Market show us the magic hand!

This early critique of the Republican Obamacare replacement by Dean Baker at the Center for Economic and Policy research takes a dim view of the outcome. That is looking to return to more than 50 million unisured before the Affordable Care Act. As we know, currently “only” 28 million Americans are without health insurance. Baker did not go into depth about the macro economic implications of this situation but stuck to the healthcare implications. He points out, and later reports support him that with the increase in the limit on contributions to the Medical Savings Account, more affluent people will be buying low premium, high deductible health insurance plans that will provide only catastrophic benefits. The market for such a plan will likely be among younger, “professional” types. On the other hand, as was revealed in this article published in the LA Times March 8, older poorer Americans will be the biggest losers in the overhaul. The article I read in the Arizona Daily Star this morning pointed out that the vast majority of counties that supported Pres. Trump in the election will lose big under the new plan. I cannot find a link because the tucson.com website is dreadfully loaded with pop ups in every click and a poor search engine.

Paul Ryan, in this interview on CBS laughed when he was asked how many people would lose the health insurance under the new GOP plan. “We don’t know”, he said. He wants the American people to be so relieved that people will not be insured under “some government mandate” that they won’t care if they are going without. He sees  the magic marketplace that will produce just the right plan for everybody and for some, none at all. Later in the same CBS Face the Nation segment, Sen. Bernie Sanders pointed out that the real thrust of this change is to relieve the very richest Americans of the taxes that were imposed upon them to fund the ACA in part. I am of the opinion that the enormous effort to drag Congress into a very mild private-insurance based, privately delivered healthcare plan was primarily due to the pressure brought to bear by this class of Americans upon the GOP in Congress.

The macro-economics of available healthcare is on display right here in Arizona. Mounting uncompensated care was causing great financial stress upon hospitals and clinics in Arizona; particularly rural Arizona. The GOP-led State Legislature did not heed the pleas and cries of the Arizona healthcare providers to help them recover some of that uncompensated care and accept the Medicaid expansion offered by the ACA. It was not until great pressure was brought to bear upon these Legislative “leaders” by the Gov. of Arizona, Jan Brewer. Brewer, a Republican was able to bring to the table a plan to fund the Arizona premium of the expansion through a levy worked out with the healthcare providers on patient-occupied beds. Brewer was able to gain media support for this plan, got it passed over GOP leadership dissention and that by 2015 had enrolled 1.6 million Arizonans, according to this Arizona Daily Star article.

“Somebody else’s baby” is how one GOP Congressman characterized his view of the people who are helped under the Affordable Care Act. This is not only inhumane and selfish but it betrays a fundamental mindset common among these GOP leaders, including Paul Ryan that people who struggle in our society; or any society for that matter should not be the burden of those who are more fortunate. This is anathema to civil, developed societies who understand that widespread disease and want among large numbers of their society weakens and makes vulnerable the entire society.

The magic hand of the marketplace was given its chance. It resulted in skyrocketing healthcare costs, millions dying needlessly, financial ruin for millions; bloated, topheavy insurance companies and a shrinking number of enrollees. It’s time to move on to universal coverage. And no, it will not come from the magic marketplace. It will have to be demanded.

China’s “miracle economy” and its impact on world poverty

china-street-market
rural Chinese street market

Perhaps many of my associates have been waiting patiently for frontier markets equity funds to produce some positive returns. Frontier markets number some 63 nations that are so latently emergent that they are not classified as “emerging”, the more common satellite asset class in advisor portfolios. So what is the prospect that we will see some progress by them? Part of the issue is the continuing divide; even antagonism between the economically developed world and the global frontier economies. Critics decry “neoliberal” policies demanded by the US and European dominated World Bank and the International Monetary Fund that steer emergent economies away from socialism. The US and European dominated World Bank and International Monetary Fund, for instance may demand the privatization of state-owned infrastructure such as railroads in exchange for credit. These policies, critics argue do more to open developing economies to predatory multinational corporations than strengthening these economies. This fosters dependence on the developed world economies and do little to foster development; the key element in frontier markets returns.

Mark Weisbrot, Co-Director of the Center for Economic and Policy Research takes issue with President Obama’s assertion at the UN yesterday that “globalization” is responsible for a substantial reduction in world poverty. Inadvertently, Weisbrot argues, the President gave high marks to the Chinese economic miracle and its patient transition from a planned (sometimes called “command”) economy to an economy of mixed socialism and capitalism. Weisbrot observes that most of the 1.1B people who have moved out of extreme poverty in the last 25 years live in China. Weisbrot argues that the Chinese economy is hardly the poster-child of “open markets”; the “way forward, not backward” in Obama’s words. China has also had a great impact on other frontier economies through liberal trade with these markets; increasing their share of frontier markets exports  from less than .1% in 1980 to more than 3% in 2010. China, Weisbrot observes has also “provided hundreds of billions of dollars in investment, loans, and aid to low- and middle-income countries in the 21st century”. Weisbrot does not support the Trans Pacific Partnership; the 11 country trade deal that has become a signature policy of Obama’s.