John Goodman’s Commentaries
What does the average economist know about environmental science? Probably no more than any other reasonably educated person. Yet economists have three talents that are sorely missing from most discussions of environmental policy – particularly policies related to climate change. They understand (1) the scientific method, (2) cost-benefit analysis and (3) how costs and benefits affecting different generations can be evaluated over time.
Joe Biden says that corporations aren’t paying their fair share of taxes. He also says his plan to raise corporate taxes won’t harm anyone who makes less than $400,000 a year. Virtually all economists know these statements are false. Yet, John Goodman thinks there has ever been a time in recent history when there has been such a large gap between what economists know and what politicians say.
June O’Neill, an economist who used to direct the Congressional Budget Office, and her husband Dave O’Neill produced a comprehensive survey of the economic research on this issue almost a decade ago. They concluded that while discrimination may exist, it’s not the main determinant of overall wages and incomes.
If you search the economics departments of our nation’s colleges and universities you would be hard pressed to find a real socialist. That’s because economists know a lot about socialism. They have been studying it and thinking about it for over a hundred years. Outside economics departments, things are different. It has often been humorously estimated that there are more Marxists on the faculty of American universities than there are in Russia or China today. How is that possible? John Goodman blames the economists.
Lifetime spending inequity is one-third of wealth inequality. The main reason: government taxes and transfers, which make the system far more “progressive than we are led to believe. In 2018, for example, the top 1 percent of taxpayers paid 40.1 percent of all federal income taxes. The top 10 percent paid 71.4 percent. The bottom half of the country paid less than 3 percent of all federal income taxes.
The solution to Obamacare’s high out-of-pocket costs and narrow networks is to let people buy insurance that meets their medical and financial needs. That’s why people are turning to short-term insurance, limited benefit insurance and health sharing insurance.
Obamacare has two very bad features: unaffordable out-of-pocket costs and perilously narrow networks. If you combine last year’s average (unsubsidized) premium with the average deductible, a family of four had to pay $25,000 before getting any benefits at all from their plan. Also, the average plan looks like Medicaid managed care with a high deductible, excluding access to the best doctors and the best hospitals.
Dallas Mavericks owner Mark Cuban has done some innovative thinking on how to reform the health care system. The Cuban plan is similar to an idea once proposed by Milton Friedman and also by Harvard economist Martin Feldstein. In a nutshell, people would be responsible for medical bills up to a certain percent of their income, and government would pay everything above that. In other words, people would pay ordinary bills out-of-pocket, and government would provide catastrophic coverage for the large bills.
The intellectual collapse of liberalism and conservatism at the end of the 20th century created space that the cancel culture moved quickly to occupy. The world of ideas abhors a vacuum. Absent the traditions bequeathed to us by the Enlightenment and the Age of Reason, the cancel culture was only too willing to serve up irrationality and unreason.
What about Joe Biden’s promise that the next big spending bill won’t cost anyone a dime if they make less than $400,000? All economists think that the corporate income tax is partly paid for by lower wages for workers. The only question is: How much of the cost is born by labor? Larry Kotlikoff and his colleagues, using the most sophisticated model of international financial flows that exists, have concluded that the full burden of the corporate income tax falls on workers. Not just in this country. But in every country. The editorial board of the says they agreed with him.