Monday, October 28, 2013

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Like parentheses, errors come in pairs. The Soviets just knew that a command economy would outperform any market economy and drove their regime into the ground trying to prove it. We've bought the opposite error of thinking that markets automatically outperform government agencies even in areas like pensions, health care, and education where experience has long shown they don't and that bureaucracies are more efficient—very few companies have ever been run half as smoothly (or cheaply) as the Social Security Administration. Thus there's a certain symmetry between Brezhnev and Ted Cruz...

Unfortunately, it isn't just the Republicans or the Conservatives who are still trying to make markets do what they can't do. It’s also commonsense for the technocrats who dominate the Democratic party; and just as the would-be reformers of the Soviet economy thought they could tweak the system without challenging the faulty assumptions upon which it was built, the administration and its technocrats are mostly just compassionate Reaganites for whom the market is magic. Of course part of the reason the ACA is so complex is the dysfunctional character of American politics, but it’s a dodge to blame it on the Heritage Foundation. Obama and his cohorts may have different ethical priorities, but the New Democrats, like New Labor in the United Kingdom, have the same economic theology as the Republicans and that’s a big part of the problem.   

Francis Spufford wrote a wonderful novel, Red Plenty, about the decline and fall of the Soviet economy. It tells the story of how well meaning and intelligent people failed to make water run uphill and overcome the fundamental weakness of demand economies. One of these days, somebody will have to write a novel about how our society suffered because the economic dogmas of Neoliberalism just couldn’t be made to work.   

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