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  5. Crises as Opportunities for Sound Public Policy
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Crises as Opportunities for Sound Public Policy

Paper Session

Friday, Jan. 7, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: Association for Evolutionary Economics
  • Chair: Timothy Wunder, University of Texas-Arlington

Social Capital and Public Policy: The Role of Civil Society in Transforming the State

Asimina Christoforou
,
Panteion University of Social and Political Sciences

Abstract

In the past three decades, the concepts of social capital and civil society received much academic and public interest. Elements of social capital—namely social norms and networks of reciprocity, trust and cooperation—appeared to enhance the ability of the civil society—including non-governmental, not-for-profit, self-governing organizations and informal groups—to cultivate cooperation and solidarity, influence public policy, and promote democratic ideals and social welfare. The public debate on these concepts reminded economists that markets are socially embedded, and in many cases shifted their attention to the social factors required to improve the functioning of economies on a global, national and subnational scale.

However, concepts of social capital and civil society were often used by international organizations and national governments as corrections to market imperfections, so they merely reproduced social inequalities and existing power structures, rather than scrutinize and challenge social injustices. Post-Keynesian institutionalism (PKI) recognizes that the active contribution and collaboration of states and citizens are essential in addressing abuses of private power and fashioning a good society founded on values of equality, security and fairness. However, it has seldom studied the specific processes and conditions that determine how social norms and networks form and evolve beyond the realm of public policy, and how they can mobilize citizens to collaborate and pursue social objectives in the economy and the polity.

This paper seeks to fill that void by explaining how social capital and civil society can develop the social values and institutions that make markets and governments accountable, and that promote public policies for social welfare. As recent crises reveal, we need to discover alternative ways in which we can mobilize and organize, individually and collectively, to promote change for a better society.

Corporate Capital and (De)Monopolization of Public Health in the USA: An Institutionalist Perspective

Kosta Josifidis
,
University of Novi Sad
Novica Supic
,
University of Novi Sad

Abstract

From the original institutional economics perspective, this article discusses the patent-driven R&D models and public support to the pharmaceutical industry that is linked to a rising monopoly power of corporate capital over public health in the USA. Using the U.S. historical health data, we analyse the effects of institutional changes, shaped by large corporate capital, on public health outcomes in terms of accessibility and affordability of the medical advances arising from R&D. The analysis reveals that private returns from publicly funded R&D is higher than its social returns, despite a growing public interest in providing more comprehensive medical coverage.

Operationalizing Modern Monetary Theory, Drawdown, The Green New Deal, "Lettuce Wrap" Economics, and The Orange Economy: An Institutional Approach to Global Climate Change and Other Issues of Ecological Health

Eric Glock
,
University of Missouri-Kansas City

Abstract

Arguably, more than anything else, Modern Monetary Theory is a theory that supposes that sovereign monetary regimes are not limited by their governmental budgets, but instead by the productive capacity of their economies. MMT has further argued that, variously, inflation and Full Employment are the only constraints that exist upon government spending. This paper suggests that government budgets are being intuitively used as a proxy for capacity on the one hand, as is inflation on the other. It hopes to develop MMT in terms of its key institutionalist insight, as suggested by J. Fagg-Foster and validated by Allan Greenspan: that the technical propensities of society are the true limits to what it might do. The paper will, further, point out some of the possible issues with the use of inflation as a proxy for capacity. The primary concern of the paper in this area, however, is the reality that, generally, environmental degradation counteracts inflation, rendering inflation’s use as a proxy for capacity somewhat dangerous. This paper serves as a nexus between MMT as proposed by Randall Wray, A Safe and Just Space for Humanity by Kate Raworth (2012), Drawdown by Paul Hawken (2017) and The Orange Economy [Felipe Buitrago Restrepo, 2011]. It is suggested that the paper, How to Pay for the Green New Deal (2019), by Yeva Nersisyan and Randall Wray is a first step away from the “dual proxies” of government budgets and inflation and into the actual determination of the value of capacity. John B. Taylor in 1993’s Discretion versus Policy Rules in Practice and César Hidalgo in The Product Space argument suggest the ability to measure real and complex factors in an economy. Given the level of big-data-gathering, econometric, machine-learning, and neural-networking technology available, operationalizing MMT suggests a “real world” analysis.

Can Biden Build Back Better? Yes, If He Abandons Fiscal “Pay Fors”

L. Randall Wray
,
Levy Institute and Bard College
Yeva Nersisyan
,
Franklin and Marshall College

Abstract

A couple of months in, the Biden administration successfully passed the $1.9 trillion relief bill and has now proposed two ambitious spending packages to deal with our deficits in physical and human infrastructure. This is a good start that signals the return of fiscal policy and the end of America’s disastrous experiment with “small government”. The COVID crisis clearly demonstrated that the government can be the solution rather than the problem, as conservatives have long maintained. Congressional action put much-needed money in the pockets of American households and businesses, while federal funding provided to pharmaceutical companies fast tracked the development of vaccines. The administration is right to capitalize on this sentiment to push for its climate and infrastructure agenda.

It seems there is one lesson we should (but didn’t) learn from the response to the crisis is that government spending does not need to be “paid for” in the same sense that private spending does. Within less than a year Congress appropriated about $5 trillion for covid relief through the CARES act (March, 2020, $2.2 trillion), as part of the Consolidated Appropriations Act of December 2020 ($900 billion) and the American Rescue Plan Act (March 2021, $1.9 trillion). The usual worry about “how will we pay for it” was put on the back burner because this was seen as an emergency response.

A better approach to public policy would be to focus on goals instead. On the spending side, we need to address two questions: are how much we need to spend to accomplish the public purpose (to transition to green energy and improve our crumbling infrastructure, for instance) and can the economy absorb that amount of spending without price pressures.

A Refundable Tax Credit for Children: Its Impact on Household Debt and Inequality

Steven Pressman
,
Monmouth University
Robert Scott
,
Monmouth University

Abstract

Households with children face burdens that households without children don’t face. Besides food, clothing, shelter and healthcare, child care can easily run several thousand dollars each year. Historically, US economic and social policies have done little to help families with children. Until 2018, families with children were helped indirectly through tax exemptions for children and tax provisions such as the Child Care Tax Credit. These benefits primarily helped middle-income families in high tax brackets that owed taxes to the government. Things changed due to the March 2021 American Rescue Plan, which provided a refundable tax credit to all families with children ($3,600 for children under 6 and $3,000 for those above age 6). This payment is like the child allowance programs that exist in nearly all nations. Our paper examines the financial condition of US households with children compared to households without children, and estimate the benefits to households with children and to the nation of this refundable credit. In particular it looks at how this new tax provision will affect the debt burden of households, and the distribution of income and wealth (with a focus on the differences between households with and without children). We conclude with some suggestions for improving the refundable child credit so that it more effectively helps families with children. In particular, we propose providing the credit monthly as well as how to get money to families quickly at the start of each month.

Improving and Integrating the 80-50 Greenhous Gas Standard, Precautionary Principle, and Environmental Impact Statements for Climate Change Crisis Policy Mitigation

F. Gregory Hayden
,
University of Nebraska-Lincoln

Abstract

This paper critiques, designs changes, and integrates a) 80-50 greenhouse (GHG) decisions, b) the precautionary principle, and c) environmental impact statements (EIS) for climate change policy mitigation. Across the U.S, governments and corporations are adopting 80-50 emission criteria, which means they are intending to reduce GHG emissions (usually only CO2) 80 percent by the year 2050. These intentions are usually perfunctory and superficial public relations statements made to match what other entities have adopted, without a substantive analytical base, and containing numerous invalid concepts. This paper explains the kind of analytical studies for both government agencies and corporations that need to be completed, and the kind of conceptual corrections that need to be made for 80-50 decisions to be meaningful. Those conclusions are then integrated into precautionary-principle models that need to be adopted in the U.S. as they have been in Europe for climate change mitigation. The precautionary principle originated when it became understood that the scientific proof of causes and extent of harmful environmental damage was often not possible until after it was too late to prevent the damage. The precautionary principle is to be applied when there is no final scientific proof about a projects risk. Different kinds, levels, and refinements of precautionary rules for different kinds of activities have been designed and used. Those rules are integrated and coordinated with the 80-50 GHG emissions plan changes explained here. In turn, if OIE analysis is going to be assisted by the 80-50/precautionary principle integration, it must be carried into the EIS. EIS is the required government document that specifies the impact of proposed projects on the environment. That is the final part of this paper, especially with respect to EIS for projects that impact on climate change.
JEL Classifications
  • B5 - Current Heterodox Approaches
  • E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook