Sunday, March 28, 2010

A quick and dirty primer on progressive macroeconomics

Wonder has brought to my attention that economics is a concept that a lot of people are afraid of, even smart well informed people. I think this might have something to do with the idea that economics is supposed to involve the scary MATH. But in reality, economic theory uses very little math. Specifics use math, but theory, no.

So i told Wonder and the Kid that I'd teach them a few things about economics. I am not an economist, but I know some stuff and maybe some of you all would like to see silly little sharpie drawn graphs explaining economics.
So first we are going to start with a basic macro system. It's made up of 3 parts, the people, business, and government and it looks a bit like a triangle.

Stuff flows into and out of each part. People give their labor to business in exchange for wages and their money (wages) to business in exchange for goods and services. People and business give their money to the government in the form of taxes in exchange for services.

So far that's all pretty basic econ stuff, here's where the progressive part comes in.

Only one of these three parts is real. Only one part exists without the others.

So when economists or other "learned" men talk about the inevitability of economic things, like how a free market will regulate itself, they are lying. Free markets are not like water, they do not find their own level through physics or gravity or some natural force. They are created by people and do not exist without people and will only be as "good" as the people who create them.

While I'm on the subject of "good" let me take a quick detour. Business has no morality, it is neither good nor bad. It is amoral. Its single focus is on making a profit. That these profits often come at the expense of people is not business' concern and we should stop being shocked when companies poison toothpaste or dog food with cheap fillers. Of course business will choose cheap over safe. Safe does not increase profits.

That is why we have both government and business. Government's job is to protect the people. That is the sole reason for it's existence.


In our system, government and business are trading partners (and I massively simplified the drawing). Business not only pays taxes, but pays lobbies and makes campaign donations all in an attempt to pay less taxes and receive more services or keep profit margins wide by keeping labor costs low. And it also wants to siphon off the money that we people pay into the government by providing services that the government normally handles, like military contracting instead of soldiers or charter schools instead of public schools or health insurance instead of health care.

And government isn't the reticent dance partner in this. Because neither business nor government exist without the will of the people, both parts actively work to control the people in order to gain or maintain legitimacy. A key element of this is the election process and two party system. Without business money to fuel elections, politicians don't get elected. And you can't get business backing if you are a progressive because you are a direct threat to the business/government legitimacy pipeline.

So basically this is what the triangle looks like now

This is why neither the public option nor medicare for all had any sort of a chance in the healthcare debate. They remove legitimacy from business by explicitly comparing the efficiency of a non-profit government protection system to a for-profit business service.

But remember, neither of these things are real, but we are. We are what gives them power and we can change that. But first we have to know how the current system works

No comments: