Wayne O'Leary

Beware the Ides of March

In the opening act of Shakespeare’s tragedy Julius Caesar, the playwright has a soothsayer caution the Roman leader to “beware the ides of March,” the midpoint of that month on the ancient calendar. Caesar, it turned out, was a bad listener, and we all know what happened to him on the ides of March, 44 B.C. at the hands of friend Brutus.

I was reminded of this while perusing the mid-March issues of the New York Times, which contained enough disturbing economic news (featuring, in particular, renewed financial chicanery worldwide) to have had Shakespeare’s soothsayer muttering, “I told you so.” Clearly, T.S. Eliot was wrong; March, not April, is the cruelest month, and not just because of the weather. Beyond evidence of continued post-recessionary instability, March 2014 was marked by an abundance of informed, if somewhat depressing, speculation about the future economic course of events bearing directly on American politics.

Of special interest to progressives were reports on the nearly simultaneous appearance of two new books with the potential to shake up assumptions on both sides of the political aisle. The unsettling news for the left is contained in a tract by Ezekiel J. Emanuel, former Obama advisor on health policy and brother of Chicago Mayor Rahm Emanuel. Emanuel’s book, boasting the unbelievably convoluted title Reinventing American Health Care: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System, claims to be pro-ACA; its effect may be quite the opposite.

Emanuel maintains that under Obamacare, the percentage of private-sector workers receiving employer-provided healthcare will rapidly fall from the current 60% to under 20%, a result of companies dropping their employee coverage and forcing their workers into the ACA’s insurance exchanges; firms will do this, he says, to avoid paying Obamacare’s new “Cadillac tax” on the most generous health plans (set to be introduced in 2018), which is intended to cut extravagance and help finance the ACA. “By 2025,” Emanuel writes, “few private-sector employers will still be providing health insurance.”

Obamacare does include a penalty of $2,000 per employee for companies of 50 or more workers refusing to provide health coverage, but Emanuel discounts its impact; he believes that for large firms, paying fines will be less costly than offering increasingly expensive insurance to their work forces. The inevitable abandonment of employer health plans will come, he says, when a few major “blue-chip” companies dare to drop coverage, establishing a precedent that gradually becomes the norm.

Incredibly enough, Emanuel, one of the very people who devised the ACA, sees the change his book anticipates as a good thing, one of the “positive, unintended consequences” of the law, because it will control costs while enhancing choice. Sitting comfortably on his well-endowed perch at the University of Pennsylvania, elitist Emanuel sees nothing wrong with forcing average Americans, computer-savvy or not, to spend their Decembers each year on Obamacare websites comparing, evaluating, and shuffling plans in a desperate search for the best, most frugal deal. In truth, when it comes to their health, most people don’t want to be “consumers.” Life, as the saying goes, is too short.

If Emanuel is right about the future, upwards of 90 million workers will soon be involuntarily getting their healthcare insurance far differently; so much for keeping your present plan, if you like it. More to the point politically, if he’s correct, Democrats will be hard-pressed to win many elections in the near term as the train careens down the track toward the wreck site.

But Republicans shouldn’t chortle too loudly. Another significant book appeared in its first English translation this past March that knocks the legs out from under some of their most cherished beliefs. Foremost among these is the faith-based notion that the untrammeled free market, if left alone by government and allowed to respond fully to good, old all-American greed, will solve economic inequality, lift all boats, and deliver us prosperity beyond our wildest dreams.

In Capital in the Twenty-First Century, Thomas Piketty, a brilliant, young French economist (uh-oh!) whose seminal work is being compared to that of John Maynard Keynes, literally shatters the basis of conservatism’s deep-seated core convictions about capitalism. Using statistical data on taxes, income, and capital accumulation, he paints a horrific picture of where the US and other Western economies are headed (if we’re not there already) — namely, toward a new Gilded Age dominated by a tiny, capital-owning minority and characterized by vast disparities in wealth, privilege, and influence not seen for over a century.

Piketty’s research further suggests the emerging era of wealth concentration and rampant inequality will, if not arrested by concerted public action, likely last for decades to come. The cherished conservative catechism of most Republicans (and some Democrats) says this can’t happen. Since the 1950s, economic orthodoxy, especially in the US, has taught that free-market capitalism will always stabilize, producing a “balanced” economy in which profits and wages grow in unison, with steady upward mobility as the by-product.

It’s a flawed analysis, Piketty argues, the product of a self-satisfied class of academic economists absorbed in abstract mathematical formulae and content to focus narrowly on the business cycle, neglecting how the economy works for most people. In his view, they’ve missed the big picture, overlooking the maldistribution of wealth, income, and capital; the anemic growth of wages compared to profits; and other “forces of divergence” afflicting contemporary capitalism and threatening democratic institutions.

Politicians who follow the dictates of today’s stagnant economic thinking, Piketty infers, are rejecting the evidence of their lying eyes. Education, for instance, the standard means advanced for countering inequality, simply won’t work, he says, to slow or reverse the negative trend. Piketty calls for political action with an emphasis on higher taxation at the top; he suggests a combination of wealth and income taxes, globally applied, as the only serious hope to level the playing field and save capitalism from itself.

Piketty is no Marxist, but his work does vote for a populist agenda. As the first refreshingly creative intellectual force to appear in the economics profession for decades, he could become, if not this generation’s Keynes, then at least its John Kenneth Galbraith — and a first-class headache for the right to boot.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He is the author of two prizewinning books.

From The Progressive Populist, May 15, 2014