From the Executive Editor
When the liberals and the literati and Hollywood all come out against the Bush administration’s assaults on liberty and individual rights, that’s not news. But when the superheroes of America’s comic books hurl their superpowers against the White House for its attacks on our constitutional rights, that’s something else—a sign that the rage against Bushism has penetrated a pillar of popular culture, in both its underground elite publications and its patriotic mainstream. In this issue, critic Julian Sanchez documents the great comic-book uprising, while noting that superheroes aren’t an easy fit in any theory of democracy or popular rule.
Elsewhere in this issue, two of the Prospect’s founders, Robert Kuttner and Robert Reich, each the author of a new book on the political economy, argue the question of who’s responsible for the economic transformations of the past 30 years. Are corporate and financial elites to blame (that’s Kuttner’s position) or are they just the shameless beneficiaries of technological revolutions and globalization (that’s Reich’s)? John B. Judis contends that in matters of foreign and military policy, President Bush not only repudiates the multilateralism of Wilson, FDR, Truman, et al., but, in a stunningly dubious achievement, resurrects the imperialism of William McKinley. And Robert Farley surveys the achievements of the U.S. Air Force and asks: Who needs it? Superheroes, si; strategic bombing, no, in this month’s Prospect.
-- Harold Meyerson
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Health Care: Go Long
Paul starr presented an excellent overview ["The Hillarycare Mythology," October 2007] of the 1993–1994 struggle for national health insurance. He is probably seriously in error, however, in concluding that universal health-care coverage for children would constitute a major victory in 2009–2010.
If a Democrat narrowly wins the presidency, and the Democrats only gain a few more House seats and a Senate seat or two, then Starr is right. Moreover, the universal health-care coverage for children "fallback position" should be pushed early enough to be passed.
If, however, the Democratic candidate wins with 53-plus percent of the vote, and the Democrats also pick up 10 or more House seats and four or five Senate seats, Starr’s strategy would constitute a significant error. While there would be fewer Congressional Democrats than in 1993, Congress overall would be ideologically more liberal. Moreover, winning on a clear health plan and winning a clear majority of the vote (Clinton took 43 percent of the vote in 1993) would give the new president more clout and a clearer mandate than Clinton ever had.
Starr’s article brings up considerations not only of the past -- and the perfectly routine stupidity of the press -- but of the future. When we read the phrase "universal coverage based on consumer choice among competing private health plans," we realize yet again that the likely Democratic presidential candidate is, in this respect, well to the right of conservative parties in all other advanced nations.
Yet, we in the United States already have a single-payer health-care plan that preserves freedom of choice and functions very well. It is called Medicare, and its gradual extension to the entire population will solve many of our health-care problems while saving the enormous amounts of money now going to insurance companies for no services rendered.
Tending the Hedges
The excellent summary of the current financial crisis by Robert Kuttner [The Bubble Economy," October 2007] is marred by a few misstatements regarding the hedge-fund industry.
Kuttner writes that in the collapse of the LTCM hedge fund, the Federal Reserve leaned on big banks to buy the fund outright, liquidate its positions, and "eat about $4 billion in losses." This is a serious misstatement. The $4 billion in losses took place prior to the Fed’s action and were borne entirely by the investors in LTCM (exactly where they belonged). The Fed did pressure the banks to buy the fund outright and liquidate its positions, and the banks were required to invest about $3.6 billion in the fund to assure against further losses, but the actual unwind did not eat into any of this added investment.
The assertion that hedge funds represent "financial middlemen unproductively extracting wealth from the real economy" needs some analysis to support it. Arbitrage activities that help reduce pricing anomalies in the financial markets can contribute to more productive allocation of investment in the real economy. To what extent they actually do is an empirical issue.
New York, NY
Bob Kuttner replies: At the time the banks succumbed to the Fed’s pressure to buy the hedge fund, it was not at all clear how much of the loss would be recouped. And yes, some derivatives may improve market functioning, but many add risk that is disproportionate to benefit.