Jacobin both good and bad

I guess that I should really get a subscription, given how often I read JacobinMag nowadays. This morning, for instance, I read a piece where they point towards the role of the Netherlands as vanguard of everything that’s wrong in the Eurozone (and much of the industrialized world), as a tax haven:

Many corporations (including Google and Starbucks) and celebrities (like Bono and Mick Jagger) dodge taxes through the Netherlands. Last year, 48 percent of Fortune 500 companies had a shell company in the Netherlands.

Royalties, in particular, are not taxed. Corporations pay fabricated royalty costs to mailbox companies in the Netherlands, artificially lowering their profits. The royalties are untouched in the Netherlands and, after returning to the mother company, are untaxed in the home country because they were already taxed before (albeit at a zero percent rate).

So while the supposed social democrat Jeroen Dijsselbloem — Dutch minister of finance and head of the Eurogroup — routinely denounces Greece’s “unwillingness” to reform its tax system, the Canadian mining company Gold Eldorado uses the Netherlands to avoid paying taxes in Greece.

In 2013 and 2014, Ukrainian oligarchs were invited to the Dutch embassy by private Dutch law firms for a seminar about how to avoid taxes using the Netherlands. The Dutch Ministry of Finance and multinationals make so-called fiscal deals, the contents of which aren’t even disclosed to members of parliament.

or as a “repress wages and export the hell out of here” country:

The first EMU country where wage cuts were institutionalized was the Netherlands.

It has been policy and doctrine since 1982, when the Dutch labor unions, in an infamous agreement with employers, agreed to wage decreases (euphemistically dubbed “wage moderations”) in return for a reduction in working hours meant to boost employment. (Dutch scholar Paul de Beer recently showed that while unions kept their part of the bargain, working hours actually didn’t decrease so much as unpaid overtime increased.) The Dutch central bank then tied the country’s currency to Germany’s Deutschmark — decades before the euro made doing otherwise impossible.

This helped develop an export-led growth model, with low wages and large exporting companies. The strategy works in the sense that there are large current account surpluses, which for exporting multinationals translate into unprecedented profit rates. Of course, employees and small businesses dependent on domestic consumption pay the price.

The Netherlands, along with Austria, has been one of Germany’s closest EMU partners in institutionalizing this export-driven, low-wage, no-inflation model[.]

There was also this to-the-point article about how Martin Shkreli’s decision to strongly increase the prize of a particular drug was not an issue of personal greed but about the dysfunction of a private health care system:

Turing Pharmaceutical didn’t spend a dime on developing the drug or testing it in clinical trials. It is simply pricing the drug, as the saying goes, at “what the market will bear.” The “market” of Toxoplasmosis-sufferers is, of course, a particularly vulnerable one. But this is the essential explanation for rising prices among both generic and patented drugs, drugs for asthma and hepatitis C and cystic fibrosis.

In other words, the massive spike in the cost of daraprim is a result of the political economy of American health care. The profiteering of Turing and like-minded companies aren’t aberrations that can be dealt with by case-by-case shaming (and anyways, Shkreli seems unbothered by such castigation). The fundamental flaw is the system, not one admittedly repugnant CEO.
[…]
A good first step would be to get rid of the statute, enshrined in the 2003 Medicare and Modernization Act, that prevents Medicare from bargaining with drug companies over prices, a reform that was left out of the Affordable Care Act to appease Big Pharma. According to a 2013 estimate by Dean Baker of the Center for Economic and Policy Research, allowing Medicare to negotiate drug prices down to what Canada or Denmark pays would save hundreds of billions of dollars over a decade.

As they point out:

These changes would go a long way towards rationalizing drug prices and unburdening the sick. However, deeper reform — aimed not only at lowering the cost of drugs, but also at improving their overall therapeutic potential — is needed.

but somehow, which is surprising for Jacobin, they stop a step short:

One potent fix would be direct public sponsorship of drug development, with therapeutic impact — not profitability — as the overall aim.

Why not come out and say it clearly: given that the first step of drug development (identifying pathways and compounds that act on them) is already done at publicly universities, the development of the drug, the clinical testing etc, should be done at universities (and university hospitals) as well, and the production should be state-controlled. This might also stem the tendency to bury negative tests or lie about side effects since there’s no profit motive involved.

So this bothered me a bit. But when Jacobin writes about Sanders’ policies and about how they are actually not as expensive as they’re being made out to be:

When you want to make a budget number sound gigantic, always be sure to use the ten-year projections. And always use dollar amounts, because they sound heftier than the more honest measure, percentages of GDP. Sounds like a lot, for sure. And that’s the point of these articles: scare people with big numbers, studiously avoiding context.
[…]
[W]hile $15 trillion is a gigantic number, it’s 6.6% of projected GDP over the next ten years.
[…]
Besides, Sanders’ proposal amounts to 0.5% of GDP over the ten-year period. That is not a large number — it’s a sixth the size of projected spending on the military.

The rest of the agenda amounts to just over $2 trillion, or 1% of GDP. Again, that is not a large number.

I just wanna tear my hair! Because the discussion that this article gets involved in is about the cost of social progress! There’s three problems with this:

  1. A currency-issuing government like the US government is not revenue-constrained. Bernie Sanders, if elected (and if he has the necessary parliamentary majorities) could slap his entire program onto whatever the US budget is currently and nothing would change (apart from the fact that the US would become a socially more just country, of course). If he wanted to continue the lie that governments need to issue debt obligations, the Fed would hold a couple more trillion US government debt, i.e. the US government would owe itself. If not, the government deficit would be higher, whatever…
  2. Those are people’s lives and well-being we talk about – why does a leftist even discuss cost? We shouldn’t slap a monetary value on people’s well-being and we can’t ever find one that will not eventually be lower than some profit margin. So unless the value is dynamic and always higher than the highest profit margin that can be made by infringing on people’s well-being (which is equivalent of not having a monetary value to begin with), it’s useless and problematic.
  3. The “It’s not even that expensive for the government…” will never end up in the left’s interest. There’s always a cheaper solution, which is have people starve, not have adequate housing, not get adequate health care, not receive free education. That’s always cheaper so one can’t beat the right on “price”!

It’s depressing to see that even a self-proclaimed voice for socialism is so deeply steeped on right-wing thought that they’ll follow the right’s framing. Unless we change the framing, we can’t affect lasting change.

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This entry was posted in belief systems, deficit spending, developed countries, health care policy, human rights, MMT, public debt. Bookmark the permalink.

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