Thursday, June 21, 2012

Romney fails to consider the costs of competition; assails Rick Scott for noting economic improvements

All of conservative economics falls to the ground with the answer to one question: what becomes of those who compete and lose?   Competition, you see,  is supposed to be the mechanism that makes free markets and corporations work to benefit everyone.  Just as sports benefit when more compete, leading to better play and a market for watching; so, apparently competition is said to make products and services better. In truth, competition can be inefficient.  What rewards there are go to the winners, while those who compete and fail get nothing and lose the time and effort they would have better spent developing other skills and doing other things. Yet they have to be fed and watered, cared for and educated while developing the failed skillset and again when developing its replacement.   Competition can easily become destructive, and the inefficiency of  more and more people competing for fewer and fewer places, a condition increasingly common across different industries, can lead to social inefficiencies, pauperizing entire classes of people.   This is not how Europe and North America created wealth in the last three hundred years, nor is it the governing principle in today's Asian success stories.  Competition, it turns out, is a red herring.  It assists neither innovation nor wealth building.  Necessity is not the mother of invention, but of crime.  The invisible hand of capitalism is Fairness and putting value into work.  Competition leads only to a gambling ethic, and only if rewards are too outsized to be fair.  In Romney's case, competition is a somewhat deliberate red herring, since his business career was all about reducing competition instead of increasing it.  But you should not conclude, from Romney's hypocrisy on the issue, that he would leave the nation's tattered social safety net alone or that he understands that he is kneeling before a false God of Competition behind the conservative economic theories he espouses.  Republicans, in general, show such contempt for the poor their policies border on genocide.  Romney is no different.

He will mislead you with his statements.   Earlier in the campaign he said he "doesn't care about the very poor" because there is a social safety net for them.  He says he won't touch medicare and social security for ten years, although it's clear he cannot not touch them and reach his fiscal goals. And he says he wants Americans to have more income and less unemployment, promising a big reduction to unemployment in his first term (as Obama also did).

Sounds like  a stand up guy.  Until you find out how he intends to do all this.  His plan for unemployment insurance is simple: make the workers pay.  Currently, employers pay into a fund to help people who are unemployed.  Romney wants employees to have to pay into the fund, cutting costs to employers and raising it to employees, and it can only be used for their personal unemployment so if you have only paid in for six months and are unemployed for a lengthy time, you will run out.  If you are never unemployed,  you get to roll your unemployment into your retirement savings.  Furthermore the accounts will be managed privately, subject to the risk of the stock market falling or the custodian running off with your money.   You will be able to get 30-50% of your previous salary, which is less than the 50% to a maximum level, the current benefit.
The logic behind this is that by forcing workers to pay it will give them an incentive to avoid unemployment - by accepting lower wages.

In short, his specific policy idea is inconsistent with his other ideas of risk-taking being the driving force in the economy and that we need more entrepreneurs.  It is also inconsistent with the idea that workers should earn more, if they will now earn less net of unemployment and be prisoners in their current jobs, discouraged from starting new businesses.  Underneath it is an ugly notion that unemployment is a voluntary choice for malingering by workers, rather than a byproduct of the nation's economic system.

In Medicaid, he wants to give states full control of the program instead of sharing it with the feds, and cap the federal contribution at 1% growth per year.  Current health care inflation is expected to be 7% per year due to an aging population.  True, that may be excessive, a number that was set during the Bush era by Medicare, which allowed the large increases.  But Romney has no plan for cutting costs.  By transferring management of the program to the states, without real statutory authority to set prices and standards, it is the states and the states alone who will have to make this work, as Romney is dodging responsibility for health care cost cutting.

Obama, at least has done a few things to rein in costs, such as identifying Medicare fraud.

In Massachusetts, Romney was the cause of Medicare fraud, not the solution.

Meanwhile, all discretionary programs, including food stamps, would have to be cut more than 50% in Romney's world to reach his fiscal goals.

Not content to wait for Romney's budget, Congressional republicans have already asked for big reductions in food stamps to pay for a military spending increase, and also to maintain high farm subsidies.  So we will have higher food prices AND lower food aid, meaning starvation. Republicans, of course, do not believe anyone will starve. They think people don't really need food stamps.  Since Romney plans further military increases - having arbitrarily demanded military spending at 4% of GDP,  a military budget that is already larger than that of the rest of the world COMBINED will grow even bigger.

On top of that, Romney intends on cutting costs for Social Security and Medicare by advancing the eligibility age one month per year after 2022.

Doubtless he would make many more changes, including privatization, but he can't say them during the campaign.

Nowhere do the Republicans or Romney consider what happens to people who compete and lose.  When JP Morgan Chase lost $9 billion on a $100 billion derivatives bet, Romney said it "didn't matter" because somebody else made $9 billion on the bet.   How peculiar then that one of their main campaign themes has been Obama's "corruption" when the government invested several hundred million dollars in a solar energy company that failed.  Obama is "corrupt" when taking a half billion dollar risk on alternative energy, but JP Morgan Chase is just playing around when they risk $100 billion of their depositors' money on a casual bet that their idiot CEO didn't even understand.

No financial institution should be making $100 billion bets that can destabilize the world economy.  But this is standard Republican pap. Those who lose magically start new businesses or accept lower wages or try again and succeed.  The costs are never considered. One Republican candidate in Wisconsin chastised the media for doing stories eliciting sympathy for poor or unfortunate people.

The Romney campaign is angry with Florida governor Rick Scott, who wants to take credit for the state's improving economy and declining unemployment.  Romney needs to win Florida and he can't if people think Obama has done a good job on the economy.  Republicans are trying to sabotage the economy, but in addition, they mislead people about it, even if it hurts incumbent Republican officeholders.

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