Red Scare 2018: Socialism and Healthcare

✑ DAVID F. RUCCIO | ± 5 minutes
‟As soon as a policy to radically change the existing economic order becomes popular...

A recent report of the Council of Economic Advisers aims to show how socialism lowers national income. Most of the paper is dedicated to Medicare for All. We knew this was coming.


About the author (click)
Dr. David F. Ruccio is a renowned marxian economist, professor of economics at the University of Notre Dame, where he has taught since 1982. He is also a member of the Higgins Labor Studies Program and the Joan B. Kroc Institute for International Peace Studies. He blogstweets, and contributes to the journal Rethinking Marxism (which he edited for twelve years), Real World Economics Review and Democracy at Work. On twitter: @Dfruccio

A specter is haunting the United States — the specter of Medicare for All. All the powers of old America have entered into a holy alliance to exorcise this specter: Wall Street and Big Pharma, Trump and McConnell, Fox News and the American Enterprise Institute.

Now, “coincident with the 200th anniversary of Karl Marx’s birth — and, more important, on the cusp of the 2018 elections — the Council of Economic Advisers has joined the alliance:

‟socialism is making a comeback in American political discourse. Detailed policy proposals from self-declared socialists are gaining support in Congress and among much of the electorate.

The fact is, socialism is on the rebound in the United States. And healthcare is the top issue for voters in the midterm elections (with 71 percent of respondents saying healthcare is “very important” in making their voting decisions for Congress this year, and at least a quarter choosing health care as the “most important issue,” topping all other issues). Moreover, more than half of Republicans (52 percent) in a new American Barometer poll say they support Medicare for All.


That’s why the White House decided to issue what, according to Kate Aronoff, “reads like a Red Bull-addled college freshman’s attempt to parse their introductory economics course through a first-response paper,” replete with a definition of socialism taken from the dictionary and a graphic representation of Milton Friedman’s “Four Ways to Spend Money.”

The ostensible reason for the report is to show how socialism, even if implemented peacefully and democratically, create “fundamental incentive distortions and information problems” that lower national income.

Elizabeth Warren & Bernie Sanders (Wikimedia)

But the real target is a particular socialist policy, Medicare for All, to which most of the paper is dedicated. The rest is just an attempt to throw everything against the wall — from anecdotes through dubious calculations to a narrow selection of academic studies concerning the Soviet Union, Maoist China, Cuba, Venezuela, and the Nordic countries — and hope some of sticks to the one policy that, in the context of the United States, has long raised the specter of socialism.1

‟This policy would distribute healthcare for “free” (i.e., without cost sharing) through a monopoly government health insurer that would centrally set all prices paid to suppliers such as doctors and hospitals. We find that if this policy were financed out of current Federal spending without borrowing or tax increases, then more than half the entire existing Federal budget would need to be cut. Or if it were financed through higher taxes, GDP would fall by 9 percent, or about $7,000 per person in 2022, due to high tax rates that would reduce incentives to supply the factors of production. Evidence on the productivity and effectiveness of single-payer systems suggests that “Medicare for All” would reduce both short- and long-run longevity and health despite increasing somewhat the population with health insurance.

We knew this was coming. It’s almost ingrained in U.S. political discourse, that as soon as a policy to radically change the existing economic order becomes popular it’s smeared with the label of socialism. That’s what the two Red Scares, in the years following the two world wars, were all about.

Any maybe it will work again. But my suspicion is, people are fed up the ineffectiveness and inequality built into the current system of healthcare and won’t be scared off by the tired assertions about the opportunity costs of not being “free to choose” that are proffered by the Council.

In fact, instead of shrinking from the label, we need to recognize that Socialism is already acknowledged by all American Powers to be itself a Power. Moreover, it is high time for Socialists to openly, in the face of the whole world, publish their views, their aims, their tendencies, and meet this nursery tale of the Specter of Socialism with a manifesto of the movement in support of Medicare for All.



NOTES

1 Among the many laughable propositions in the Council’s attempt at economic red-baiting is its critique of the supposed inefficiency of “large state organizations” in socialist agriculture in the Soviet Union, Maoist China, Cuba, without a single mention of the negative effects of large private organizations in contemporary healthcare in the United States, through the ongoing wave of mergers and acquisitions in pharmaceuticals, hospitals, and health insurance.

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