Show Details for the week of January 18th, 2016

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On The Monitor this week:

  • The misconstrued relationship between automation and wage inequality, with John Schmitt
  • The gap between rhetoric and reality in Hillary Clinton’s assessments of Bernie Sanders’ healthcare plan, with Gerald Friedman

More about this week’s guests:

john-schmitt-web-photoJohn Schmitt is research director at the Washington Center for Equitable Growth and co-author of the piece, “Don’t Blame the Robots: Assessing the Job Polarization Explanation of Growing Wage Inequality.” (co-authored with Heidi Shierholz — who is now the chief economist at the Labor Department — and Lawrence Mishel, president of the Economic Policy Institute). You can follow John on Twitter here.

Background: President Obama said in his State of the Union address: “Now, what is true — and the reason that a lot of Americans feel anxious — is that the economy has been changing in profound ways, changes that started long before the Great Recession hit; changes that have not let up. Today, technology doesn’t just replace jobs on the assembly line, but any job where work can be automated. Companies in a global economy can locate anywhere, and they face tougher competition. As a result, workers have less leverage for a raise. Companies have less loyalty to their communities. And more and more wealth and income is concentrated at the very top.”

Schmitt Quote: “Technological change is not the force behind rising inequality. Technological change has been a constant feature of the economy throughout the entire 20th century, with no obvious associated increase in wage or income inequality for much of that period. As many researchers have also noted, the timing of the microcomputer revolution doesn’t match well with the jump in inequality. The largest increase in wage inequality took place in the few years between 1979 and 1982, well before personal computers, let alone the Internet, had transformed workplaces. And, the pace of growth in wage inequality slowed somewhat even as computerization spread steadily in the late 1980s and 1990s. Technology is also not well suited to explain important dimensions of wage inequality by gender, race, and age.

gerald_friedman Gerald Friedman is a Professor of economics at the University of Massachusetts at Amherst, Friedman’s work was cited by the Wall Street Journal about Bernie Sanders’ proposals for government spending. Last year he was featured in an accuracy.org news release: “How WSJ is off by $18 Trillion on Sanders’ Proposals.”
Background:
Democratic presidential candidate Hillary Clinton on Thursday night on MSNBC claimed regarding Sen. Bernie Sanders’ healthcare proposals: “The bulk of what he is advocating for is a single payer health care system, which would probably cost about $15 trillion. … it would basically end all the kinds of health care we know, Medicare, Medicaid, the CHIP program, children’s health insurance, TRICARE for the National Guard, military, Affordable Care Act exchange policies, employer-based policies. … It would take all that and hand it over to the states.” Clinton is apparently echoing a Wall Street Journal piece from last year: “Price Tag of Bernie Sanders’ Proposals: $18 Trillion,” which relies on the analysis of Professor Gerald Friedman, quoted below. In under 24 hours, a RootsAction.org petition, “Tell Hillary Clinton to Stop Lying About Single-Payer,” has gained nearly 10,000 signers. “A single-payer health plan covers everyone and lowers costs. It does not deprive anyone of health coverage or empower any governor to do so. Unless you’re in the top 5 percent for income, you save more by tearing up your health insurance bills than you pay in higher taxes under single-payer.”
See Politifact debunking of similar claims from the Clinton camp: “Chelsea Clinton mischaracterizes Bernie Sanders’ health care plan.”
Friedman Quote: “The statement that Sanders ‘would take all that and hand it over to the states’ is wrong. What Clinton is doing is shameful. Sanders’ plan would end or transform those programs, but more importantly end employer based healthcare — and that’s good. The gold standard of single payer plans is HR 676, Medicare for All, which actually enhances Medicare and covers everybody. What Sanders has done is take that proposal and — in an apparent attempt to make it palatable to some Republicans — let the states administer the new, comprehensive program. Obamacare allowed coverage for 15 to 20 million people, and that was a good step. But it’s by no means what is really needed. We have 30 million people who are still uninsured and tens of millions who are under insured. The insurance companies still dominate how healthcare is done and that adds tons of overhead costs. Even Medicare now leaves people having to cover 20 percent of hospitalization. Sanders’ proposal solves all those problems — and it also adds pharmaceutical coverage. It does let the states administer it under strict guidelines. That’s not control — it has provisions in place that if they don’t administer it properly, the federal government can move in. It would in effect move administrative functions from private federal contractors to states. The $15 trillion figure is my old number from 2013 for the 10-year cost of a single payer program (HR 676) over and above current federal spending. (The exact number was $14.6 trillion.) That was based on projections from the Center for Medicare and Medicaid statistics from 2009. Later projections have lowered spending and my current estimate of the ten-year cost of a single-payer program would be $13 trillion. I have proposed several alternative ways to finance such a program — all have payroll taxes well under what people pay now for health care, on the order of 3 to 7 percent.”
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