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The Economic Mistake Democrats Are Finally Confronting


It would be nice to have the Republican Party the Niskanen Center imagines, one more focused on making a decent life affordable than on making vaccination optional, and I wish it well in its effort to white paper it into existence. For now, though, it’s Democrats who are starting to take supply-side concerns seriously.

But before we get to that, I want to widen the definition of “supply,” a dull word within which lurks thrilling possibilities. Supply-side progressivism shouldn’t just fix the problems of the present, it should hasten the advances of the future. A problem of our era is there’s too little utopian thinking, but one worthy exception is Aaron Bastani’s “Fully Automated Luxury Communism,” a leftist tract that puts the technologies in development right now — artificial intelligence, renewable energy, asteroid mining, plant and cell-based meats, and genetic editing — at the center of a post-work, post-scarcity vision.

“What if everything could change?” he asks. “What if, more than simply meeting the great challenges of our time — from climate change to inequality and aging — we went far beyond them, putting today’s problems behind us like we did before with large predators and, for the most part, illness. What if, rather than having no sense of a different future, we decided history hadn’t actually begun?”

Bastani’s vision is bracing because it insists that those of us who believe in a radically fairer, gentler, more sustainable world have a stake in bringing forward the technologies that will make that world possible. That is a political question as much as a technological one: Those same technologies could become accelerators of inequality and want if they’re not embedded in thoughtful policies and institutions. But what Bastani sees clearly is that the world we should want requires more than redistribution. It requires inventions and advances that render old problems obsolete and new possibilities manifold.

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Climate change is the most pressing example. If the Biden administration gave every American a check to transition to renewables, the policy would fail, because we haven’t built that much renewable capacity, to say nothing of the supply chain needed to deploy and maintain it. In a world where two-thirds of emissions are now coming from middle-income countries like China and India, the only way for humanity to both address climate change and poverty is to invent our way to clean energy that is plentiful and cheap, and then spend enough to rapidly deploy it.

Or take health care. House and Senate Democrats are squabbling over dueling policies to let Medicare set the prices it pays for drugs. Europeans and Canadians pay far less for the same prescription drugs that we buy, and so House Democrats want to let Medicare set the prices of at least some drugs at 120 percent what our peer countries pay. Senate Democrats, according to STAT, seem to be moving toward directing Medicare to set prices based on what the Veterans Health Administration pays, which is lower than before but still higher than abroad. (It’s darkly comic that neither chamber has simply taken the position that Americans shouldn’t pay more than Canadians for prescription drugs.)

The counterargument here is frustrating, but important. Yes, Americans overpay compared to peer countries for drugs. But truly curing, managing or preventing disease is of extraordinary value to humanity. Pfizer and Moderna will make billions from their coronavirus vaccines, but they’ve created trillions of dollars in economic value by unfreezing economies, to say nothing of the lives saved. It is true that European countries free-ride off the high cost we pay for drugs, because it’s the U.S. market that drives innovation. But that doesn’t mean we’d be better off paying their prices, if that meant new drug development slowed. We don’t just want everyone to have health insurance in the future. We want them to be healthier; freed from diseases and pain that even the best health insurance today cannot cure or ease.

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