring
that money is redistributed upward. And, of course, the conservatives
are smart enough not to own up to their use of the government.
Just to take a few easy ones, why would any market-oriented opponent
of big government support the existence of too-big-to-fail banks (TBTF)?
These TBTF banks operate with an implicit subsidy from the government.
Lenders expect the government to step in to back up these banks debt if
they fail, as happened on a massive basis in 2008. As a result, TBTF
banks can borrow money at lower interest rates than would be possible in
a free market.
The amount of money at stake is substantial, possibly more than $60 billion a year.
This is more money than is at issue with the Bush tax cuts to the
wealthy. This $60 billion is money that is redistributed from the rest
of us to the biggest banks in the country, their top executives and
their shareholders, all courtesy of big government.
To take another easy example, drug patents raise the price of
prescription drugs by close to $270 billion a year above their free
market price. This is roughly five Bush tax cuts to the wealthy.
Patents are government-granted monopolies. Since prescription drugs
often are necessary for a person's health or even life, people will pay
almost anything for a drug if they can afford it or can get their
insurance to pick up the tab.
Patents imply very big government since the government will imprison
anyone who produces a drug without the patent holder's consent. In
recent years the big government has been actively working to extend
Pfizer and Merck's patent monopolies to the rest of the world through
NAFTA, CAFTA and other recent trade deals.
Patents are currently used as a mechanism to finance prescription
drug research. But there are other more efficient mechanisms, such as
the prize system suggested by Nobel Prize-winning economist Joe Stiglitz. Alternatively, we could simply increase and redirect the $30 billion in public money that goes to support biomedical research each year through the National Institutes of Health.
To take one other example of big government that conservatives
support, highly paid professionals (e.g. doctors, dentists and lawyers)
use licensing restrictions to limit both foreign and domestic
competition. While the government has been using the banner of "free
trade" to drive down the wages of manufacturing workers, it has
simultaneously been increasing the protection afforded doctors in order
to prevent any similar downward pressure on their wages.
If doctors in the United States were paid the same as doctors in
Western Europe, it would save us more than $80 billion a year. The big
government subsidy to doctors alone is close to two times the money
involved in Bush's tax cuts to the wealthy.
It is not difficult to find other examples where conservatives want a
big role for the government. Of course conservatives are opposed to big
government social programs. That is because their goal is redistributed
income upward rather than ensuring a decent standard of living for the
whole population. It's very good politics for the right to equate big
government with big government social programs, and incredibly foolish
for progressives to help them.
The issue here is not in any real sense the size of government or its
impact on the economy. A government that diverts an extra $270 billion a
year to the pharmaceutical industry by enforcing patent monopolies on
prescription drugs is every bit as "big" as a government that taxes an
additional $270 billion a year and hands it to the drug industry.
It is totally understandable that the right would try to conceal the
massive extent to which it relies on government to redistribute income
upward. It is very hard to figure out why the country's leading
progressive thinkers want to help them.
Dr. Dean Baker is a macroeconomist and Co-Director of the
Center for Economic and Policy Research in Washington, D.C. He previously worked as a senior economist at the Economic Policy Institute and an assistant (
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