It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.
The other day I received a note from Stephanie Kelton, one of the very few economics professors who actually understands Monetary Sovereignty.
It was a form letter inviting me to support the Sanders Institute:
“Establishment economics won’t get us where we need to go. We need a bold policy agenda to take advantage of our vast capacity to build an economy that cares for our people and our planet in a way that makes us proud to call ourselves Americans.
“We know that another world is possible. We know that millions upon millions of everyday Americans believe in a world where everyone has a right to a decent job, healthcare, and the college education they want and need.
“We know that it will take powerful movements and bold ideas, working together, to make that vision real. And we know that The Sanders Institute can be an important place for that vital work to happen.”
The Institute is named after Bernie Sanders, who during the last election, had proposed a “Medicare for All” plan. Though his plan didn’t acknowledge the need for taxless federal funding, I once had hoped it was a start.
If you go to the Sanders Institute web page, you will see some of the Institute’s fellows, including Danny Glover and Harry Belafonte (Huh?), Professor Stephanie Kelton, and Professor Jeffrey Sachs, whom Time Magazine called, “the most important economist in the world.”
Seeing Sachs as an important member of the group tells me that Medicare for All is doomed.
Sachs is a human “false flag,” who claims concern for the less affluent, but whose recommendations support the belief that federal funding for health care must take away funding for other social needs.
Here is what Sachs wrote on the Sanders’ website:
Jeffrey Sachs: Americans can save $1 trillion and get better healthcare
by Prof. Jeffrey Sachs
US health care costs are out of sight, more than $10,000 per person per year, compared with around $5,000 per person in Canada, Germany and France. Obamacare expanded coverage without controlling costs.
Immediately, you can see that Sachs’s primary concern is cost. Yet, our medical care problem is not cost, but coverage.
Too many Americans either do not have health care insurance, or pay too much for the insurance they have. By contrast, the federal government can afford any cost, and in fact, higher federal payments to doctors and hospitals would:
–-Stimulate the economy
–Help hospitals modernize services and
–Incentivize young Americans to become doctors.
In short, Sachs follows the usual economic party line that claims federal deficit spending should be reduced.
The Republican plan would ruthlessly and cruelly limit coverage without controlling costs. Of the two options, Obamacare is vastly more just. The Republican plan is ghastly. But America has a much better choice: health for all at far lower costs.
This might seem like an out-of-reach goal or a political slogan, but it is neither. Every other rich country uses the same medical technology, gets the same or better health outcomes, and pays vastly lower sums.
Why the disparity? Health care in America is big business, and in America big business means big lobbying and big campaign contributions, the public interest be damned.
So far, so good.
Health care is our biggest economic sector, far ahead of the military, Wall Street and the auto and tech industries.
In line with its economic size, it ranks first in total lobbying, with a recorded $152 million in lobbying spending in 2017 and an estimated $273 million in federal campaign contributions in the 2016 election cycle, divided roughly equally between the parties.
Both parties have therefore ducked the hard work of countering the health care sector’s monopoly power.
Health care spending is now at $10,000 per person per year, roughly twice or more the total of other high-income countries, or a staggering $3.25 trillion a year.
We should aim to save at least $1 trillion in total annual outlays, roughly $3,000 per person per year, through a series of feasible, fair and reasonable measures to limit monopoly power.
And here is where Sach began to go off the rails. He talks about the supposed need to “save at least $1 trillion,” but why?
He says the reason is to “limit monopoly power.”
Are we to believe that paying hospitals, doctors, nurses, et al less, will “limit monopoly power”?
Here’s a 10-point plan Congress should consider.
First, move to capitation for Medicare, Medicaid and the tax-exempt private health insurance plans.
Under capitation, hospitals and physician groups receive an annual “global budget” based on their patient population, not reimbursement on a fee-for-service basis.
Capitation surely must be the worst idea imaginable.
It resembles the Republican “block-grant” plans for paying states to offer health care, thereby guaranteeing the poor will not receive health care.
The sole purpose of the GOP block grant and Sachs’s “capitation” is to save money for the federal government, an organization having the unlimited ability to pay any bills of any amount, forever.
Sachs’s “capitation” would guarantee that hospitals provide the minimum amount of service to patients.
If hospitals are paid according to the number of patients, why would they improve service when they’re not paid to improve service?
For instance, why buy expensive CT and MRI scanners when a simple stethoscope will do?
Capitation also would guarantee that fewer young people would want to be doctors. Being a doctor is hard work: Years of difficult study followed by more years of difficult work.
The reward is not only the good feeling from helping sick people, but also the financial reward. Take away the latter and you reduce the number of interested people.
Second, limit the compensation of hospital CEOs and top managers. The pay of not-for-profit hospital CEOs and top managers, for example, could be capped at $1 million per year.
Limiting the compensation of hospital CEOs and top managers is as foolish as capitation. As long as we’re considering foolish ideas, why limit them to the health care industry. Why not limit the compensation of all top managers in all industries?
There are hundreds of thousands, perhaps millions, of CEOs in America. Shall we limit all their salaries? If not, why not?
Presumably, Sachs believes the health care industry does not need to attract the best managers, because as “everyone knows,” running a hospital is so easy. Right?
Third, require Medicare and other public providers to negotiate drug prices on a rational basis, taking account of research and development incentives and the manufacturing costs of the medicines.
Only an economist could come up with this idea. Specifically, how would government bureaucrats “take account of” research and development incentives and manufacturing costs? Sachs has no idea.
Fourth, use emergency power to override patents (such as compulsory licensing of patent-protected drugs) to set maximum prices on drugs for public health emergencies (such as for HIV and hepatitis C).
Sachs wants the private sector to receive less money from the federal government. He wants our Monetarily Sovereign government — a government that has the unlimited ability to create dollars — to save money at the expense of business.
Economically, that makes no sense.
Fifth, radically simplify regulatory procedures for bringing quality generic drugs to the market, including through importation, by simplifying Food and Drug Administration procedures.
“Simplify” is easy to recommend, so long as one doesn’t have to be specific. Exactly which laws should be changed, and in what way?
That is as foolish as President Trump’s order that agencies eliminate 2 rules for every new one they create. Ignorant and childish.
Sixth, facilitate “task shifting” from doctors to lower-cost health workers for routine procedures, especially when new computer applications can support the decision process.
This is a good idea, which hospitals already are trying. That is why there are more than 50 types of nurses. Sachs doesn’t say what he means by “facilitate,” however.
Seven, in all public and private plans, cap the annual payment of deductibles and cost-sharing by households to a limited fraction of household income, as is done in many high-income countries.
This is a “take-from-the-hospitals,-doctors,-and pharmaceutical companies” plan. Why tax (yes, it’s really a tax) households anything.
Much better to provide federally-paid, no-deductible Medicare for every man, woman, and child in America.
Fully funded, federally funded Medicare for All would be the ultimate of simplicity. It would include everyone, and federal spending would stimulate the entire nation.
The only ones who wouldn’t like it are the health insurance companies and their lobbyists (Don’t need them).
Eight, use part of the annual saving of $1 trillion to expand home visits for community-based health care to combat the epidemics of obesity, opioids, mental illness and others.
Here Sachs demonstrates total ignorance about Monetary Sovereignty. The federal government does not need to save $1 trillion or even $1 in order to expand health service.
It can provide everything without collecting a single dollar in taxes.
Nine, rein in the advertising and other marketing by the pharmaceutical and fast-food industries that has created, alone among the high-income world, a nation of addiction and obesity.
Government control over advertising and marketing dollars? Not only is this unnecessary in a Medicare-for-All world, but it likely would be found unconstitutional — and dangerous to a free nation. How could Sachs not understand that?
Ten, offer a public plan to meet these conditions to compete with private plans. Medicare-for-All is one such possibility.
Well, “duh,” as my grandchildren say. Medicare-for-All not only is one possibility; it eliminates the need for the first nine Sachs suggestions, so long as it is federally funded.
Visit the website of your local not-for-profit hospital system. There’s a good chance the CEO will be earning millions per year, sometimes $10 million or more.
Or go to treat your hepatitis C with Gilead drug Sofosbuvir. The pills list for $84,000 per 12-week dose, while their production cost is a little over $100, roughly one-thousandth of the list price.
Or go in for an MRI, and your hospital might have an $8,000 billable price for a procedure that costs $500 in a discount clinic outside your provider network.
All of these are examples of the vast market power of the health care industry. The sector is designed to squeeze consumers and the government for all they’re worth (and sometimes more, driving many into bankruptcy).
As a result, the sector is awash in profits and compensation levels, and the stock prices of the health care industry are soaring.
How much is a good hospital CEO worth? How much did it cost to invent Sofosbuvir? What was the cost of developing all the failures that never hit the market?
Are soaring stock prices and compensation levels a signal that a company should be punished?
If the federal government funded Medicare for All, all those “excessive” profits would go to the private sector, stimulating economic growth.
In the meantime, human and financial resources are pulled away from low-cost (but also low-profit) disease prevention, such as low-cost community health workers and wellness counselors who work within the community, including household visits.
There is no reason why the federal government cannot pay for disease prevention as part of Medicare-for-All.
The health care sector is a system of monopolies and oligopolies — that is, there are few producers in the marketplace and few limits on market power.
Many industries are like that. The armaments industry is one good example. And as with both the health care and armaments industries, the federal government has the unlimited ability to pay, and every dollar it pays goes into the economy, stimulating the economy.
Every other high-income country has solved this problem. Most hospitals are government-owned, while most of the rest are not for profit, but without allowing egregious salaries for top management.
Drug prices are regulated. Patents are respected, but drug prices are negotiated.
Sounds like communism, doesn’t it? I absolutely do not recommend government ownership of health care facilities. The federal government should pay your bills, not own your hospital.
None of this is rocket science. The problem is not our intelligence. The problem is our corrupt political system, which caters to the health care lobby, not to the needs of the people.
The real problem is ignorance of Monetary Sovereignty — the false belief that the federal government can’t afford to fund healthcare for American citizens, and that federal taxes are necessary.
People like Sachs promulgate this belief. If “the most important economist in the world” recommends 10 truly uninformed ideas based on ignorance of Monetary Sovereignty, what hope is there for health care in America?
Sachs may want to be a friend, and he may think he is a friend, but he is our enemy, parroting the debt Henny Pennys.
As for the Sanders Institute, its letter claimed we need “a bold policy agenda, powerful movements, and bold ideas.”
But if Jeffery Sach takes the lead, we will see the same old, misleading, limp, “Who’s gonna pay for it?” objections.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.