Macroeconomics and health care

Macroeconomics and health careHSPM 714 J50Fall 2013When an economy implodesLots of unused resourcesIdle laborIdle capitalLots of foregone goods and servicesLess available to support health careLess investment for future growth of economyHealth effectsUnemploymentWasted timePsychologicalPhysicalLoss of material wealthFood, shelterA money-driven economy can implodeIf spenders spend lessBecause they dont want to buyBecause they want to save morePaying off debts = flow to savingsBecause they cant get creditA money-driven economy can implodeIf spenders spend lessBecause they dont want to buyBAD IDEA #0: Arent people always going to want to buy stuff with their money?ANSWER: Not if they are capitalists who want to make money with money.Examples: Apple and GoogleA money-driven economy can implodeIf spenders spend lessBecause they dont want to buyBecause they want to save moreFor a rainy day, to increase their stock of savingsTo pay off debtsPaying off debts = flow to savingsA money-driven economy can implodeIf spenders spend lessBecause they dont want to buyBecause they want to save moreBecause they cant get credit, because the credit system has collapsedCreditors stocks of savings are lessThe moneyed are afraid to lendDebtors are forced to repay loans (save)Credit systems collapseUnregulated banking can expand and then collapseEuphoria of lending,Then fear of not being repaidRegulation can reduce swingsBut, wealthy find ways to circumvent regulationOnce the economy has imploded,how can we expand it?Wait for it to recoverEase creditLend money at low interestOr give money Government spendingWhen private spending falls down,Government spending stands up.Limitations of credit easingOnce interest rate for government bonds reaches 0%, it cant go lower.Liquidity trap

Politically unaccepted alternativesGiving money awayRetail lending by Federal ReservesGovernment spending can be overdoneTotal demand =Consumption + Investment + Government + Exports minus importsExcess total demand leads to price inflationWhen the unemployed resources are re-employedSpenders (buyers) compete by offering and allowing higher prices

Being perfect may not be possible.Being better is possible.We do need discussion of how much government spending and credit easing is enough but not too much.That discussion is hampered by pervasive BAD IDEAS.Bad ideas/analogies(when applied to economics)Sin and redemptionPublic debt = public sinFeigned concern about deficits and debtSin and redemption bad analogyObsession with causes of crashCause sought in bad behavior rather than the systems weaknessProlonged misery for millions atones for sinsSinners PunishedFix that by switching responsibility to losers and moochers.

So, we cut food stampsGoing hungry is bad for healthU.S. Rep. Paul Ryan: People on food stamps dont dream.

And we try to cut MedicaidMedical care can be good for youWhats the appeal of this?For the richJustification of richesTo make money from money,High interest ratesLow inflationFor non-richWork hard for moneyResent others* who get it with less workWant the money they do have to maintain valueResonates with some religious teachings (but contradicts other teachings)Whats the appeal of this?For economistsWingnut welfare$$$ think tanksMainstream media welfareTV appearancesDiscredited theoriesExpansionary austerityThe 90% debt/GDP cliffWhy business dislikes government spending to promote full employmentDevalues need to be nice to business (confidence) RegulationTaxationProvides services that compete with businessLike health insuranceFuller employment undermines bosses authority at workplaceOnce the economy has imploded,how can we expand it?Wait for it to recover avoidable suffering and preventable illnessEase creditDone all we can short of having Fed go into retail bankingGovernment spending2% excess unemployment implies 4% GDP gap, which government could fill.How to finance government spending?TaxesBest if taxes fall on those who have money and arent spending itBut those people can fight thatBorrowingLenders will be people who arent spendingFederal Reserve can lendprint moneyConcerned about the national debt?The deficit scolds arent.How can you tell?They reject raising taxes.Their real agenda is to make the public more dependent on themBy undermining governmentMirror image of their obsession with dependence of people on governmentTaxesPurpose: prevent inflationWhich lowers value of governments moneyHistorical examplesCrusades Spending gold inflationCaesar Spending + taxing it back no inflation

During depression,government deficit helpsDuring inflation, government surplus helpsBad ideas/analogies(when applied to depressions)Sin and redemptionPublic debt = public sinFeigned concern about deficits and debtBad idea: Free market idolatry

A good start for more jobs and better public healthFood stampsMedicaid expansion under ACAThe ACA was supposed to reduce government spending slightlyOther cuts and some new taxesThe ACA with less Medicaid expansion will reduce spendingWhich will shrink the economy fewer jobsHospital closings