The continuation of my interview with Gerald Friedman, economist consultant on Medicare for all/ Single payer for the Bernie Sanders campaign.
audio recording of the interview is here: Podcast: Gerald Friedman, Bernie Sanders' Single Payer Healthcare Consultant, Debunks Attackers
Rob: Okay, Gerry, you want to talk a little bit about what Chuck said about economics and economists?
Gerald: Oh, economics is a very sad discipline. I much enjoy economics. I enjoy doing it and I also think that it's vital for our society's well-being that we have good economic analysis, but the profession is in a very sorry state, and I think that a lot of the better economists would acknowledge. The dominant paradigm, the overwhelmingly dominant paradigm in economics, is not only completely unrealistic, but has been thoroughly discredited. I mean, even people like Alan Greenspan had to admit after the economic crisis hit in 2008 that, ah...and he said this is no surprise that, oh my God, everything that I was thinking was wrong. I didn't think this could happen. Well it did happen. It does happen. The dominant paradigm is a failure. Why do people continue to teach it and to work within it? I think that part of it is, again, as Chuck said, you have to follow the money and huge chunks of money that for 40, 50 years had been put into subsidizing right wing economic, conservative economists. Graduate students wanting to work within the dominant conservative paradigm -- groups from the Koch brothers, the Mellon Foundation have been paid economists.
There was an analysis by one of my colleagues on the graduate students, Henry Epstein on graduate students and, now, this is not easy to do because the economics profession, still today, has... it used to have no code of ethics, no requirements to disclosure of funding sources. Now there's a weak little code of ethics that was adopted by the American Economic Association. But what my colleagues did was they went to corporate reports for the leading financial companies, CitiGroup, Bank of America, and they looked at in those reports which economists they paid to do studies, analyses, whatever, and they found that, I believe it's 13 of the 15 economists who were most prominent and testifying for bank deregulation in the years before the financial crisis, had been paid by the financial services industry. The other two, I'm not sure who they are, but maybe they were paid by some other companies that weren't big enough to be entered into my colleague's study.
And some of these are egregious. For example, an economist at Columbia wrote a paper, Financial Stability in Iceland. He was paid $250,000 for that paper by the Icelandic Banking Association. When the Icelandic banks went bankrupt and took the country with them, Mischum, the economist, changed the name of this article on his resume to Financial Instability in Iceland. I mean, did he give back the $250,000? I don't think so.
When you get to the health insurance debate, the amount of money on the other side is enormous and their willingness to pay off people, to give people what... yeah, you may say, given the stakes, relatively small amounts of money. You pay an economist $100,000 and you can probably get them to do anything you want. Most of them. I've never seen $100,000. Nobody's ever offered me that and if they did I would... I mean, the Commonwealth of Massachusetts pays me a salary. I don't really need a whole lot more.
Okay, but most academics aren't... we're not rich people and the amount of money on the other side is huge. Think about it. If I go out and say we can save $600 billion next year by establishing a national single payer plan. That is $600 billion of income to people.
Now, a lot of it is money that goes to people who... billing and insurance clerks who mostly don't like their jobs. They quit those jobs a lot. They're not very well paid. They could... the plans for single payers have provisions for retraining, unemployment insurance. They may be a lot better off, but nobody is going to pay Steve Helmsley, the Head of United Health Care, $48 million under a single payer plan. He is paid $48 million. The head of the Center for Medicare Services who, basically, is in charge of healthcare finance for half of the American population, is paid $175,000. That's what's his government salary. Public servants don't get paid that much like CEOs. How much would Steve Helmsley be willing to put into hiring economists and other people for the private health insurance industry? If I were him, I'd put in at least $47 million if it came to that. And you go beyond that. The top health insurers have a market evaluation of a trillion dollars? That's how much it's worth to stop single payer.
Rob: So, you're saying that there are huge amounts of money available to buy economists to make reports saying whatever is wanted?
Gerald: That's right. That's right and if you can't say it honestly, then you obfuscate, you hand wave, you throw around numbers that may or may not be relevant. You write a report like the six pages that Kenneth Thorpe put out. And, you know, if you're a big enough name, or whatever, then people will put it into Vox. They'll-
Rob: Are you saying that Thorpe is engaging in unethical behavior?
Gerald: No. No. First of all the standards of ethics in the economics field are really loose, so you can't really say that about anybody. Secondly, I don't know the man. It's possible he believes what he wrote. I can't dispute it. It's possible. It's different than what he used to write, but okay, maybe he changed his mind. I can't say. I would never say that somebody that I don't know deliberately did it, but if he didn't, there will be other people who... if he did it honestly, certainly there will be other people who will do it for money. Maybe it's the economist in me, but I believe that if you wave enough money at somebody, you'll get some behaviors that you want. Not from everybody. There will be some people who will never change their views just for money. There will be some people who will believe that the world is flat and the private health insurance system is better than single payer. There will some who will believe that and there will be some who will believe the world is round and private health insurance is better than single payer, I guess, although they are both equally ridiculous ideas from my perspective. Maybe Kenneth Thorpe really believes this, but there will be other people who will find their way to saying what the rich want if the rich pay them enough for it.
Rob: Now, you talked about "the failed economic paradigm." What is that economic paradigm?
Gerald: Well, the basic idea of orthodox economics is that the operations of so-called free markets will provide for full employment and the optimal distribution of output without any conscious political intervention. So, you set the system up, you establish property rights, you establish police, you establish systems of currency, etc, and then you just walk away and people acting on their own self-interests will produce the best economic outcomes possible. There you go.
Rob: That's Keynesian economics right?