Unrigging the media and the economy

This is a rush transcript and may not be in its final form. Some non-grammatical forms have been edited to conform more with the apparent intent than the exact verbiage, and links and notes have been added. Anyone finding errors or confusing statements is invited to correct them here or raise them in the accompanying "Discuss" page or add updates in notes and / or subsequent sections.

Dean Baker

On 2021-02-23, 7 - 8 PM Central (US), Dean Baker, co-founder of the Center for Economic and Policy Research, was interviewed by Joe Ballegeer, economist and activist with Our Revolution Kansas City, Missouri, and Spencer Graves, journalist with 90.1 FM, KKFI, Kansas City Community Radio. Baker was asked about his proposals for media reform, mentioned in Confirmation bias and conflict, and for improving the US political economy more generally.

Interview 2021-02-23 with Dean Baker on his book Rigged and related topics

29:00 mm:ss audio podcast extracted from interview with Dean Baker on unrigging the media and the economy

The first half was broadcasted as Radio Active Magazine on KKFI.

Below please find a transcript that can be edited to correct discrepancies with the accompanying video and add references and links to the "Discussion" below.

Transcript

Broadcast intro

Bill Clause  00:00

You're listening to 90.1 FM, KKFI, Kansas City Community Radio, Radio Active Magazine. Your host today is Spencer Graves. Spencer, go for it: Introduce the folks that are on the line with us.

Spencer Graves  00:11

Okay, thank you. I'm Spencer Graves, your host for this episode of Radio Active Magazine. My co-host is Joe Ballegeer, an activist with Our Revolution Kansas City, Missouri. He recently completed a PhD in Economics at UMKC. We will be talking with Dean Baker, co-founder of the Center for Economic and Policy Research, and author of the book Rigged: How globalization and the rules of the modern economy were structured to make the rich richer. That book is available in print from many booksellers, but it is also available free from DeanBaker.net. The full interview is being carried live on the Facebook page for Our Revolution Kansas City, Missouri. The first half hour is also being broadcast on 90.1 FM, KKFI. Kansas City Community Radio. Links for both the book and Our Revolution KC's Facebook page are available in the description of this episode of Radio Active Magazine at KKFI.org. This event is also being co-sponsored by PeaceWorks Kansas City. Joe?

Overview of policy changes Baker recommends

Joe Ballegeer  01:21

Thank you. So let's just jump right in with the first question. Could you please give us a quick overview of some major changes to US public policy that you might recommend?

Dean Baker  01:34

Yeah. Well, of course, I have a very, very long list. But I'll just give you a few that I think would be very helpful, very important. And mention one thing that has happened that I think is making a very big difference.

Dean Baker  01:47

One of the things I've written a lot about is patent and copyright protection. And I think people fail to realize both how much money is at stake here and how important that has been in the upward redistribution of income we've seen over the last four decades.

Dean Baker  02:01

So my poster child here is Bill Gates, who is one of the richest people in the world. That would not be the case if Microsoft didn't have patents and copyrights on software where they could arrest people who made copies without his approval.

Dean Baker  02:18

Prescription drugs is the other area that's hugely important. The amount of money at stake with prescription drugs alone is on the order of 400 billion. We spend about $500 billion a year on prescription drugs. That's equal to about two and a half percent of GDP. And we'd probably spend less than 100 billion. Drugs would be cheap if we didn't have patent protection.

Dean Baker  02:42

What I propose here is a number of mechanisms, measures that would reduce the importance of patents and copyrights, first and foremost in health care area drugs, medical equipment, vaccines that would redistribute a huge amount of income downward.

Dean Baker  03:01

And just to be clear on that, and people can often miss this, when I'm saying just redistribute a huge amount of income downward, a lot of people go, how does making drugs cheap mean downward distribution of income? Well, if I'm getting, you know, $30 an hour, $25 an hour, $15 an hour, whatever it might be, that money goes much further if I'm only paying five or 10 bucks for my prescriptions, as opposed to $1,000 or $2,000. So that does raise people's income. And people may not catch that, but it does.

Dean Baker  03:33

The other one that I'm really fond of is a financial transactions tax. There's a bill before Congress actually introduced by Congressman DeFazio in Portland, that would have a small financial transactions tax. The Congressional Budget Office estimated that his bill would raise about 70 billion a year, so about three tenths of a percent of GDP, about the same as the food stamp budget, to give people a point of reference.

Dean Baker  04:00

But more importantly, in my view, is that that would hugely downsize the financial sector. So you have a lot of people, many of them get very rich from trading, that's doing no benefit whatsoever for the economy.

Dean Baker  04:12

So those are the sorts of things I mean, I have a much longer list I could give you. But what I tried to look at are ways you could restructure the economy, so that less money goes to those at the top and more money to the rest of us.

Dean Baker  04:25

The other one where I want to, you know is that the Federal Reserve Board has hugely changed its policies over the last two decades.

Dean Baker  04:36

And that's been the result of a lot of pressure. I've played some role in that. But a lot of people have worked on that, a lot of labor groups, community groups. And Jay Powell, the current Fed chair, is saying things that aren't very different from what I would say that getting to low levels of unemployment increases workers bargaining power, particularly those at the bottom, particularly members of minorities, disadvantaged groups, people with less education, people with criminal records.

Dean Baker  04:59

When you have a very tight labor market, these people can get can get jobs. They can get pay increases at their jobs, because they have bargaining power.

Dean Baker  05:14

So those are some of the areas that I've done work and continue to work in, and I think can make a huge deal of difference as we go forward.

Impact on African Americans

Joe Ballegeer  05:24

That's great. Just a follow up on that, how do you see any of these proposals that you just recommended, or potentially other ones that may have an impact on African American communities?

Dean Baker  05:36

Well, certainly when I was mentioning the Federal Reserve Board policy very directly. If you go back two decades ago, when you had Alan Greenspan as Federal Reserve Chair, he argued (and I don't mean to just pick on Greenspan here, because this was very much a consensus view in economics), he argued that the role of the Federal Reserve Board is to keep stable prices, keep inflation under control. And it didn't have a responsibility to try and maintain high levels of employment, try to push the unemployment rate down as low as possible.

Dean Baker  06:09

And if you raised the issue with him, and I did raise it specifically with him, that this is directly connected to to wage differentials, black-white wage differentials, black-white unemployment differentials, they look at you like you're speaking a foreign language.

Dean Baker  06:28

As it stands now, Jay Powell, the current Fed chair, he very explicitly says, we have to push the economy first,

Dean Baker  06:37

in large part, because for those at the bottom, particularly African Americans, this is about getting giving them opportunities.

Dean Baker  06:45

It does that doesn't mean this is everything, this solves the problem of 400 years of racism or anything. I'm not trying to say that.

Dean Baker  06:51

But it's a very different world where you have the black unemployment rate, that's somewhere close to the white unemployment rate, as opposed to twice as high.

Dean Baker  06:59

That's a very different world. And it's great to see the the Federal Reserve Board Chair now saying that. That's a really big deal.

Dean Baker  07:07

The other points, I won't go into great detail. But if you reduce wage inequality, so that those at the bottom are earning somewhere closer to those at the top, the very big gap, but if you could reduce that gap, disproportionately those at the bottom, but the reality is disproportionately those are black.

Dean Baker  07:26

If we could raise the prospect for workers at the bottom, generally that improves the prospects for black workers.

Citizen-directed subsidies for media

Spencer Graves  07:35

You have in the past supportive citizen-directed subsidies for media. Your current thoughts on this?

Dean Baker  07:45

Obviously you can slice and dice this and put this a thousand different ways.

Dean Baker  07:49

But the basic idea here is to have some tax credit, that will be available to individuals to support the media.

Dean Baker  07:58

And I would put that very broadly, because I don't know how you cast, what's the media, particularly with the internet.

Dean Baker  08:05

I'm big fan of newspapers, but the reality is, most people aren't going to be getting newspapers as paper. They're going to get everything over the web, which makes it hard to find what exactly is media.

Dean Baker  08:18

In any case, the basic idea is that we have some amount of money, $100, $200, that individuals could direct to support the creative work, the journalists, creative writers of their choice. And that would, to my view, allow for a huge amount of journalism that we would value.

Dean Baker  08:38

I've raised this in different contexts. People go, "How do you know, they won't use it to support QAnon?"

Dean Baker  08:38

I don't, but I don't see a way to prevent that. I don't think we have to devote our efforts to try to make sure that no money goes to QAnon. I mean, it'd be wonderful if no money did go to QAnon, but the key thing is to give people alternatives.

Dean Baker  08:59

So if everyone had $100, $200, the two models I used for this is one if we think nationally, I think this has been very similar to what we already have with with the charitable contribution tax deduction. Now that's hugely tilted towards the rich, because most people don't itemize on their taxes. So if you're like most people, you know, you make contribution $200, $500, whatever, to a charitable organization, you don't get anything off on your taxes, because you're not itemizing.

Dean Baker  09:31

On the other hand, you know, if you're a millionaire and you make $100,000 contribution, you're in a 40%. Well, it's 37%, but whatever, we'll just round up the 40% tax bracket. Well, you make your $100,000 contribution. Well, the government's picked up $40,000 of the tab.

Dean Baker  09:48

So I make that point just to say, we do this. But we do it in a way that hugely favors the rich.

Dean Baker  09:55

So we can do that. There's a structure in place. You know who can get it. The IRS audits, at least in principle, nonprofit organizations to make sure that they're doing things consistent with their tax exempt status, maybe not always the way we'd want them to. But in principle, they do do that.

Dean Baker  10:13

And we do it. I don't know whether I want to say it works. But we've had it a long time. Not too many people want to eliminate that.

Dean Baker  10:24

The other model, I think, is a wonderful model: Seattle has a system supporting campaigns called democracy vouchers, where they give every resident a $75 voucher that they could use to support candidates in local elections. It's just for local elections. They could support the candidate of their choice.

Dean Baker  10:45

And in order to be eligible to receive the money, a candidate has to agree to certain limits: They can only take contributions less than some limit. I don't remember what the limits are. I think it's contributions of less than $1,000. And they have to agree to spend less than x; I don't know what the x is.

Dean Baker  11:02

But this is a very similar system, where we we say we think it's important that all citizens have a voice, not just rich people, in the elections.

Dean Baker  11:14

So here's a mechanism for giving them that voice. Now that's focused on the campaign. But you could have the same sort of principle applied to supporting the media, newspapers, creative work more generally.

Spencer Graves  11:27

Wonderful. Might citizen-directed subsidies for media be adopted in a local jurisdiction, for example, asking Kansas City, Missouri, to match what they spend on advertising, media and public relations and accounting for citizen-directed subsidies for media, as you suggest?

Dean Baker  11:47

Yeah, I think that's a fantastic idea. Because the point is, it's not a lot of money. Should it be $50, $100, $150? To my view, you take what you get. You don't want to be trivial. For $10, probably most people won't bother with it. So you don't want to be trivial. But you know, for $50, $100, that would be enough to have a very big impact.

Dean Baker  12:10

And once you did that, let's say you can get Kansas City to do that. I think it's a fantastic model, because people would see it works.

Dean Baker  12:17

This is why with a lot of policies I tried to play with, you figure out how you could slice and dice it.

Dean Baker  12:26

I've worked with the people pushing for Medicare for all, and I'm a big fan of that.

Dean Baker  12:31

But I've come to realize, we're not going to get to Medicare for all in the sense that we're not going to get Congress to vote for a Medicare for All plan, even if it's phased in for three or four years. That's not going to happen. You have to do it through intermediate steps. That's too big a change. We just don't have politics like that.

Dean Baker  12:48

I suppose if the republican party would completely collapse and fade away and we had 300 democratic representatives in Congress and 70 in the Senate, maybe we could talk about that. But I'm not going to hold my breath.

Dean Baker  13:01

So what I think about with all our policies is how can you have manageable steps that really move the ball forward? And again, you have to make sure they work.

Dean Baker  13:12

So, if Kansas City did this, we have to make sure that we have provisions in place, that we know it's going to do what we want. It doesn't mean that there might be some nutballs that we find detestable that would get some of the money. But the point is that it would support some vibrant news organizations that people valued. So you have to make sure it's structured that way.

Dean Baker  13:34

But, if you do that, if people like it, then it could be expanded in Kansas City. And other places will follow.

Dean Baker  13:43

A lot of times we think it's bad that we have such a decentralized system. And Texas is gonna do a lot of things we may not like, but they could do that, because we have a federal system.

Dean Baker  13:54

But the flip side of that is, we could do things we like. In Los Angeles and San Francisco in California, we have to figure out how to take advantage of that as much as possible.

Spencer Graves  14:06

Right. So for our radio audience, if in case you just joined us, we're interviewing Dean Baker, co-founder of the Center for Economic and Policy Research, about his recommendations for changes in public policy, especially media policy, based in part on his book Rigged: How globalization and the rules of the modern economy were structured to make the rich, richer.

Modern Monetary Theory (MMT)

Joe Ballegeer  14:31

So after reading your book, Rigged, the main argument that I really pulled out of that was that income inequality is a policy choice that we have made. And this is similar to an argument made by Modern Monetary Theory, which is a economic theory that comes here out of Kansas City and is very popular. So you just mentioned that a big systemic change may not be possible with the current political climate. But I want to maybe pick your brain and hear your thoughts about MMT in general, and maybe potential specific MMT policies, such as the Green New Deal?

Dean Baker  15:11

I see MMT, Modern Monetary Theory, as largely being Keynesian, which I don't mean at all as a slight. Of course, Modern Monetary Theory comes from Keynes.

Dean Baker  15:24

The essence of it is being Keynesian. I know many of the modern monetary theory people, I don't think they're offended by that. But I think it's very much on the mark in that their main emphasis is that the limits on government deficits, government spending is the productive capacities of the economy.

Dean Baker  15:45

We've had this long period, where there's been this obsession with budget deficits, that we have to balance the budget. The budget deficit's too large, or we're going to bankrupt our children, this and that.

Dean Baker  15:56

And the key corrective that the Modern Monetary Theorists provide is that we're not limited by what we borrow or by what we print for that matter: We're limited by the economy's productive capacity.

Dean Baker  16:11

You go back to the Great Recession, where we needed a really big boost to the economy to make up for the demand that was lost when the housing bubble burst.

Dean Baker  16:22

And you had all these more mainstream economists are saying, "Oh, we can't do that: The deficit would be too large."

Dean Baker  16:28

But again, the whole point was we were trying to fill a really big hole: We had a very large amount of unemployment. And that required spending large amounts of money to fill that gap.

Dean Baker  16:39

So I think that's a very important corrective. I don't consider myself a Modern Monetary Theorist. I don't know what they think of me. But I think that basic point is a very important one.

Dean Baker  16:55

When it comes to the Green New Deal, it's very helpful in how we think about this. So are we going to spend money to support electric cars, conversion to electric cars, to convert to solar energy, wind energy in place of fossil fuels?

Dean Baker  17:12

Our ability to do that depends on the extent to which we're pushing up against the economy's resource constraints.

Dean Baker  17:18

And I wrote a short piece on this a couple years ago, where I said we could do this, but we are likely to run up against limits.

Dean Baker  17:25

Now I feel more confident that we could have a very big, Green New Deal program and not run up against limits, just because the price of clean energy has come down so much.

Dean Baker  17:36

So you know, back then, two years ago, maybe less, I thought on the one hand, the unemployment rate was under 4%. So I didn't think we had a lot of slack in the labor market, perhaps some, but not a lot. I thought that we were talking about very large amounts of spending that would in my view then overheat the economy.

Dean Baker  17:59

But where we stand now, we have, unfortunately, a lot of unemployment. But that means that we have excess capacity in the economy.

Dean Baker  18:06

But the other side, we've seen huge declines in the price of clean energy. So clearly, there's resources involved in the transition. So we're gonna have people put solar panels on their roofs. We're gonna obviously need new car production for getting people to buy electric cars, rather than gas-fueled cars.

Dean Baker  18:24

But we aren't talking about a huge commitment of new resources.

Dean Baker  18:31

So I think an ambitious Green New Deal is very much within the economy's capability.

Dean Baker  18:36

And it might mean some additional government spending, but a lot of that is going to be made up on the private side. We talked about carbon taxes. I'm a big fan of carbon taxes. But I know the politics on that.

Dean Baker  18:47

But if we're getting people to use electric cars that don't use gas, that's gonna free up a lot of money out of their pockets.

Dean Baker  18:55

Resources that used to go to drilling for oil, transporting oil. We're not going to be using those.

Dean Baker  19:02

So we have a lot of potential there. I just want to be clear, that doesn't mean we can do everything and not think we're ever going to hit limits. But I think we have a lot of room there. And I think that's a very important insight that the MMT folks have reminded us of.

Antisocial media

Spencer Graves  19:20

Wonderful, thank you. Siva Vaidhyanathan published a book in 2018 on Antisocial Media: How Facebook disconnects us and undermines democracy. What are your reactions to this and related work by Professor Vaidhyanathan?

Dean Baker  19:42 I think his basic point is very much on the mark.

Dean Baker  19:50

Facebook has really become a behemoth, out of control. I found it just horrible in the last election. Go back to 2016, too. But in the 2020 election, people were basically begging Mark Zuckerberg to be responsible. And he was better in 2020 than he was in 2016 in trying to limit the spread of misinformation.

Dean Baker  20:15

But we shouldn't be in that position, that we're beholden to some multi-billionaire to keep the internet from being filled with total garbage. We should not be in that position.

Dean Baker  20:31

So I think the arguments are very much right. And the question is, what do you do about that? I'm forgetting now his exact proposal. I believe he wants to break up Facebook, which I'm fine with.

Dean Baker  20:42

But my main route is a somewhat different path. And we've had some exchanges on this.

Dean Baker  20:47

At least is a first step, I would take away the section 230 protection. And what this means specifically, is that protects Facebook and other internet intermediaries from the same libel laws that a newspaper or print outlet or broadcast outlet are subject to.

Dean Baker  20:47

And just to be clear, you know, because again, a lot of people get confused on this. If Facebook, if Mark Zuckerberg makes up some outrageous lie, says Joe Biden's a pedophile, and keeps kids in his basement and whatever, he could be sued. No doubt about that. That's not the issue.

Dean Baker  21:26

The issue is, if he allows other people to say that on his network on Facebook, he cannot be sued. They can take out ads. They could spend millions of dollars taking out ads, making the most vile lies about anyone they want. They could use doctored photographs, and that person could be sued. But Mark Zuckerberg can't be.

Dean Baker  21:43

And if that person happens to be the XYZ Corporation that's registered to a post office box in Iowa, that is, in turn, Joe Smith, and no one knows who Joe Smith is. Well, you can't get very far with that one.

Dean Baker  22:02

But, you know, Mark Zuckerberg himself, Facebook itself, is not liable. And CNN would like be liable, ABC would be liable. New York Times would be liable. They're responsible for the material they carry. And I don't see a reason for exempting someone just because they're on the internet.

Dean Baker  22:24

There's two points on this: One is the person who takes out $20 million worth of ads. That is someone that is, at least in principle, easily identifiable. You could crack down on that.

Dean Baker  22:37

What about all the people who post stuff on their Facebook pages? Is Mark Zuckerberg gonna be liable for that?

Dean Baker  22:47

I think there's an interesting model here. I'm not a big fan of copyright, but we actually do have a model with this. The Digital Millennium Copyright Act sets up rules for enforcing copyright on the internet.

Dean Baker  22:58

So if I were to take someone's song, take a latest Bruce Springsteen -- I'm sure I'm dating myself -- but I would put one of his songs up on my Facebook page, and everyone could listen to it for free and not pay Bruce anything.

Dean Baker  23:12

Well, Bruce Springsteen might be a decent guy, so maybe let me do that. But he has the legal rights to say, "You can't do that." So what he could do under the Digital Millennium Copyright Act is he notifies Facebook: "Baker's got my song. I've got the copyright to it. You have to take it down." So they tell me I have to take it down in 48 hours, and if I don't take it down, they're gonna do it for me.

Dean Baker  23:38

And if not, they're subject to penalties, actually severe penalties, for copyright violation.

Dean Baker  23:43

You could do the same sort of thing that if someone posts libelous material on their Facebook page, someone sees it, they're upset about it, they'll contact Facebook and say, "Hey, there's this libelous material." And they have 48 hours to take it down. And if they don't, they could be subject to a suit.

Dean Baker  24:02

Now maybe it's not libelous. Maybe it's 100% true, and I'm just upset. They're reporting the truth. Well, Facebook could make that judgment. Would that be costly?

Dean Baker  24:11

It will be, but that's a cost that other media outlets bear. So I just don't see any logic to the idea that somehow if you're on the internet, you could spread libelous material without consequence, but if you do it in print, if you do it in newsprint, if you do it through broadcast, you can't. I just cannot see the logic to that.

Spencer Graves  24:35

Okay. A recent New York Times article gave the "Economic case for regulating social media", recommending abandoning the targeted ad business model in favor of one based on subscriptions. Your comments?

Dean Baker  24:58

Well, I think that would be a step in the right direction. But Facebook's making a lot of money with its current system. I'm sure Zuckerberg or at least as people saw that article, they're going, "Well, we don't want to change."

Dean Baker  25:19

So, it's one thing to say it would be nice if you did. But this is how they're making lots of money.

Dean Baker  25:28

One of the assumptions I always work with is companies want to make money. If you want them to do something that means they'll make less money than they do now, they're not gonna want to make that change.

Dean Baker  25:42

Yeah, you could try to apply pressure. There are times companies do respond to pressure.

Dean Baker  25:47

I remember back in the 80s a lot of us were pushing boycotts of South Africa. And eventually, that did work. Most companies did pull out of South Africa just because it was bad enough publicity for them. And there wasn't that much money at stake. It was bad enough publicity, they decided it was better to just pull out. And that, I'm sure, helped bring about the transition.

Dean Baker  26:10

Obviously, there was a huge movement within South Africa for democracy. But that certainly helped.

Dean Baker  26:16

So you can talk about that. I won't say it's impossible. But I tend to think that's a really big lift. So to my view, we could think of how we'd rather see Facebook structured. But I would focus on what laws we could change to bring about a different outcome.

Changes in public perception of deficit spending

Joe Ballegeer  26:45

To return to spending questions, I know that popular opinion about spending impacts what's possible. So I wonder if you have thought about the recent spending with the Coronavirus that's happened? And if that has any long term impact for how the public is perceiving spending by the government?

Dean Baker  27:08

Yeah. This has been very interesting. We had a very large CARES Act. I'm forgetting what the exact sum was back in April. It was somewhere in the order of $3 trillion. And it passed with huge bipartisan support, and it had a very positive impact. You can't look at the economy today and say, "It's great." But it's hugely better than it would have been had we not had that push from the the stimulus or rescue package, whatever we call it.

Dean Baker  27:40

And then we did another 900 billion, which seems small today. But you go back to 2009, $900 billion seemed like an awful lot of money.

Dean Baker  27:49

Now, I recognize the economy's larger and there has been some inflation. But still, that would have been seen as an awful lot of money back in 2009.

Dean Baker  27:57

So I think that did change attitudes. And we do seem very much in line to get, whether we get the exact 1.9 trillion, I don't know, but somewhere in that ballpark does seem very likely at this point. And it does seem very likely to be getting through Congress. And the point is, people will hear a lot of money. I think, for most people, 1.9 trillion at this point doesn't sound very different from 900 billion or 500. It's a lot of money.

Dean Baker  28:25

But what they're gonna evaluate it by is what it does. On the one hand, the checks are very popular. And I don't think that was necessarily the best use of the money, but it's politically popular, it creates support for more efforts like this. So I think that's very good.

Dean Baker  28:43

And the Biden administration has rightly placed a huge priority on getting the vaccines out and trying to get the pandemic under control. If we get the economy back in gear, I think people are going to be very happy about this. And you know, at the end of the day, they care about what's their standard living. Do they have a job? Are their wages going up? Can they pay for their health care? These are the things people care about.

Dean Baker  29:09

The deficit's an abstraction. If you went around on the street and asked people, "What was the deficit last year? What's it going to be this year?" I'll bet less than one in 10 could give you an answer within 20 or 30%.

Dean Baker  29:22

These are not things that have meaning to people in their daily lives. What has meaning to them is, "Are they living well? Is their family living well? Can they afford their health care? Can they afford to pay for college for their kids?" That's what people think about.

Dean Baker  29:36

So I think that this is a huge step to getting us in a proper frame. It's not just like I want to run big deficits. But the point is, we should be thinking about, "How do we make people's lives better?" And that's what we're doing now.

Free higher ed

Joe Ballegeer  29:55

Along the lines of popular policies that make people's lives better, what are your thoughts on some things like free higher education for everyone or or not free but no cost higher education?

Dean Baker  30:17

I think it's a great policy. And it's something that clearly is very popular. Just as high school degrees 60, 70 years ago, that was a necessity for getting a decent job. Not that everyone's gonna go college. A lot of people go to technical school, Community College. That's great. Not everyone has to go to a four year college, but they should have that option. They shouldn't be prevented by the expense.

Dean Baker  30:48

And, you get, to my view a silly argument, "Should we be paying for Bill Gates' kids?" Three things: One, there aren't that many Bill Gates. I don't mean just Bill Gates, but people with an awful lot of money. So, where are you going to have your cut off? Is it going to be $150,000 for a family? Wherever you have that cut off, there aren't going to be that many above that.

Dean Baker  31:13

The second is that we're talking about public schools. We're not going to make Harvard free. If Harvard wants to make itself free, because they have so much money in their endowment, that's great, but that's their call. We're not going to pay $50,000, $60,000 a year to send kids to Harvard.

Dean Baker  31:27

So when we talk about the high income people, the Bill Gates, or people with incomes of $500,000, $600,000, they might send their kids to private schools. It's not my ideal world: I'd like to see every one of those same sorts of schools, but whatever they'll do that we're not going to prevent them from doing that. So what that means is, we're not giving their kids you know, free college. Some of them will. Some of them, their kids will go to state universities. And that's great, too. But a lot of them won't.

Dean Baker  31:53

But the third point, and maybe I think of this more practically, because I was kind of in this situation myself when I was growing up, we often don't have two parent families. Obviously, it takes two parents to produce the kid, I get that. But a lot of families are broken families, and maybe that's not the right term to use.

Dean Baker  32:19

But you have the kid most often raised by the mother. Is the father gonna pay? Well, maybe the father is very comfortable. The father has a good income. The mother doesn't. Well, should the father pay? Yeah, the father should pay, How are you going to make the father pay?

Dean Baker  32:35

I'm not trying to play games here. There's a lot of people in that situation.

Dean Baker  32:39

So if the parents are earning more than $150,000, pick your number, but we'll just start with that, they have to pay for much or all their kids education. Fine, but you have the mother who's earning $40,000, and a father who maybe is earning $200,000. And the father says, "Hey, I don't like that kid. I don't like the mother, I don't want anything to do with them."

Dean Baker  33:03

So we're getting this huge effort to try and make the dad pay. We perhaps should. But that's a real big effort for not very much money.

Dean Baker  33:12

Because again, it's not just that, you're going to be cracking down on perhaps a relatively small number of people: You have to please everyone. Because everyone comes in there. And they go, my parents income $50,000, mine $70,000. You have to please everyone. So that seems like an awful lot of effort to go through for what's likely to be a relatively limited amount of money.

Dean Baker  33:34

So we could apply the same thing for everything. Should millionaires be able to use the streets for free? Well, they could afford to pay for them. But what are we going to do? We're going to police the streets? That'd be nuts.

Dean Baker  33:47

And if you think about more carefully, it's the same story with college. I think the idea of getting to free college is a really good one.

Skilled people working on renewable energy rather than nuclear weapons

Spencer Graves  33:57

Okay, Timmon Wallis, who was a guest on Radio Active Magazine in January 19, said that people currently involved in making nuclear weapons have the skills needed to develop and improve renewable energy technologies. And having these people work on renewable energy would help us reduce the threat of both climate change and the destruction of civilization in a nuclear war. Your comments?

Dean Baker  34:23

Well, I'm sure a lot of the skills are transferable. But I'm not an expert on nuclear weapon manufacturing. So I can't speak with any authority as to how easily they are transferable. But insofar as we can reduce our reliance on nuclear weapons, ideally get away from it altogether, but in any case, at least reduce it, that's a great thing for the world.

Dean Baker  34:45

And, it's one of the unfortunate things in the Trump administration: They obviously had no interest in this whatsoever. Because it means negotiating.

Dean Baker  34:54

We could do things unilaterally, but at the end of the day, we'd like to see the other nuclear powers, China, Russia, whoever else, also reduce their reliance on nuclear weapons.

Dean Baker  35:05

So I'm hoping the Biden administration will go in that direction. They already rejoined what was it? The START agreement? I think they renewed the START agreement. That was a good thing. And we have to go much, much further.

Dean Baker  35:17

But that was kind of the low hanging fruit. The agreement was up for renewal, and we're gonna renew it. So that's a good thing.

Dean Baker  35:25

But in so far as we could reduce the resources devoted to nuclear weapons in particular, these are a lot of skilled scientists. How easily they can transfer their skills, I can't say. But these are clearly very highly skilled people. And it'd be much better having them do something that's productive for society rather than destructive.

Unrigging the media impacting prospect for peace

Spencer Graves  35:43

Wonderful. In that same vein, how might unrigging the media as you recommend impact the prospects for war and peace?

Dean Baker  35:53

Well, the media, I think, has often tended to treat whatever came on the State Department as being authoritative.

Dean Baker  36:01

And that's not to say everything comes out of the State Department is a lie. But you have people in the State Department that have an agenda. And they often use the media to push that agenda.

Dean Baker  36:13

And just to give you something; it's not that recent now. But the Iraq War: There was a real drum beat around the Iraq war that Saddam Hussein was this huge threat to the United States.

Dean Baker  36:25

And they said Saddam was not a nice guy. He is not a Democrat. He tortured people. There's no doubt about that. But that wasn't why we went to war with Saddam Hussein. We went to war with Saddam Hussein, because he was supposed to be producing nuclear weapons, which he could use on the countries around him, or even in principle, conceivably on the United States.

Dean Baker  36:47

And they pushed that line very effectively within the media. The New York Times, our most prominent newspaper, had a big story where they had supposedly the evidence of Saddam Hussein's nuclear weapon program. And turned out to be all garbage. I'm forgetting the name of the woman, the reporter, she actually spent some time in jail because she wouldn't reveal her source.

Dean Baker  37:11

But it was all planted story. You can't keep someone from being duped.

Dean Baker  37:21

But if we had more news outlets that were saying, "Wait a second, what's the source on this story? Do we really have reason to believe that?", that might have made it more difficult to have this march to war. I'm happy to see Joe Biden as president, but he fell in behind that. He was one of the leaders among the Democrats saying this should be a bipartisan effort.

Dean Baker  37:44

If we had more voices in the media, it would be more difficult to do something like that. And that's been done, I should just say again, and again and again. So that was a very prominent example.

Dean Baker  37:54

But take a more recent one: Libya. We overthrew Gaddafi. Again, not a nice guy. No doubt about that. He was a dictator, not a Democrat.

Dean Baker  38:03

But we overthrew him. Okay, what are we going to have in his place?

Dean Baker  38:08

We think it's a great idea to get rid of the dictator. That might, in principle, be good.

Dean Baker  38:12

But I don't think many people in Libya today would say that it's a better situation for them than it was when Gaddafi was there.

Dean Baker  38:19

And people aren't following Libya. Not that I'm an expert on it. It basically has disintegrated. It's not a country. They have two or three factions that control parts of the country. They're constantly fighting. For most of the people in Libya, that's almost certainly not a better situation than when Gaddafi was there.

Dean Baker  38:37

And just to be clear, none of those two or three people, the warlords, they're not committed democrats, either. So we don't have Abraham Lincoln as one of the candidates there that are getting control of Libya.

Most pressing policies that could be passed soon

Joe Ballegeer  38:51

To tie these things together about either the distribution of income, how the economy's rigged, and how the media is rigged: Do you have any policies in mind and most pressing that could be passed in the near future?

Dean Baker  39:12

That's a really good question. The idea of getting a toehold, whether it be Kansas City, wherever we may be able to do that, in terms of the media, I think that's a huge thing.

Dean Baker  39:24

Because again, I think if you got that in place somewhere and people would see it works, it could spread to other cities, other states, and ideally, nationally. I understand it's best to do things nationally, but when you can't, take advantage of where you can do it.

Dean Baker  39:39

But some of the other things, there's some fairly basic points I think it's important for people understand. I talked about patent and copyright monopolies.

Dean Baker  39:47

I was raising this point earlier that Bill Gates is very rich, because the government will arrest people if they make copies of Windows software without his permission.

Dean Baker  39:56

If you could do things that challenge that, because as an economist, it's absolutely kind of a central view among mainstream economists and even non progressive economists that technology has played this huge role in creating inequality.

Dean Baker  40:10

And what I always come back with is, "No, it was not technology: It was our policy on technology."

Dean Baker  40:16

So if we didn't have patent and copyright monopolies, these people wouldn't be getting tremendously rich.

Dean Baker  40:16

I understand where they give incentive. Because Microsoft can make a lot of money, they spend a lot of money developing new software. I get that.

Dean Baker  40:28

But there's other ways we could finance that.

Publicly funded development of a vaccine and other drugs and diagnostic procedures

Dean Baker  40:31

I always think about how can we get a foot in the door here? And prescription drugs to my mind are the best place to get foot in the door, both because it's a huge amount of money, it's people's lives. And we could slice and dice that 1000 different ways.

Dean Baker  40:47

And we just saw an incredible example: People are talking about the vaccines being developed in such rapid time. And that was a big deal.

Dean Baker  40:55

But one of the important parts of that story that's less often emphasized, it was developed on public money. At least one of them, Moderna, one of the leading vaccines that we're getting: That was developed entirely on public money. The government decided that you have a good plan. And that we paid for the research, and we paid for the clinical tests. But then we incredibly gave them a patent monopoly.

Dean Baker  41:19

But what I like about that is the first part, that it showed the government could pay for useful research. Because I've often raised this, and people "Oh, that'd be the same thing as throwing the money in the toilet." And that's not really true.

Dean Baker  41:31

I mean, we already spend about 40 billion a year in basic research at the National Institutes of Health. That tends to be more basic. Sometimes it's not, it's down the road.

Dean Baker  41:42

But in this case, it was very explicit, we gave them a billion dollars to develop and test a vaccine. And we got one in a very rapid period.

Dean Baker  41:52

I'd love to see this model pursued. The private sector spends about 90 billion on biomedical research annually. This is taken from the the government's data, the Bureau of Economic Analysis has in their National Income and Product Account. It's a pretty reliable number. They spent around 90 billion.

Dean Baker  42:12

I'd love to see that all replaced. But we're not going to do that all at once. Suppose you could dedicate some part of money to pursue development of drugs in specific areas, say, researching lung cancer, or researching diabetes, or heart disease. Pick your areas. You could figure out which ones. And say that we're gonna put the money up front. All the results are open source in the public domain.

Dean Baker  42:35

So what that means is, when you're doing the preclinical work, anytime you have an interesting finding, it goes on the web, the quickest place possible.

Dean Baker  42:42

And then when you do clinical trials, everything's on the web. If you do your clinical trials, and you have 2,000 people in the the control group, 2,000 people in the treatment group, and some of the people in the treatment group will be successful, some won't. We'd get to see a breakdown: How many of them were men? How many women? How many of them were black? How many of them had medical conditions? Were they obese? Did they have heart problems? We'd have all that information.

Dean Baker  43:13

As it stands now, that just goes to the FDA. The FDA looks at it, but it's not made public. So you'd have all that information available. And then when it actually came out, the FDA approves the drug, it would be available as a cheap generic on day one.

Dean Baker  43:31

Suppose we had a new cancer drug that was highly effective. And it's $20, $30 a prescription rather than $2,000, $3,000. That's a big thing for the people who need the drug.

Dean Baker  43:40

But it also will be a fantastic example. Because I believe in this idea and create facts on the ground.

Dean Baker  43:48

Sometimes when I'm giving a talk, I say drugs are cheap, and people think I'm nuts. But the point is, they are almost invariably cheap to make.

Dean Baker  43:57

The research can be expensive. No doubt about that. It often costs a lot of money to research a drug.

Dean Baker  44:01

But once you've done the research, to produce another vial of the drug is almost invariably cheap.

Dean Baker  44:07

So if you could show people, we just developed this new cancer drug, it's gonna extend people's lives, and we're gonna sell for 20 bucks. I think that will create the demand for a lot more publicly funded research.

Dean Baker  44:20

So that's one I think is very concrete. And I think doable. You aren't talking about a massive amount of money. We already spent, you know, $40 or $50 billion a year on biomedical research.

Dean Baker  44:35

So adding another 5 billion, 10 billion to the pot that will go to actually carry through to the development of a drug: That shouldn't be an impossible lift. And if they produced results as I think it would, because I can't see why it wouldn't, I think it would really open the door for going the rest of the way.

Wealth tax

Joe Ballegeer  45:02

One more policy question: A personal favorite of mine and a popular one among MMT folk in terms of addressing income distribution would be a wealth tax, directly taxing wealth? Do you think this would be effective and doable?

Dean Baker  45:23

I've been very skeptical of a wealth tax for several reasons. First off, just the legality. I've seen constitutional scholars argue that it's constitutional. That's not what I'm thinking of. I'm not a constitutional scholar, and I will defer to them in terms of their reading of the Constitution.

Dean Baker  45:41

It's my reading of the nine justices on the Supreme Court: Frankly, I'd be very surprised if they would not find a way to strike down a wealth tax. And they can go into the routes they would pick. I'm sure those nine judges and six, in particular, appointed by Republicans, could do much better than I can. But I do think they would find it unconstitutional.

Dean Baker  46:06

The second thing is just as a practical matter, trying to get this through the House and Senate: I think that would be a really big lift, certainly not this House and Senate. You've got 50 senators. I'll guarantee, you aren't going to get all the Democrats on board. And you're going to pick up any Republicans? I really don't think so.

Dean Baker  46:23

So I think, politically, that would be really hard.

Dean Baker  46:26

There are also practical issues. We've had some back and forth with big proponents I know: People leave the country. They're not they're not patriots. When we think of the the group of people who we are trying to tax, Mark Zuckerberg, Elan Musk: They'll leave the country. They're gonna have an exit tax. If they actually thought your tax is going to pass, they're going to leave before it passes, and good luck trying to collect it retroactively. That's not going to happen.

Dean Baker  46:56

So if you do something like this, you want to make sure it's going to work. And I think that's going to be a very hard thing to pull off.

Dean Baker  47:05

The last point on this is an MMT perspective: I understand two issues for taxing. I'll come back to the second one. But the main reason for taxation is to reduce consumption, reduce demand in the economy.

Dean Baker  47:21

One of the points I've made on this is of Elon Musk. I don't know where he stands 200 billion or something like that, some crazy sum, I'm willing to bet. I don't know the guy's lifestyle, but he probably doesn't spend very much more in a year than your average single digit billionaire.

Dean Baker  47:37

Just because there's only so much you could spend. How many houses can you have? You take your trips.

Dean Baker  47:42

So I really doubt that he spends too much more than your average single digit billionaire. The reason why I make this point is, suppose we cut his wealth in half? How much have we reduced his consumption? Probably close to zero. So in terms of freeing up consumption, freeing up demand, productive capacities, we're doing very, very little on that score.

Dean Baker  48:02

I understand the point about political power. That's a very important point. We don't want someone like Zuckerberg or Murdoch or the Koch Brothers, to have such enormous political power that stems directly from their wealth. That is a really important point.

Dean Baker  48:19

But we could cut their wealth in half. Cut Zuckerberg's wealth in half, cut Kochs'. They still have ridiculously outsized political power. Maybe we can cut it 95%, 99%. But that's a really, really long way down the road.

Dean Baker  48:37

So I don't want to tell someone, we're gonna have a 2% wealth tax, and then suddenly, you and I are gonna have the same power as Rupert Murdoch or Mark Zuckerberg. That's not the world.

Dean Baker  48:47

So when we talk about the political power -- we were talking earlier about trying to democratize the media -- I think that's the far more important route to go in terms of trying to give the rest of us a voice. Because we're not going to have the same power, each of us as individuals, as Mark Zuckerberg. But we could hope that we could create mechanisms where enough of us acting collectively can offset the political power of those people.

Copyright protection of research articles

Spencer Graves  49:20

The Copyright Clause of the United States Constitution says that it's designed to promote the progress of science and the useful arts. When it comes to publications in refereed academic journals, I cannot imagine how that could possibly happen in today's world. Prior to the age of the internet, sure. But what percent of authors for papers in refereed academic journals are motivated by money? Close to zero, I think. Your comments on that?

Dean Baker  50:02

Yeah, it's very interesting. Because I don't know how many times I've pushed my proposals on both patents and copyrights. And I've had a number of people tell me, "Copyrights, it's in the constitution." Well, it is in the Constitution, but read what it says: It's quite explicitly a public policy. It says, in order to promote the useful arts and sciences.

Dean Baker  50:03

It's not the Bill of Rights. This is not an individual right. It doesn't say everyone's got the right to freedom of religion, freedom of speech, and copyright. It doesn't say that. This is for a public purpose. And that's how we should think about it.

Dean Baker  50:39

So clearly, it does provide incentives in many, many areas.

Dean Baker  50:39

But in the case of academics, I don't know of any academic and certainly not any academic I respect for their work, who is motivated that they're going to get a lot of money from writing an academic article. Because that at best can be chump change. Or even an academic book. They want to get their ideas out there.

Dean Baker  51:06

And, in that sense, copyright is 180 degrees antithetical to what they're trying to do.

Dean Baker  51:10

So someone writes a new scientific article and article and economics, whatever it might be, they want people to read it. They don't want to keep people from reading it.

Dean Baker  51:20

I'm sure you know the story of Aaron Swartz. It's a really tragic story of a young man. He ended up killing himself. He was facing criminal charges.

Dean Baker  51:20

And what the charges stem from was he was trying to hack into MIT computers and make academic articles available free online. He wasn't trying to personally profit from it. He wanted people to be able to see get free access to these academic articles. What was his crime here?

Dean Baker  51:42

Academics, with almost no exceptions, would have been delighted to have people have easier access to their articles. So they weren't upset.

Dean Baker  52:02

So it was really the publication people. People may not know this, but it has become a big industry, the publication of academic journals. Journal publishers make a lot of money. I haven't been in the business of buying academic journals for a long time. But they charge absolutely ridiculous prices, particularly for the institutions.

Dean Baker  52:21

But that's absolutely antithetical to the idea that we want this knowledge to get out as widely as possible. Because they're about making money. And maximizing their take on it depends on being able to restrict access. Otherwise no one will pay.

Spencer Graves  52:37

And more to the point, from my perspective, at least, I don't know anybody who got a penny in royalties from a publication in a refereed academic journal.

Dean Baker  52:51

That's right. I've never heard it.

Spencer Graves  52:52

It doesn't happen. The only thing that a paywall does is prevent dissemination.

Acknowledgments

Spencer Graves  53:08

We've been talking with Dean Baker, co-founder of the Center for Economic and Policy Research, about his recommendations for changing public policy, especially media policy, based partly on his book Rigged: how globalization and the rules of the modern economy were structured to make the rich richer.

Spencer Graves  53:25

We're out of time. A video of this event with a transcript will be posted in a few days, to Wikiversity with a link to that from the description of this episode of Radio Active Magazine on KKFI.org.

Spencer Graves  53:39

Thanks to Bill Clause, who ran the sound board at KKFI, Brennan Schatz, who managed the Zoom and Facebook Live connections, and our co-sponsors Our Revolution Kansas City, Missouri, and Peaceworks Kansas City. My co host was Joe Ballegeer. I'm Spencer Graves. Thank you for listening.

Closing remarks

Spencer Graves  53:58

And it looks like we do have another minute or so. If Joe or Dean would like to say something more, please?

Dean Baker  54:08

This is a very weird time, because we went from kind of being in the worst of times under Donald Trump. I don't mean to just beat on Donald Trump. But we were on the edge of fascism. And Joe Biden wasn't the person I most wanted to see in the White House.

Dean Baker  54:24

But I think we've really opened up opportunities that we haven't seen probably in my lifetime.

Dean Baker  54:29

So I'm going to be the optimist here. I think we we have a really great opportunity to make some big and enduring changes that will really affect people's lives and ideally change the country for the better permanently.

More on financial transaction tax

Spencer Graves  54:49

I may have missed: Could you elaborate a bit more on a financial transaction tax?

Dean Baker  54:57

Yeah. The logic of the financial transactions tax is, on the one hand, obviously can raise a lot of money for the government. But the other hand, putting on our MMT hats here, it comes directly by reducing the amount of resources wasted in the financial industry.

Dean Baker  55:14

So it's not exactly one to one, but it's pretty closely one to one. So I was mentioning the DeFazio bill earlier. The Congressional Budget Office scored that as 70 billion a year. That's going to correspond pretty closely to the reduction in trading volume.

Dean Baker  55:29

That's money that's going to people on Wall Street. Now I understand that not all the people on Wall Street are rich, but a lot of them are. And so we're taking money directly out of their pockets. And we're gonna have those resources then available for productive use. So I see the financial transactions tax is a great twofer.

Dean Baker  55:47

That we're in effect freeing up money to be spent on useful things, and it's coming from many of the wealthiest people in the economy.

Dean Baker  55:55

So that's to my mind a really great story.

Spencer Graves  55:59

Okay. Thank you very much. I think this ends the talk.

Bibliography

• Dean Baker (21 February 2021). "The Green New Deal Threatens Republicans’ Bread and Butter (It’s not Just Competition in the Battle of Ideas)". Beat the Press. Wikidata Q106034011. https://cepr.net/the-green-new-deal-threatens-republicans-bread-and-butter-its-not-just-competition-in-the-battle-of-ideas/. .

• Dean Baker (2016), Rigged: How globalization and the rules to the modern economy were structured to make the rich richer, Center for Economic and Policy Research, Wikidata Q100216001.