02 February 2007

Social insurance & progress

Catch this story before it disappears behind the NYT firewall. It's yet more evidence that not all economists are evil...

Dani Rodrik, a trade economist at the Kennedy School of Government at Harvard and author of Has Globalization Gone Too Far? believes that social insurance and free trade must go hand in hand — "a concept entrenched in Europe but not in the United States." In Economist Wants Business and Social Aims To Be in Sync, Louis Uchitelle writes that as a practical matter, Rodrik says that
Washington must counteract the damage from America’s trade policies more than it has in the past. It is a message that is resonating not just with populists in both parties, who have long been skeptical of the benefits of globalization, but increasingly with mainstream policy thinkers, many of them associated with former President Bill Clinton...

“The people who talk incessantly about trade and its importance,” Mr. Rodrik said, “do so without recognizing the importance of the social insurance agenda as part and parcel of that process.”

Evidently a new research group funded by Robert Rubin, President Bill (We were happier then) Clinton's Treasury secretary, is putting together proposals to influence the D's party platform. Jacob Hacker, who wrote The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement--And How You Can Fight Back, is part of the Hamilton Institute, giving it credibility in the healthcare field.
“My argument is that we need to have a new social contract,” said Jacob Hacker, a political scientist at Yale who is working on a plan for health insurance modeled on Medicare and a program to provide subsidized 401(k) accounts. “This new social contract won’t be as extensive as those in Europe,” he added, “but it will move a lot of the responsibility for providing economic security off the backs of employers.”

Uchitelle then turns back to globalization, in particular why China has succeeded so spectacularly (government interference with the sacred free market.

Rodrik is now consulting with governments, offering them a lot more than the single solution than Peruvian economist Hernando de Soto keeps repeating. De Soto's answer to poverty is making sure the poor have legal title to their property.

I'm not aware of de Soto's solutions working anyplace — although they sure sound great.

Rodrik should get the U.S. contract. And it's gotten to that point. The free-market worshippers have taken us to where we need to get in line with the developing countries to find someone to tell us that we need to take care of our most valuable resource — our people — as well as to take care of business.

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