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Should We Have Billionaires?

(This post originally appeared on my Patreon page.)

The Democratic presidential campaign has taken a strange twist in recent days, with candidates being asked whether we should have billionaires. While there may be some grand philosophical questions at stake here, I will stick to more mundane economic ones. The real question is; how do you want the economy to work?

The basic story is that if we have a market economy, some people can get very rich. If we buy the right-wing story, the super-rich got their money from their great contribution to society. If we look at it with clearer eyes, the super-rich got their money because we structured the economy in a way that allowed them to get super-rich.

This is a point which seems very obvious, but for some reason is largely ignored in policy debates. Most typically these debates take the market distribution of income as a given, and then ask the extent to which we might want to redistribute to have less inequality. The right of course wants little if any redistribution, while people on the center and left argue for varying degrees of distribution.

But it is completely absurd to treat the market distribution of income as given. The market is incredibly flexible and it can literally be structured in an infinite number of different ways. (Yeah, I know I make this point all the time, but I can’t help repeating myself.)

My favorite here is patent and copyright monopolies, both because it should be obvious that these features are structured by the government, and there is an enormous amount of money at stake. Patents and related protections raise the price of prescription drugs alone by close to $400 billion a year over the free market price, or 1.8 percent of GDP. If we add in the impact of patents and copyrights on medical equipment, software, movies, fertilizers and pesticides, and other areas, the cost could easily exceed $1 trillion annually or close to 5.0 percent of GDP.

Many of the country’s billionaires, starting with Bill Gates, owe their vast fortunes to these government-granted monopolies. As I, and others, have argued these can be extremely inefficient mechanisms for supporting innovation and creative work. Not only are they redistributing income upward, they also slow economic growth, and in the case of prescription drugs and medical equipment, impair people’s ability to get health care.

The industry with the largest share of the super-rich is finance. There are many ways this sector can be organized differently in ways that are likely to be both more efficient and produce fewer huge fortunes.

CEPR / November 23, 2019

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Committee on Ways and Means Must Investigate Opportunity Zones

Lawmakers sold opportunity zones as a solution for this country’s poorest communities but, two years into the program, that claim does not seem to be holding up. Rather than infusing poor communities with much-needed cash, it seems that many zones are padding the already bursting pockets of some of the country’s wealthiest individuals. No story has better embodied the mismatch between the program’s intent and actual outcome than ProPublica’s report, out last week, detailing how a luxury apartment development in a superyacht marina came to qualify for the tax break. 

Eleanor Eagan / November 19, 2019

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Coalition Requests Moderators Ask About Executive Branch

To: Moderators Rachel Maddow, Andrea Mitchell, Kristen Welker, Ashley Parker, MSNBC, and The Washington Post

We, the undersigned organizations, urgently request that you ask each Democratic presidential candidate about how they would wield powers specific to the executive branch at the next debate on November 20th. In particular, we request that you ask about what qualifications each candidate will prioritize in making key nominations and appointments to the various departments and independent agencies that will fall under the next president’s purview. 

CEPR / November 15, 2019

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Impeachment Is a Kitchen Table Issue

(This post originally appeared on my Patreon page.)

As the Democrats have pushed ahead with impeachment proceedings, there have been criticisms from both the right and left that impeachment is a needless distraction from the pocketbook issues that people really care about. The argument is that people will see the Democrats as playing political games rather than focusing on health care, jobs, wages, and other issues that directly affect people’s lives.

This sort of argument ignores the world we now live in. First, we have to be clear about the Republican agenda. To put it simply, it is to give all the money to rich people.

This means that not only that they don’t want rich people to pay taxes, the rich also get to cheat workers out of their pay, pollute drinking water, destroy the planet, and do anything else to ordinary people and the environment that might boost their income. Republicans and their allies also design patent and copyright monopolies to give even more money to the rich (both here and overseas) and they structure the digital economy in ways that deny ordinary people any privacy.

It’s true that some Democrats also seem to share much of this agenda, but that’s beside the point. If the Republicans can control the White House and Congress, this is what they will do.

So, is impeachment a distraction from fighting this disastrous agenda? Not at all, impeachment is a necessary step in trying to stop it.

In case people somehow have missed it, Republicans do not care at all about democracy or the rule of law. They will do anything and everything they can get away with to keep power. We see this again and again.

To take one prominent example, Republicans wanted to include a question on citizenship on the Census to discourage immigrants from answering. The explicit purpose was to reduce political representation in areas with large immigrant populations. The Supreme Court ultimately blocked this effort because the Trump administration could not find a plausible reason to include this question, other than to discriminate against immigrants.

Just last week, the Republican leader of Kentucky’s state senate suggested reversing the results of the state’s gubernatorial election (which the Democrat won), based on his assessment that a third party candidate had pulled away enough votes from the Republican to cost him the election. While he seems to have backed away from this position in response to mass public outcry, the fact that he could seriously consider completely ignoring the results of an election shows the lack of respect that Republicans have for democracy and the rule of law.

The Ukraine affair has to be understood in this context. Trump is quite openly using the State Department, the Justice Department, and most likely other branches of government to directly advance his personal and political interests.

CEPR / November 14, 2019