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Economists Can Be Bad for Your Health: Second Thoughts on the Dismal Science

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I am not familiar with "The New Leader," in which each article in this book originally appeared as a column "The Dismal Science." Readers are assumed to be bright enough to hope for a society in which people can find jobs, make enough money to pay their bills, and be puzzled when they notice a few items repeated endlessly in "The New York Times" about things which the Federal Reserve expected to climb when something else goes down, but which had exhibited a history of climbing as nothing but money in a modern economy could ever expect to grow, in spite of efforts to watch the amount of money more closely than anything else. Texts in this book do not appear in chronological order, with "Trickle-Down Greed" from January 1982 showing up on page 109, when the ideas of the rich, it can finally be admitted, "have gone a long way toward destroying the morale of the American people." If I really wanted a job, I might be much less willing to agree so wholeheartedly, as such political wishful thinking is becoming a major obstacle to intellectual forms of slavery for a living wage.

This book is a collection of articles from exciting (volatile) times, some when interest rates were high because of inflation, when it was easy to do a few calculations and show that the extra amount of interest being paid yearly on all debt "costs close to three times as much as the federal deficit the bankers moan about." With lower interest rates, "we'd be running a surplus, not a deficit." (p. 36). In a perfect world, with a lower interest rate, we "would quickly and powerfully stimulate investment in productive enterprise, with a consequent growth in employment. It would trigger a one-time surge in the stock and bond markets, followed by a gradual tapering off of speculation." (pp. 36-37). Obviously right about the December 1988-January 1989 circumstances in which that projection was made, readers now can only wonder how stupid a vast speculative bubble based on the belief in a total change in the nature of the economy in the 1990s could seem in 2003, when the federal deficit grows at a time of incredibly low interest rates. None of our problems are Brockway's fault, though he is still right about "The number of people living in poverty is growing, and within that group the number of those who work full time yet are poverty stricken is growing faster still." (p. 37).

Brockway was trying to look this far ahead. "Well into the twenty-first century, for instance, we will be paying up to 15.75 percent interest on a trillion dollars' worth of Treasury bonds sold in the wonder-working days of former Federal Reserve Chairman Paul A. Volcker." (pp. 38-39). This could have been part of a plan, and however stupid our current situation seems, one explanation could be that someone would like to produce a financial disaster so big that it will forever destroy the expectations of millions of people who could easily be deprived of everything by those who have the power to do so. This book sure makes it seem like it could be part of a plan, like NAIRU: the "nonaccelerating inflationary rate of unemployment." (p. 28). Trying not to pick on anyone with a lot of power, Peter G. Peterson, President Nixon's secretary of commerce in 1972 (p. 57), is accused of being "a great sleight-of-hand artist." (p. 61). "Finally, consider the aftertax income of the median families (this is where the wealthy shone like burnished gold). In 1986 dollars it fell . . . When you include the increase in Social Security taxes (largely engineered, as aforesaid, by Peterson), the fall was much greater. In short, from 1977 to 1986, poverty was up a third; weekly earnings were down 10.4 percent; the median income was up 1.7 percent; but the after-tax income of the median family was down 5.3 percent. And the after-tax incomes of the wealthy more than doubled. This is what Peterson and his ilk are fighting for." (p. 62).

"Economists Can Be Bad for Your Health," an article from December 1993, is about "The dense complexity of the Clinton plan, particularly all the stuff about managed competition, was intended to achieve" (p. 85) market discipline. The same title might apply to a conference committee effort to produce drug benefits for elderly patients in 2003, if the Senate, House, Democrats, and Republicans who passed very different forms of economic inducement can bring market discipline up to date. What Brockway calls "a beautifully apposite example" (p. 86) involving a drug used on sheep for "six cents a dose" (p. 87) was priced much higher after the Mayo Clinic, "conducted tests, at its own expense, then the Food and Drug Administration reviewed the findings and approved the drug for human use." The economic argument for Medicare coverage is "Medicare's loss ratio is in the 90s. In other words, the market discipline imposed by competition among giant insurance companies costs the consumer at least 20 percent more than a government-run single-payer system." (p. 89).

"Starving All the Way from the Bank" is about how loans to Third World nations are in terrible trouble. Based on the book, DEBT TRAP: RETHINKING THE LOGIC OF DEVELOPMENT by Richard Lombardi, Third World debt, $7.6 billion in 1960, was a trillion dollars in 1985, not likely to be paid off by "the notion that a growing GNP cures all ills." (p. 99). Any attempts to produce money in areas where the people don't earn enough to sustain life are panning out as poorly as Export-Import Bank loans to "The national airlines of countries of fewer than a half million souls, most of them tribesmen . . . bought fleets of Boeing 747 jumbo jets." (p. 99). Boeing and someone else got money in their pockets, not the tribesmen, but banks want that money now, too.