Here’s an interesting article in the Washington Post by columnist Ezra Klein that compares health care reform by Republicans with reform championed by more liberal Democrats.  Klein points out the Senate version more closely mirrors the Republican versions of reform.

Klein takes Rep. Paul Ryan’s health care reform proposals as representing the Republican version and then compares it to the reforms of liberals, including the single payer ideas they proposed.  In almost every detail cited, the Senate version apes the Republican ideas more than those from the left.

So one is left to wondering why the Republicans were so unanimously opposed to a reform that encompasses more of their ideas than those of the left.

My answer.  The Republicans weren’t really serious about reform.  They are owned by the huge corporate interests in the existing health care industry.  They were never going to vote for reform–even if it was their reform being proposed.

Former Federal Reserve Chairman Paul Volker is now front and center regarding the path of financial reform and that’s a very good thing.

Chastened by his problems with getting health reform and the likelihood his financial reform proposals might well run into the same type of juggernaut posed by huge corporate spending, Obama has reached out to possibly the most respected Federal Chairman ever.

Volker is a proponent of strong banking regulation.  He wants to separate, once again, investment banking from the much different and more conservative commercial banking.  In short he wants to duplicate legislation that would do what the depression era Glass Steagall act did.   That legislation led to more than 60 years of banking stability.

Since Reagan, Glass Steagall underwent gradual dismemberment, reaching its final destination when the legislation was done away with entirely under Clinton in 1999.  During that time America has sustained seven financial disasters including the latest one, the most severe since the Great Depression. 

It’s small wonder Obama now appreciates Volker’s point of view more than he did before.  Volker is now making the Congressional hearing circuit to bolster Obama’s chances of gaining real banking reform.

Volker is the Fed Chair who broke the back of 11% inflation under President Jimmy Carter (caused by the oil embargo–when will we ever learn!).  The economy tanked, of course, under Volker’s unrelenting pressure but the inflation broke.  However the poor economy torpedoed a second Carter term and Ronald Reagan won saying “It’s the economy, stupid.”  Editor’s note from Counterpoint noting this was Clinton’s campaign slogan, not Reagan’s.  Reagan’s was “Are you better off today than four years ago.”  Clinton’s is better.

Reagan didn’t reappoint Volker but instead chose his ideologic soulmate, Ayn Rand desciple Allan Greenspan.   Greenspan championed the view that free markets can self correct their excesses.  After the recent debacle, he has relented that viewpoint and apologized publicly for the error.

If you want an understandable and brief historical rundown on Volker’s sudden re-appearance on the financial stage, it’s here at a blog called truthdig.

Beezer’s long lamented the disappearance of Glass Steagall and witnessed firsthand the slow process of its dismemberment beginning in the mid 1980s when investment banks were allowed to sell commercial bank certificate of deposits which unleased the curse of “hot money” being parked in stolid commercial bank liabilities.

Read the article and learn something.  For those who don’t understand the importance of this push for stronger regulatory reform, this article will accurately fill you in.

Republicans, of course, won’t support real reform.  These are big corporations after all.  And they own the Republican Party every man and child.

President Obama’s chief economists, Larry Summers, is complaining about China’s mercantilist policies including its artificial peg of its currency under the dollar.

Back in December 2009, New York Times columnist/economist Paul Krugman wrote a brief explanation of how this currency manipulation has destroyed American jobs.  He estimates it’s about 1.4 million jobs lost.

Reforming our trade policies to protect American jobs and incomes is desperately needed now.  The arguments that unrestrained free trade policies create jobs, net, is total hogwash.  As is the idea that America can’t have a strong economy with policies in place to protect these jobs and their income.

Having a huge trade deficit is like having a tire with a hole in it.  As fast as you pump air (money) into the tire it goes out the hole (in the form of job losses as money escapes to foreign factories, import purchases and the like).

And with 1.3 billion people (4X the size of the US) it seems possible that China doesn’t even need to have an export driven policy.  If they increased their labor income, China would spark possibly history’s largest consumer durables boom just within its own borders.  Without exporting a single dishwasher.

To a lesser degree, the same income shift downward in the US would also have the same salutory effect.  The US has a demand drought.  People aren’t buying, so folks are losing their jobs all over the place, which accelerates and increases the downward spiral even more.

We need a more progressive tax rate table.  Our best times in terms of income and job growth have come when we had truly progressive income tax rates (despite what your told).  We need to direct federal monies to states and localities to preserve, even enhance, jobs and incomes. 

If we succumb to the myth that the federal budget is just like the family budget, and that when demand is down we need to “tighten our belts” and thus further depress demand instead of doing precisely the opposite, then we’re cooked.  That’s what FDR did under pressure in his second term and guess what happened?

We plunged into a severe recession that almost reached depression levels.  Until FDR regained his senses and restarted stimulus spending.

At any rate.  It’s time to protect our country’s economy from predatory trade practices.  And not only from China.

Sam Bowles, a professor of behavioural science at the Santa Fe Institute, is challenging more than a few widely held beliefs about wealth creation and the follow on of wealth transfer.  It’s an interesting train of research that has particular significance today.

Basically, Bowles research has led him to the conclusion that income inequality may be America’s most pressing problem.  And it is possibly the most pressing problem around the world today.

Among his observations is that in American almost one in four workers are employed in what he describes as “guard duty:” Working to maintain inequality between income groups.  Bowles asks whether that type of activity, so widely spread, is a drag on the economy.

Another observation is that success has a huge wild card which is poorly understood.  It’s called luck.  Working hard and smart, while important, may not be the most important ingredients for success.

Beezer here.  I’ve had first hand experience in this.  Making money was relatively easy.  Losing it was hard work.  Wrong time, wrong place are results that can not often be confidently predicted.  Sometimes, it’s just luck that turns the word “wrong” to “right.”

At any rate Bowles deserves attention.  And he’s getting it.  His is an interesting story that begins at Harvard with a meeting he and other academics had with the late Martin Luther King Jr.   King was all about social justice, of course.  He came to Harvard seeking economic input that might help his social agenda.  Bowles soon realized his economic training was of little help.  And he wondered why that was so. 

And thus Bowles’ career was sent in one specific direction.  Interestingly, it was his study of primitive hunter gatherer societies that became an early clue as to what might be wrong.  “Inequality breeds conflict, and conflict breeds wasted resources,” Bowles argues. 

And inequality is sticky (what with all the “guards” doing their work).  If you’re born into the bottom 10 percent of incomes, your chances of becoming a member of the top 10% is 1.3%.  For 99 out of 100 in this group, the “rags to riches” story is truly a myth.  And this poverty persists through generations.  It’s a tough problem and one that Bowles (and his students) are making a serious effort at understanding.

Beezer here again.  Which gets me back to my previous post.  A real challenge Obama faces is one of information and its distribution.  How to allow the American public to question many of the unquestioned opinions about economies that are now held as truth but may not be true, or at least nowhere near as accurate as is currently believed.

We have to begin asking the right questions.  Right now that’s almost impossible.  Bowles’ reasearch may be the first step in the war against intractability.  We are nothing if not stubborn.  Nevertheless, we need to open up more than a little and consider that maybe, just maybe, what we’ve been told as truth is not true.  That what we accept is in need of reconsideration.

Read this article in the Santa Fe Reporter.  It’s at minimum, very interesting.  Again thanks to Economist’s View and professor Mark Thoma for this information.