Meyerson on TAP: Where Markets Don’t Go, Here’s How the State Can Step In

California Gov. Gavin Newsom is whooshing through Washington this week, seemingly to promote at least the thought among his fellow Democrats that he’d be an excellent choice for the party’s next presidential nominee should Joe Biden opt out of the running. I admire much of what Newsom’s done as governor, though I have very real doubts about how he’d perform nationally with working-class voters. (California’s electorate has just about the lowest percentage of working-class whites of any state.)

Still, one initiative Newsom announced last week holds promise as a way that he and other Democrats could do something that could, if expanded, tangibly benefit working-class lives. Last Thursday, Newsom announced that California is appropriating $100 million in its new budget for developing, manufacturing, and distributing insulin at cost. “Nothing epitomizes market failures more than the price of insulin,” he said. As 37 million Americans suffer from diabetes, a program like Newsom’s would clearly benefit a sizable share of the populace.

Newsom isn’t alone in seeking to reduce insulin’s hugely marked-up cost, which can range as high as $6,000 a year. A bill has been introduced in Congress to put price controls on the drug, which is why it may not win enough Senate Republicans to go anywhere. Colorado has placed a $100 monthly cap on co-payments for insured insulin users. A consortium of hospitals is funding a nonprofit to make generic insulin. But manufacture and provision to all in need of insulin, whether insured or not, whether hospitalized or not, is on no apparent drawing board save the state of California’s.

That’s partly because size and progressivity matter. California can afford to get into the business of public provision of a necessity because it has an economy larger than those of all but four nations, and because it has the most progressive state income tax in the United States. This year, that has yielded the state a balanced budget of just over $300 billion.

The broader lesson here is that when confronted with market failures—something we have in abundance—there’s an option: a public option. The market failure most plaguing California, and increasingly most other population centers as well, is the dearth of affordable housing. If Democrats want to get serious about curtailing inflation in the long run and enabling millennials and Gen Zers to get a leg up economically, they need to get government into the housing construction business, with funding on a scale that only the federal government and particularly flush states like California can provide.

In a nation whose credo could be “Market Failures ‘R’ Us,” the solution necessarily becomes de-marketizing the goods, physical and social, that the market isn’t producing. Newsom’s is a good first step; a lot more have to follow.