Why The Critics Of Bernienomics Are Wrong – OpEd
By Robert Reich
Not day goes by, it seems, without the mainstream media bashing Berney Sanders’s economic plan – quoting certain economists as saying his numbers don’t add up. (The New York Times did it again just yesterday.) They’re wrong. You need to know the truth, and spread it.
1. “Well, do the numbers add up?”
Yes, if you assume a 3.8 percent rate of unemployment and a 5.3 percent rate of growth.
2. “But aren’t these assumptions unrealistic?”
They’re not out of the range of what’s possible. After all, we achieved close to 3.8 percent unemployment in the late 1990s, and we had a rate of 5.3 percent growth in the early 1980s.
3. “What is it about Bernie’s economic plan that will generate this kind of economic performance?”
His proposal for a single-payer healthcare system.
4. “But yesterday’s New York Times reported that two of your colleagues at Berkeley found an error in the calculations underlying these estimates. They claim Professor Gerald Friedman mistakenly assumes that a one-time boost in growth will continue onward. They say he confuses levels of output with rates of change.”
My esteemed colleagues see only a temporary effect from moving to a single-payer plan. But that view isn’t shared by economists who find that a major policy change like this can permanently improve economic performance. After all, World War II got America out of the Great Depression – permanently.
5. “So you think Bernie’s plan will generate a permanent improvement in the nation’s economic performance?”
Yes. Given that healthcare expenditures constitute almost 18 percent of the U.S. economy – and that ours is the most expensive healthcare system in the world, based on private for-profit insurance companies and pharmaceutical companies that spend fortunes on advertising, marketing, administrative costs, high executive salaries, and payouts to shareholders – it’s not far-fetched to assume that adoption of a single-payer plan will permanently improve U.S. economic performance.
Universal health care is really unavoidable at this point in time: a government paid single payer health care system will have a lot of beneficial side effects besides the economy: it will lower health care costs and it will reduce billing costs and with it bureaucracy both for doctors, hospitals and the government alike. That will lower hospital costs. As sole provider, the government has a strong position to push drug prices down by forcing US drug companies to compete not only against each other, but also against less expensive medications imported from Canada and Europe. But a single payer health care system will also lower the incidence of illness and medical needs because it will imp roe public health. Because everybody can get care – even the homeless on the street – the incidence of TB will drop. That means fewer cases of drug resistant TB. It will in addition cut down on a host of other infectious diseases because people can get care in time to avoid spread. Many problems will be diagnosed earlier because there is access to preventive care, cutting costs of care. As it is, the government subsidizes policy costs for those who cannot possibly pay for it. That means a lot of bureaucracy to cater to so many insurance companies’s and plan requirements. The money to do so is all taxpayer money. At this time, insurance companies lose money because they have to pay out more than they take in with policy premiums. That means increasing policy costs and therefore increasing subsidies as more and more people are priced out of insurance. Obamacare, while a step in the right direction care wise, is also a bonanza for the insurance companies, as taxpayer dollars insure insurance profit. The US is the only industrialized country in which taxpayers, at the threat of pretty hefty penalties, have to subsidize insurance profit! Strictly speaking, that is not a legal/constitutional use of taxpayer dollars. The only way at this point to remedy the many problems with US health care is really single payer, government payed, universal health care.