Krugman’s Blog, 3/2/13

There were three posts yesterday.  The first was “Self-destructive Europe:”

I just wanted to flag two important articles on Europe. First, Simon Wren-Lewis reminds us that while extreme austerity is being imposed on Europe’s periphery, the core has also pursued contractionary fiscal policies. Here’s the IMF’s estimate of the cyclically adjusted primary balance — a measure of what the non-interest budget balance would have been at full employment:

Basically, faced with a huge blow to private demand from a burst housing bubble and deleveraging, Europe has responded not as 75 years of economics said it should, with temporary stimulus, but with Herbert Hoover — or, better, Chancellor Brüning — policies of retrenchment. And policy makers pronounce themselves shocked both to find that the bottom is dropping out of Europe’s economy and that their perceived authority and wisdom is being rejected by voters.

Meanwhile, Mark Mazower, an actual European historian, says better and with more authority than I could what I’ve been trying to get at: the Chancellor Brüning reference is not a joke:

Those preaching austerity probably do not see themselves as contributing to a crisis of democracy, but they are. The Italian elections should remind eurozone leaders to pay attention to their voters. Economic fixes have failed to staunch a political crisis that has the capacity to harm not only EU integration, but the legitimacy of the continent’s democratic order itself.

Next up was “Welfare for the Medical-Industrial Complex:”

Stephen Brill’s long piece about medical costs has brought forth a mixture of praise and annoyance from health-care economics experts, including Aaron Carroll and Uwe Reinhardt; they’ve been screaming for years that our medical system charges too much, and so they’re both gratified and annoyed to see a major-media piece confirming what they’ve been saying all along.

Weirdly, though, Brill sniffs at one thing that we know works to keep prices down: single-payer systems that can say no. There’s a reason single-payer systems are pretty much universally much cheaper than systems — even the Swiss system — that run things through private insurers. And it’s not just the administrative costs.

Note that Medicaid, in particular, which is able to say no in ways Medicare can’t, is substantially cheaper than both Medicare and, even more so, private insurance.

So why does Obamacare run through the private sector? Raw political necessity: this was the only way that it could get past the insurance industry’s power. OK, that was how it had to be.

But you should really be outraged at the efforts of some states to ensure that the Medicaid expansion is done not via direct government insurance but run through the insurance industry. What you need to understand is that this is a double giveaway, both to the insurers and to the health care industry, because private insurers don’t have the government’s bargaining power. It is, bluntly, purely a matter of corporate welfare for the medical-industrial complex.

Oh, I guess you might believe that the relevant politicians sincerely believe that the magic of the market will somehow lower costs, despite overwhelming evidence to the contrary — and that rewarding their friends has nothing to do with it. Hey, I have this bridge to sell you.

Still, isn’t it bizarre that governors who protest bitterly about the cost of Obamacare, and in general about wasting taxpayers’ money, are willing to throw away lots of money via corporate welfare? Actually, no; it’s only puzzling if you think they believe anything they say.

Like Aaron, I’d say that outrage over the duplicity here is not sufficient reason to block the states’ moves; unfortunately, the uninsured are at stake, and they need help. But we’re seeing an object lesson in what our political divide is really about.

The last post of the day was “What the Malaysians Know:”

Via TPM, Buzzfeed has a story about how a bunch of conservative pundits, especially but not only Josh Trevino, acted as paid agents of the Malaysian government in a covert propaganda campaign:

A range of mainstream American publications printed paid propaganda for the government of Malaysia, much of it focused on the campaign against a pro-democracy figure there.

According to Trevino’s belated federal filing, the interests paying Trevino were in fact the government of Malaysia, “its ruling party, or interests closely aligned with either.” The Malaysian government has been accused of multiple human rights abuses and restricting the press and personal freedoms. Anwar, the opposition leader, has faced prosecution for sodomy, a prosecution widely denounced in the West, which Trevino defended as more “nuanced” than American observers realized. The government for which Trevino worked also attacked Anwar for saying positive things about Israel; Trevino has argued that Anwar is not the pro-democracy figure he appears.

Pretty amazing stuff. But none of the reports I’ve seen brings up a blast from 2005 we should surely remember: Think Tank’s Ideas Shifted As Malaysian Ties Grew:

For years, the Heritage Foundation sharply criticized the autocratic rule of former Malaysian prime minister Mahathir Mohamad, denouncing his anti-Semitism, his jailing of political opponents and his “anti-free market currency controls.”

Then, late in the summer of 2001, the conservative nonprofit Washington think tank began to change its assessment …

Heritage’s new, pro-Malaysian outlook emerged at the same time a Hong Kong consulting firm co-founded by Edwin J. Feulner, Heritage’s president, began representing Malaysian business interests. The for-profit firm, called Belle Haven Consultants, retains Feulner’s wife, Linda Feulner, as a “senior adviser.” And Belle Haven’s chief operating officer, Ken Sheffer, is the former head of Heritage’s Asia office and is still on Heritage’s payroll as a $75,000-a-year consultant.

Hmmm.

It seems that some years ago Malaysia’s ruling party took a good look at leading pundits and policy intellectuals in the conservative movement, reached a judgment about their personal and intellectual integrity or lack thereof, and acted in accordance with that judgment.

Funny how Malaysia gets who these people are and what motivates them — while our own press corps doesn’t.

Oh, ouch.  That may leave a mark…

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