Common Dreams has republished a Washington Post article So, What’s the Difference Between Warren and Sanders?.

Here is the problem with Warren’s approach.

For Warren, the solution to our economic ills already exists in well-regulated capitalism. “I believe in markets,” she said in a recent podcast interview. “I believe in the benefits that come from markets, that two people coming together, or two companies, or a company and a person coming together to exchange goods and services, yay.”

Yes, well regulated markets are essential, but they are not enough.

I believe that there are certain aspect of social life that are best handled by the profit-drive market system. However, there are important other aspects that are very poorly served by profit driven markets.

Some examples are the provision of some entitlements that citizens of a wealthy country like the USA should expect as a human right. They need to be taken care of whether they make someone a direct profit or not. They keep a society functioning for the long haul.

Caring for this aspect of society is not the function of the profit driven private market. Only the government can take on the task and have the responsibility for making sure that these needs are met. Notice that I did not say the government must provide all these services. I only said that the government must assure that these needs are met.

There has to be a place in the society for private, profit-driven markets, if for no other reason than preventing such markets would require such draconian government control over people’s lives that it is not the kind of society I want to live in. Overly centralized planning and control is also a risky proposition that can lead to amplified disasters that tend to be prevented under some decentralized planning and control. A perfect centralized planning and control system might be more efficient in the short term. In the long term completely centralized control does not adapt well to unforeseen events nor even to long term evolution of the society. There needs to be checks and balances from decentralization.

Let’s not forget that John Maynard Keynes showed that there are also some dangers in completely decentralized actions of rational people.

If Warren does not understand what is just not appropriate for the markets to handle, then she would be a frightening person to be put in charge.

I also have potential problems with the article’s author Elizabeth Bruenig in this interpretation of Sanders’ approach.

Instead, he aims to transfer power over several key segments of life to the people—by creating a set of universal economic rights that not only entitle citizens to particular benefits (such as medical care, education and child care) but also give those citizens a say in how those sectors are governed: in short, democratic socialism. And that means building a movement, not just a presidential campaign.

The very basis of democracy is that citizens have a say in how those sectors are governed. There is nothing new here except in trying to make this country work the way our Constitution says it should. If this paragraph means any more than that, then I have to think long and hard about what is being suggested.

A blog by Thomas G. Clark as an interesting article 10 Economic fairy stories that people need to stop believing in .

In a generally good article, there is one section that I want to try to correct.

5. Everyone maximizing their self-interest promotes wellbeing

This section makes a weak case for what is wrong with this myth. John Maynard Keynes made a much stronger argument against this myth. He showed why everyone maximizing their own self-interest could lead to problems for society as a whole. There is no logical way for individuals to act on their own to overcome the problems. Only a coordinated action by a large enough economic entity like a national government could solve the problem.

In an economic depression like the one in the 1930s that followed the bubble economy of the roaring 1920s, many people trying to maximize their own self-interest try to cut back spending and increase saving to ward off financial ruin. (Of course the maximizing self-interest in the roaring 1920s was an example of collective action that lead to a bubble.)

In the depression situation, the attempt to cut spending by the public causes job losses and even a deeper recession. No economic entity smaller than the national government is large enough to take action by itself to turn the trend around. If such an entity tried to counter the trend by themselves, they would likely go bankrupt trying to do it. The federal government the size of the USA or of Great Britain has the taxing, spending, and money creation authority to counter the depressionary trend and staying power to overcome the depression. These entities alone have enough power to replace the missing consumer demand to keep the employment level up. In fact, these entities can invest in economic development projects that can increase the size of the productive economy so that their countries can come out of the depression in better shape than they went in.

Of course, these government entities had the ability to prevent the bubble of the 1920s, but they didn’t do that either. The same thing holds for the bubble that led up to the 2008/2009 economic crash and the ensuing great recession.