America is not a democracy

The title sounds wrong, if not catchy, but it is the title of an article in The Atlantic by Yasha Mounk. The main point is that America is a republic, designed by the Founding Fathers to keep the common people as far away from decision making as possible.

We are a representative democracy within a constitutional republic.

This is my take. And I believe that with today’s instant media and the believe in the power of one, the difference between a direct democracy where the state is weak and a republic with a strong President, Congress and Supreme Court to balance each other’s power, is very much on everybody’s mind. The individual has indeed very little influence, the design of the Constitution. Yet we come to believe that each of us can be anything you want if only you believe in it and work hard for it. The dissonance between what is and what our democracy should be – We the People – is challenging our trust in the state and its institutions.

Well, I recommend to read this article because I think understanding the value of the U.S. Constitution is critical in accepting its role in public life.

Economists are modern day Utopians

Economists tell us that the free market solves problems. Some have recently even argued that price gouging in times of emergencies by your neighborhood store and gas station is the best solution as it prevents hoarding. Modern economic principles are built on the assumption that all players are rational agents, with the proper rationality being what is in one’s best (economic; sic) interest. Economists get it wrong. Humans are not rational agents. We have petty expectations like greed, revenge, stubbornly holding onto beliefs unbecoming the economic principles. If we were all rational agents, we would need no regulation or government, we would need no taxes since we would selfishly and selflessly see the need to pay money for the common good, not just ones own.

In reality our modern free market economy is mostly regulated such that trading in goods and money benefits all, not the least the government which is a self governing body that invests in common goods that no single individual, no matter how rich, could achieve on their own.

And as for the price gouging, the solution in emergency situations is rationing, not increasing prices to the highest bidder. Our American health care system is in permanent emergency crisis, where price gouging is normal. Most people want to believe that health care is a market place, but it is not so for two reasons. First, it is already highly regulated. To work in the health profession you need a license that is hard to achieve. You need to accept and treat anyone coming to your doors, no matter if the individual can pay or not. You can demand payment later, or from the tax payer. Second, unless for preventive care, no one goes to the doctor unless it is an emergency, which is exactly why we are held hostage to price gouging by the hospital and insurance industry. We are not customers. We have no time or ability to choose treatment, doctor or hospital when lying in an ambulance. And even if we get to the plan included hospital, they can still higher out of plan doctors which allows them to charge extra for their service.

So let’s get rid of the fantasy of the rational agent in economics and come up with more complex model that include real world agents driven by emotional outcomes, not only economic optimal outcome.