Wednesday, January 04, 2017

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Jared Bernstein highlights how a generation of public policy has systematically transferred risk from the wealthy who claim to bear it, to the general public which can't afford to do so:
Back in the late 2000s, two authors — the economics journalist Peter Gosselin and the political scientist Jacob Hacker — wrote books documenting what they both called “the risk shift.” The idea was that policy and social norms had changed in ways that shifted economic risk — invoked by retirement, illness, job stability and loss of income — from government and firms to individuals and families. The result was greater inequality and worse: greater insecurity among the many people on the wrong side of the risk shift.
The Affordable Care Act is an anti-risk-shifter, a policy designed to shift the locus of the insecurity of no or inadequate health coverage back onto the government sector, which, due to its power to pool and regulate, is the far better sector to place that risk (which is why I’d lower, not raise, the Medicare eligibility age).

Same with retirement risk. As I read the WSJ article, my inner wonk was screaming: We already have a great, efficient, much-loved, fully vested, progressive, guaranteed pension plan. It’s called Social Security. If we want to relegate retirement insecurity to the past, we don’t need new saving schemes and tax incentives. We need to strengthen and expand Social Security.

Trump and the Republicans are anxious to repeal Dodd-Frank financial reform and cut the Consumer Finance Protection Bureau off at the knees. They’re preparing to pass a huge, regressive tax cut that I believe is ultimately designed to generate lasting deficits that will then be cited to justify the cutting of Medicaid, food stamps, Medicare, and Social Security.

With that, the risk shift will be complete.

What’s remarkable is that this is all happening at a time when even conventional wisdom recognizes that structural economic changes — globalization, technology, inequality, immobility, persistent underemployment, “secular stagnation” (persistently weak demand) — have made economic life tougher for many in the workforce. Such changes would seem to demand a politics that would drive the risk shift in the opposite direction, off the shoulders of households that are increasingly exposed to growing structural risks of displacement and loss, and back onto firms and governments.
- [Edited to add: Timothy Martin writes about the development of personal retirement accounts - which were supposed to supplement more stable defined-benefit pensions, but instead came to be used as an excuse to dispense with them.] And Peter Orzagh connects the stress of a more precarious life to the declining health (including shortened life spans) for lower-income Americans.

- Matt Bruenig notes that exactly the same incentives used as arguments against a basic income apply to the accumulation of passive income through capital ownership. And that reality (combined with the privileged treatment given to capital) makes it obvious how it's possible to pay for a system which provides meaningful supports to everybody.

- Dean Baker points out the futility of trying to pretend that the unpopularity of corporate-driven trade deals is merely an issue of messaging rather than substance.

- Finally, Richard Trumka discusses the dangers of allowing the likes of Donald Trump to pretend to speak for workers even as he uses his power to undermine them. And Ted Hesson reports on the real effects of Republican government - as raises and benefits promised under the Obama administration are being retracted by employers who have concluded they can get away with continuing to exploit their workers. 

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