Charter Schools, Obamacare and the Airlines: Will the Marketplace or Government-Guided Interventions Create Workable Solutions? Will We Learn from Failures?

Everyday my inbox is filled with anti-Trump diatribes, scholarly anti-Trump essays and calls for rallies and demonstrations; and, each Trump action re-enervates the anger and frustration. The Republicans control both houses of Congress and the White House: has our nation made a long term turn to the right? Stephen Skowronek, a presidential historian places the Trump presidency in prospective ,

… certain presidencies are “disjunctive” — straddling a political order passing into history and another one struggling to be born. And “disjunctive” generally means ineffective, because the parties such presidents are leading are likewise trapped between past and future and unable to unify and act.

Skowronek sees an “ineffective” interregnum, not a long term change in the political direction of the nation.

While Trump bashing/praise leads the debate there hasn’t been much discussion over the philosophical differences between Republicans and Democrats.

A short (and admittedly inadequate) look the growth of economic philosophies,

Adam Smith is the father of economics and modern capitalism, in 1776 wrote “The Wealth of Nations,” an enormously influential book,  Clearly, the book that guided Alexander Hamilton, the first American Secretary of the Treasury.  Smith coined the term “invisible hand,” defined as,

The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.

and Smith further  “explained that an economy will comparatively work and function well if the government will leave people alone to buy and sell freely among themselves. He suggested that if people were allowed to trade freely, self interested traders present in the market would compete with each other, leading markets towards the positive output with the help of an invisible hand.”

For the next hundred and fifty years economists and governments treated Adam Smith as the seer of economics. Yes, depressions might come and go, years of hard times and years of prosperity, the “invisible hand” is eventually self-correcting. Governments had no direct role in the economy except to assure that the marketplace ruled.  As the industrial revolution evolved nations moved from agricultural to industrial economics. Karl Marx and Frederick Engel responded with the Communist Manifesto (1848) and Marx’s Das Kapital (1867) and saw the world quite differently,  “The history of all hitherto existing society is the history of class struggles”

In the twentieth century, with the end of World War 1 and a harsh peace treaty the German economy failed, runway inflation and unemployment; the economic instability crossed the Atlantic and after a seemingly endless run up in the stock market the market crashed in October, 1929. Markets would self-correct, the Adam Smith economic principles would prevail.. FDR was sworn in as president in March 1933, and Roosevelt’s the New Deal, called for vigorous government intervention.

John Maynard Keynes, The General Theory of Employment, Interest and Money (1936), revolutionized the view of the role of government in “managing” an economy.

Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle. Keynesian economics advocates a mixed economy.

On the other side of the spectrum is Milton Freedman, Capitalism and Freedom (1963) has become the bible for the conservative side. Freedman is the anti-Keynes,

* Friedman argues against the continual government spending justified to “balance the wheel” and help the economy to continue to grow. On the contrary, federal government expenditures make the economy less not more stable.

* Though well-intentioned, many social welfare measures don’t help the poor as much as some think. Friedman focuses on Social Security as a particularly large and unfair system.

* The Keynesian doctrine of “social responsibility”, that corporations should care about the community and not just profit, is highly subversive to the capitalist system and can only lead towards totalitarianism.

 * Government intervention often has an effect opposite of that intended. Most good things in the United States and the world come from the free market, not the government, and they will continue to do so. The government, despite its good intentions, should stay out of areas where it does not need to be.

Democrats, as progressives, in the tradition of FDR are Keynesian, they view the role of government is to “balance the scales,” whether using fiscal and/or monetary policy to steer the economy as well as creating programs to alleviate poverty and provide paths into the middle class. Republicans, as conservatives, in the tradition of Smith and Freedman, see the free market as the most democratic and effective method of government. Business should be allowed to fail, there is no such policy of “too big to fail.”  For Freedman parents should be provided with school vouchers, schools: public, private charter or religious can receive vouchers and the marketplace, not test scores should determine the success or failure of schools.

A conservative argues that decades of anti-poverty programs have failed to alleviate poverty, in fact;  the programs have made a segment of the population generationally dependent  on the programs, He argued every program should require a work component.

I urged him to read Jonathan Swift’s “A Modest Proposal: For Preventing The Children of Poor People in Ireland From Being A Burden to Their Parents or Country, and For Making Them Beneficial to The Public,” ,

[]”I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled …”]

Currently the Earned Income Tax Credit provides dollars to working families earning below the poverty line, in a way, a reverse income tax. A more radical answer is to forego all “anti-poverty” programs and provide  a guaranteed minimum income to all: What Would Happen If We Just Gave People Money?

Rather than concern itself with managing myriad social welfare and unemployment insurance programs, the government would instead regularly cut a no-strings-attached check to each citizen. No conditions. No questions. Everyone, rich or poor, employed or out of work would get the same amount of money. This arrangement would provide a path toward a new way of living: If people no longer had to worry about making ends meet, they could pursue the lives they want

 You would think concept of a guaranteed income is a liberal, far left position; however, conservative are also supportive of the concept. (Read Atlantic article here).

In the real world deregulation, the movement to a free market, unregulated marketplace was just argument used to deregulate the airline industry. Free up the airline sector and many small carriers will emerge with more routes to more cities at cheaper fares. The result: the opposite. We now have fewer airlines flying to fewer cities at higher fares. The deregulation of airlines became an example of monopolistic competition.

An example of the free market bubbling up from the bottom are the emergence of Uber, Lyft and Via, challenging the regulated taxi industry.

The claims that replacing the Affordable Care Act, Obamacare with, Trumpcare, will result in a competitive healthcare sector with more competition, more choices and lower rates is highly questionable. ,

Currently the cost of health care in the US is significantly  higher than OECD: will a market-based healthcare system provide wider choice and cheaper prices or is the airline deregulation catastrophe the model?

Will failure be a learning experience? Will conservatives change, or, place blame on the progressives?   Or, although I highly doubt it, the reverse?

We learn from touching the hot pan,  in athletics we learn by guided practice over time, do we learn from failed policies or are we fated to making the wrong choices over and over again and placing blame elsewhere?

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One response to “Charter Schools, Obamacare and the Airlines: Will the Marketplace or Government-Guided Interventions Create Workable Solutions? Will We Learn from Failures?

  1. The only thing I see in common with your title to wit: Charter Schools, ObamaCare and AIrports , is that they all need fixing. Maybe part of Obama’s “borderless” leanings, also subscribed to by Hillary was to allow all of the illegal immigrants to pour across our borders at the outset, so that they could create a forced labor economy nationwide. Problem is , we already have that.Its called Prison work release programs.I see them all the time on the VanWyck Pkwy.
    Sarcasm aside, I do believe that each of the grouped entities has its own negative connotation,which cannot be allowed to linger on. ObamaCare rightfully so, is being addressed as we speak. Infra Structure issues are going to be addressed and compatibly so by both parties, and that is a good thing.
    Charter Schools, and choice are slowly becoming a states rights issue, as well they should be. In eliminating Common Core, The Fed gov’t has done the right thing, and it should stop there. I believe that if all 50 states held a week long retreat, that out of that venture would emerge a curriculum that while geographically friendly, would at the same time have at its core a common Amercian Standard of educational nationwide content. At the heart of that would be American History. With all the influx of foreign immigrants over the past 10 years, from every one of Earth’s continents, we do not insist that their children learn American History. Many oppose this notion on the grounds that such a coarse of study would crush cultural mores and customs. Some believe that to be proud of our history to the extent that we teach it in our schools is embarassing and insulting to others. I do not subscribe to either of those notions. Why? Because I know better. While having been a public school lifer I know now what I knew 20 years ago, 30 years ago and the day after my first day on the job. School governanace is and has always been at the heart of the answer to the question as to why schools fail. All of you know this as well. HAs nothing to do with neighborhoods, poor people like ,iddle class ones, like rich ones, want their kids to learn. They want their schools well kept and well disciplined. If only our municipal leaders, be they mayors, local congressmen, community activists prioritized getting the best leaders to run our schools as opposed to determining how they could best milk the cow so that everyone could dip their beeks, we wouldnt still be looking for answers to the question of why schools fail.

    Like

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