Krugman’s blog, 7/24 and 7/25/15

There was one post on Friday, and two yesterday.  Friday’s post was “Fire Phasers:”

Jeb Bush doesn’t just want Americans to work more hours; he also wants to “phase out” Medicare, or so he told a Koch brothers backed group. What he’s talking about, presumably, is a Paul Ryan-type conversion of Medicare into a voucher system.

Fact-checking organizations please note, by the way. The next time Democrats say that Republicans want to destroy Medicare, and Republicans start screaming that this is a lie, remember that when talking to their own people like Jeb themselves call what they’re proposing a plan to, yes, end Medicare.

What’s interesting, in a way, is the persistence of conservative belief that one must destroy Medicare in order to save it. The original idea behind voucherization was that Medicare as we know it, a single-payer system of government insurance, simply could not act to control costs — that giving people vouchers to buy private insurance was the only way to limit spending. There was much sneering and scoffing at the approach embodied in the Affordable Care Act, which sought to pursue cost-saving measures within a Medicare program that retained its guarantee of essential care.

But we’re now five years into the attempt to control costs that way — and what we’ve seen is a spectacular slowdown in the growth of health costs, with the historical upward trend in Medicare costs, in particular, brought to a complete standstill. How much credit should go to the ACA? Nobody really knows. But the whole premise behind voucherization has never looked worse, and the case that universal health insurance is affordable has never looked better.

It’s amazing, isn’t it? Who could have imagined that conservatives would keep proposing the exact same policy despite strong evidence that they were wrong about the facts? Oh, wait.

The first post yesterday was “The Old Man and the CPI:”

I don’t watch financial news, but CNBC was on in the gym, so I was treated to a long ad from Ron Paul, who wants you to buy his video explaining the coming crisis brought on by loose money. And I found myself thinking about the remarkable fact that there really are people who will buy that video.

After all, Ron Paul has been making the same prediction year after year — in fact, he’s been making this prediction at least since 1981!— and has been wrong year after year. It’s hard to think of a doctrine that has been as thoroughly refuted by events as goldbug economics. For a while gold prices did go up, although not for the reasons the goldbugs thought, but now even that has gone into reverse. So why would anyone pay money for this guy’s analysis?

Of course, we know why: it’s the Bernie Madoff effect, a.k.a. affinity fraud. People believed Madoff because he was their kind of guy, never mind the implausibility of his claims; they believe Ron Paul for the same reason. True, there’s no reason to suppose that Paul is deliberately misleading his market – he probably believes his own nonsense. But in terms of the underlying dynamics that makes no difference.

So who are the people who feel a deep affinity with a crotchety crank? Um, crotchety white guys feeling cranky. The whiteness is, I believe, an important part of the story, as I’ll explain in a minute.

The basic mindset of the kind of people who pay Ron Paul for his economic advice is pretty clear: they’ve made some money over the course of their lives, they believe that all of it reflects their own virtue, and they think they know from that experience what it takes to create wealth. They hear that the Fed is printing money, and it sounds to them like a violation of both the laws of economics and morality — and they surely think of it as a plot to take away their completely earned gains and give them to Those People (hence the whiteness issue).

You can try as hard as you like to tell such people that monetary policy is mainly a technical problem, that the Fed isn’t giving money away, and that predictions of runaway inflation have been utterly wrong; it will make no difference. You can point out that they would have done a much better job of investing if they had listened to theMIT gang; sorry, we’re just not their kind of people.

I’d say it’s sad, but I find it hard to feel much sympathy for the marks of this particular scam. Then again, that’s probably why they will never, ever listen to what I have to say.

Prof. Krugman is much too polite to mention Charlie Pierce’s “Paul Rule,” which is that any member of the Paul family can make sense for 5 minutes, but that at 5:00:01 something will be said that makes you wonder if the speaker is from the Dagobah system.  Yesterday’s second post was “Uber and the New Liberal Consensus:”

You might not have thought that a taxi service would move onto center stage in our great political debates. But Uber actually is looking like a surprisingly important political issue. Why?

Well, Uber actually brings two things to the taxi market. One is the smartphone revolution, letting you tap a screen instead of standing out in the rain waving your arm, and cursing the guy who darts out half a block from you and snags the cab you were trying to hail.

The other is the company whose workers supposedly are free contractors, not employees, exempting the company from most of the regulations designed to protect employee interests. And it’s the second aspect that brings us into divisive politics.

On one side, Republicans are eager to dismantle as many worker protections as they can. So from their point of view Uber’s not-our-problem approach to workers would be desirable independent of the technology.

On the other side, we’re recently seen the emergence of the “new liberal consensus“, which argues (based on a lot of evidence) that wages are much less rigidly determined by supply and demand than previously thought, and that public policy can and should nudge employers into paying more. If that’s your policy plan, you really don’t want to see employers undermine it by declaring that they aren’t really employers.

It’s surely possible to separate these two issues, to promote the use of new technology without prejudicing the interests of workers. But progressives need to work on doing that, and not let themselves get painted as enemies of innovation.

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