Edward Lotterman

Divisions are so bitter within a nation that anger, even rage, seem increasingly common.

Such anger is multi-directional, springing from different wounds for different people. Income is distributed more unequally than in decades. Inequities worsen apace.

Differences grow starker in levels of living between a well-off minority, even if a substantial one, and a majority that is mired in unemployment, stagnant incomes, deteriorating communities, substance abuse, poor health outcomes and general hopelessness.

Moreover, politics are dysfunctional. The judicial system allows near-open bribery of elected officials. Electoral political success is possible only with huge amounts of money given by wealthy people, with an expected quid pro quo. This largesse often pursues particular nest-feathering apparent to all. But it breaks no laws.

The legislative branch is devoid of any collaboration across the political spectrum that had facilitated effective governing in the past. Obsolete rules of order hamstring legislating to a point where deadlock seems permanent.

Internationally, there has been no general war for decades. But brushfire conflicts involving one or another of the great powers smolder on. Thunderheads warning of far greater conflict boom louder and higher.

Overall, a sense of dread seems pervasive.

Does any of this sound familiar?

No, it is not 2024, but rather a picture of the United States in the 25 years leading up to World War I as painted by historian Barbara Tuchman in her masterful “The Proud Tower: A Portrait of the World Before the War, 1890-1914.” This was the “gilded age” of ostentatious wealth in North America and Europe coupled with true human suffering on a massive scale.

So after two world wars, a “New Deal” in the U.S. and democratic reforms across Western, and later Eastern, Europe, why does it all seem very familiar? What lessons have we learned, and apparently unlearned, from our troubled past?

Well, consider the public reactions to the assassination on Dec. 4 of UnitedHeathcare CEO Brian Thompson. These reactions show generalized anger over the lack of control people have over their economic lives, exemplified specifically on how health care is provided and paid for in our nation and how that unjust and inefficient system has been allowed, if not openly fostered, by government policy.

Moreover, it is hard to ignore the gulf between the vast police resources — and media attention — focused on finding the killer of one rich white man in New York compared to those spent investigating nearly all other murders, but especially those of poor minorities, that happen daily and in large numbers around our country.

Then the release of a recording of UnitedHealth Group CEO Andrew Witty in which he cravenly argues that his company’s extreme rate of insurance denials are, in fact, a public service, poured gasoline on the fire. Such denials, Witty says, prevent the collapse of the entire health care system because of excessive claims.

It is also clear that monopolistic power in health insurance has been only one cause of drastic rises in overall costs of health provision. The conversion of nonprofit hospitals and clinics into for-profit ones and groups of specialists decamping employment at nonprofits to set up their own profit-making specialty clinics are other factors that drive both costs of medical procedures and the incomes of doctors and clinic managers well above those of any other wealthy nation.

New programs, including drug benefits in Medicare, brought forth pharmacy-benefit managers that were supposed to bring cost-reducing competition. Instead, these PBMs had perverse incentives to beg higher list prices from pharma manufacturers so they could show greater “discounts.”

But health care is only one part of a litany of economic grievances that can spark violence.

Several government policies aiming to maximize free-market forces in meeting people’s needs have perverse outcomes. Consider “The Great Grocery Squeeze,” an article in the December issue of The Atlantic magazine, which details “How a federal policy change in the 1980s created the modern food desert.”

“Food deserts,” defined as areas in which at least “33% of the residents of the community live more than 1 mile from the nearest grocery store in urban areas or 10 miles from the nearest grocery store in rural areas” have become common. These are now widespread not only in urban areas, but across vast swathes of rural Minnesota and the Dakotas.

The change detailed in the article was that the Reagan administration simply stopped enforcing the 1936 Robinson-Patman Act, which prohibited grocery manufacturers from granting price discounts to large retail chains unless justified by actual differences in cost, such as with larger shipments. The act prevented large grocery chains from brazenly using their monopoly power alone to gain competitive advantages. The Reagan administration, with the support of many economists, saw such New Deal-era laws as “excessive regulation” preventing market efficiency.

But the result was that grocery stores started disappearing from urban neighborhoods and rural towns. Some consumer price advantages for the big chains did come from lower actual costs, but much came from the exercise of efficiency-destroying monopolistic power. This soon allowed Walmart, Safeway and Kroger to gobble up smaller competitors, further reducing competition and availability.

Government toleration of the same sorts of exercise of monopoly power by giant nonfood retailers dealt similar blows to independent drug and hardware store chains. Yes, big box stores truly do have lower costs in many areas. But they also have efficiency-destroying pricing power that introductory econ students learn cause “dead-weight losses to society as a whole.”

These examples, of high costs and access denial in health care and of reduced retail availability and higher prices to families, are due in great part to unwise policy choices. The abandonment of virtually all antitrust actions is another. These could be reversed by thoughtful legislation. But that would require a functioning legislative branch of the federal government and an executive branch understanding true challenges in our economy.

That takes leadership.

As the 19th century closed, Republican Speaker of the House Thomas B. Reed of Maine made a valiant effort to overcome House rules of order that paralyzed legislation. His early death in 1902 blunted progress.

But the hyper-activism of GOP President Teddy Roosevelt, who unexpectedly had gained the position due to the assassination of William McKinley, brought active enforcement of antitrust laws and reforms in other areas affecting social well-being. Enraged wealthy corporate moguls and Wall Street financiers saw Roosevelt as a traitor to his party and class.

However, like conservative German Chancellor Otto von Bismarck two decades earlier, Roosevelt understood that if conservatives simply opposed all reform and did nothing to alleviate the very real suffering of a large fraction of the populace, they faced danger. If the oppressed masses had no relief, they would turn to more radical alternatives that would overthrow the governmental and economic structure that enabled the well-off to maintain their comfortable lives. Limits on monopolistic abuses, provision of basic work safety, measures to protect the disabled and survivors, ensure food safety and broaden education were not Socialist threats to market economies but rather reinforced and defended them.

At the same time as Teddy pushed reform from the White House, bright lawyers were able to pry social and business reforms from state and federal judiciaries. Louis Brandeis, who would later shine on the Supreme Court, successfully argued for child labor regulations and laborers’ right to organize collectively. After the 1912 election brought Democrat Woodrow Wilson to the White House, reformers in a long-sclerotic Democratic party would bring legislative fruition to some of these issues.

The effect of the destruction of these market guardrails, when felt en masse, can lead to actions such as the fatal shooting of a health care executive in New York. While Thompson’s assassination in itself may not spark violent class warfare, the cynical public reaction to it should be seen as a warning sign to the powers-that-be that supposed free-market reforms are again crushing people’s well-being.

The tragic dilemma we face now is that there is no Reed, no Roosevelt, no Brandeis, no Wilson on the horizon to heed this warning. Instead, we have rampant cowardice in the Senate that, instead of acting as a counterbalance to Oval Office excesses, seems to be rocketing us away from compromise and reform.

The old saw that, in democracies, voters get the government they deserve seems true. When public attitudes may change is shrouded in uncertainty. Let’s hope it happens without more violence.

Related Articles

Real World Economics: Bitcoin is in a bubble phase; the bubble will burst

Real World Economics: Fed is insulated from political interference

Real World Economics: Donald Trump’s ambitious agenda would affect all of us for years to come

Real World Economics: Trump redux: A look at some issues

Real World Economics: U.S. is tops, except for health care

St. Paul economist and writer Edward Lotterman can be reached at stpaul@edlotterman.com.