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Ways to push back on inequality

From a column in the Washington Post, “baby bonds”: a relatively inexpensive approach involving individual accounts (of perhaps $20,000) for each baby born in this country.

From Matt Bruenig in the New York Times a couple of months back, the idea of a Norwegian-style social wealth fund that pays a dividend each year to all.

These approaches preserve the outcomes ground out by the market–and presumed to be efficient by those who see a perfect system of setting prices and the like, given the distribution of wealth–a doctrine of economic optimism.

A heterodox approach sees the problem as ramifying in all of these micro-outcomes somewhat while avoiding petty and over-frequent meddling in the economy. How are such beliefs justified from the point of view of an economist who sees this possibility?

The presumption that the market is perfect when it comes to setting prices–or even only imperfect here and there–can be countered with an alternative logic that sees the need for compensation that works out to a standard of living given that people work to the extent they are able to–a moral valuation of labor along with the economic as described by Jeffrey D. Jones in The Unaffordable Nation: Searching for a Decent Life in America. The latter is an interesting used book I’ve been reading recently and of course only one formulation of the argument for a broader policy concern with inequality.

Without some concern for the package of benefits for full work effort, we have a system where many subsist by running up debts and often looking for gambles that might somehow make up for a system that does not pay–a situation documented in Joness’ book.

Hence, it is not out of bounds to be concerned with the package of benefits and the like one gets given one does what one can to be in education or working.  It is no surprise that more than 10 states see increased minimum wages go into effect, even as Congress finished with its pro-rich tax reform bill.

Congress will now seek dangerous cuts in health care programs that will either increase illness or merely shift costs to last-resort programs for indigent patients. The key from the modern monetary theory (MMT) perspective on public finances is to note that these actions merely require waiver of caps also put in place by decisions of Congress–as long as the resulting deficits will not make the economy perform less well by standards such as inflation and unemployment. Fiscal choices are an instrument; concerns about the size of deficits or the debt per se are not justified for a government with its own currency and no debt in another currency. And plans about redistributing financial wealth do not substitute for concern with medical coverage for all.

Finally, there is a concern with protecting small players in the market place who contribute to the diversity of goods available; witness the net neutrality debate. And a level playing field without harassment in the workplace. As reported by a favorable review in The Nation, philosopher Liz Anderson raises the alarm over the at-will employment contract as a major power imbalance contributing to widely reported harassment issues. We first mentioned Anderson’s book in this previous post.

Institutionalists in economics (the heterodox school by this name–John K. Galbraith and Thorstein Veblen, for example) have long been concerned with imbalances of power posed by big and powerful players, rendering market outcomes involving consenting “agents” suspect despite a veneer of free choice. And of course, there is also a great benefit to a shift the balance of financial resources a child has  the start of life.

 

 

 

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