It sounds like a dream these days, and it’s likely to remain just that if it does not become a national priority. Unfortunately, the political winds are blowing in the opposite direction right now. But that could change. So let’s dream a bit.
First of all, a national investment in full employment is absolutely the best thing we could do to restore the health of our economy. A well-targeted “stimulus” aimed at increasing the “demand” for goods and services is consistent with what many economists these days are recommending for economic recovery. (The case for this approach, along with some historical evidence in favor of it, can be found in Robert Reich’s new book, Aftershock.) It would put money into the hands of people who will use it immediately for basics like food, clothing, housing, transportation, etc. This makes far better sense than continuing the Bush era tax cuts for the “have mores” that are not working now and are more likely to be used for purchasing fine art, gold, yachts, and other luxury items.
A more important argument, though, involves the good that full employment would do for our society. It would put millions of idled workers back to work and enable them to provide for their basic needs. It would relieve the deep personal and family stresses that accompany unemployment, restore the dignity and productivity of these workers, and prevent a further corrosion of job skills. Equally important, it would relieve the strains on our overtaxed welfare system and our private charities and would restore some of the public sector service and teaching jobs that the states and local communities have been shedding recently.
What would a full employment program look like? The overarching goal would be to provide employment to everyone who is willing and able to work. Currently there is only one job available for every five job seekers, and the projections for private-sector job creation for the next several years are dismal. The Labor Department expects that eight out of every ten new jobs will be “low paying,” or worse.
Employment for everyone who is able to work is by far the most dignified and fair way to provide for many of the basic needs of our people. And where the private sector cannot generate good employment, a more robust public sector employment program should provide a back-stop as the “employer of last resort.” This is a concept that traces back to the original version of what became the Employment Act of 1946, although it fell into disfavor among economists in recent decades.
Of course, it’s also important for the government’s role to be more counter-cyclical in nature and not compete with the private sector. Accordingly, there should be even greater incentives than already exist for private sector job creation, more emphasis on training workers for the twenty first century job market, and more micro-financing for the sustainable local business ventures that will be the employers of the future.
A corollary of a full employment policy is that we must also devise a way of paying workers a living wage, rather than our delusional minimum wage. One intriguing idea was proposed by the senior economist and Nobel laureate Edmund Phelps in his 1997 book, Rewarding Work. Phelps argued that we should increase wages in a way that does not impose an unrealistic and destructive cost burden on our nation’s employers. The idea would be to supplement the minimum wage, and low wages generally, with something like an automatic rebate of payroll taxes that employers would then pass through to their employees. Not only would this reinforce the value of work and greatly improve the lives of the one-third of our population who are trapped in deep poverty but it would move us away from a welfare system that is demeaning, inefficient, and does not focus effectively on rewarding work. Among the obvious objections to this plan, apart from its cost, is the danger that employers might try to game the system to their own advantage. But Phelps deals with this and other issues at length in his book.
The reality is that the “free market” has been hollowing out our economy, even before and certainly ever since the Crash of 2008. We can no longer rely on the marketplace alone to provide enough jobs for our people. It’s time for us to take collective action.
Tuesday, November 30, 2010
Monday, November 29, 2010
What Safety Net?
The myth lives on, especially in conservative circles, that as a nation we provide an adequate economic safety net for the victims of our Darwinian system of free market capitalism (though I do not know of any Darwinian analogies to billionaires out there in the natural world). The marketplace will take care of the rest, we are told.
The reality is that, at best, our so-called safety net programs serve only to break your fall off the economic ladder. About 40 percent of those who lose their jobs (not even counting the army of self-employed workers) go into free fall.
The assumptions underlying the comforting safety net rationalization are that (1) unemployment is temporary, (2) most people are covered and they can supplement the benefits they receive from unemployment insurance, COBRA, food stamps, and the like with personal savings, and (3) their income will bounce back to their previous levels (or thereabouts).
No wonder, then, that the college textbooks in economics are sanguine about unemployment as a necessary part of being a dynamic, flexible economy. It’s actually treated as being beneficial -- a deterrent to inflation. (I won’t bore you with the technical arguments here.)
The truth is vastly different. As economist and New York Times columnist Paul Krugman put it, the facts have a liberal bias. The bulk of the job losses over the past 20 years, even in this recession, have been due to automation, downsizing, and the outsourcing of well-paid manufacturing and (increasingly) service jobs to other countries. This has led to long term “structural” unemployment in the parts of the country that have been hardest hit, far beyond the “official” statistics. (Even the official rate puts long term unemployment at more than seven million workers, and their children.) Most unemployed people do not receive unemployment insurance, and the benefits are only temporary for those who do. Benefit levels are also inadequate (averaging about $290 per week). As for relying on savings, the fact is that most workers who lose their jobs are already deeply in debt with car loans, credit card charges, mortgages, school loans, and the like. Nor do incomes bounce back. There has been a relentless downsizing of income for those who have been lucky enough to find new employment.
The consequences of this race to the bottom have been showing up in various social indicators. Median incomes for Americans actually dropped several percentage points over the past 10 years, even as incomes at the top of the scale soared. About 30 percent of fully employed American workers are now classified as “working poor,” with low-wage jobs that are seriously inadequate to meet their basic needs. We also rank near the bottom of the 30 OECD countries in terms of the income gap between the rich and the poor (behind only Mexico and Turkey), and our health statistics put us to shame. We now rank 50th in the world in terms of life expectancy at birth and 45th in terms of infant mortality. A recent broad international survey of the overall quality of life in various advanced nations ranked us eleventh (as noted in an earlier blog item).
So let’s get real about our “free” market, and our “safety net.” It’s time to begin making the case for a national “full employment program” at a “living wage” – an ideal that goes back to the end of World War II. We need it now more than ever.
The reality is that, at best, our so-called safety net programs serve only to break your fall off the economic ladder. About 40 percent of those who lose their jobs (not even counting the army of self-employed workers) go into free fall.
The assumptions underlying the comforting safety net rationalization are that (1) unemployment is temporary, (2) most people are covered and they can supplement the benefits they receive from unemployment insurance, COBRA, food stamps, and the like with personal savings, and (3) their income will bounce back to their previous levels (or thereabouts).
No wonder, then, that the college textbooks in economics are sanguine about unemployment as a necessary part of being a dynamic, flexible economy. It’s actually treated as being beneficial -- a deterrent to inflation. (I won’t bore you with the technical arguments here.)
The truth is vastly different. As economist and New York Times columnist Paul Krugman put it, the facts have a liberal bias. The bulk of the job losses over the past 20 years, even in this recession, have been due to automation, downsizing, and the outsourcing of well-paid manufacturing and (increasingly) service jobs to other countries. This has led to long term “structural” unemployment in the parts of the country that have been hardest hit, far beyond the “official” statistics. (Even the official rate puts long term unemployment at more than seven million workers, and their children.) Most unemployed people do not receive unemployment insurance, and the benefits are only temporary for those who do. Benefit levels are also inadequate (averaging about $290 per week). As for relying on savings, the fact is that most workers who lose their jobs are already deeply in debt with car loans, credit card charges, mortgages, school loans, and the like. Nor do incomes bounce back. There has been a relentless downsizing of income for those who have been lucky enough to find new employment.
The consequences of this race to the bottom have been showing up in various social indicators. Median incomes for Americans actually dropped several percentage points over the past 10 years, even as incomes at the top of the scale soared. About 30 percent of fully employed American workers are now classified as “working poor,” with low-wage jobs that are seriously inadequate to meet their basic needs. We also rank near the bottom of the 30 OECD countries in terms of the income gap between the rich and the poor (behind only Mexico and Turkey), and our health statistics put us to shame. We now rank 50th in the world in terms of life expectancy at birth and 45th in terms of infant mortality. A recent broad international survey of the overall quality of life in various advanced nations ranked us eleventh (as noted in an earlier blog item).
So let’s get real about our “free” market, and our “safety net.” It’s time to begin making the case for a national “full employment program” at a “living wage” – an ideal that goes back to the end of World War II. We need it now more than ever.
Sunday, November 28, 2010
Profiting from Hard Times
I certainly don’t know whether or not there will be a market crash 2.0, but investment guru Peter Schiff, who predicted the 2008 crash in his bestseller Crash Proof (which was heavily promoted on Fox News, where he is a frequent guest) has written a new book predicting a second market catastrophe. The new book has the uplifting subtitle “How to Profit from the Economic Collapse.”
Yes I know, investment advisors are not paid to promote the public interest. But it’s somehow in bad taste, shall we say, to encourage what sounds like callous profiteering from the suffering of others. Schiff (and his alter-author John Downes) helpfully recommends that investors should move their stock portfolios to “foreign securities” and gold. This sounds like a self-fulfilling prophesy – a recipe for how to induce a stock market crash. Another recommendation is “staying liquid,” so that you can move money into new opportunities. Hmmm, if a second bank bailout is not in the cards, maybe you should put the money under the mattress and keep an AK-47 at hand.
This book is just another example, among many, of how pursuing one’s own self-interest, even at the expense of others, has become the norm in our country. The former British Prime minister Margaret Thatcher famously asserted that “there is no such thing as a society. There are only individuals and families.” (She conspicuously left out corporations.) My response, in The Fair Society and in an earlier blog item, is that a society exists if people believe it does and act accordingly – and vice versa. A deeply troubling thought is that we are becoming a vice versa.
Yes I know, investment advisors are not paid to promote the public interest. But it’s somehow in bad taste, shall we say, to encourage what sounds like callous profiteering from the suffering of others. Schiff (and his alter-author John Downes) helpfully recommends that investors should move their stock portfolios to “foreign securities” and gold. This sounds like a self-fulfilling prophesy – a recipe for how to induce a stock market crash. Another recommendation is “staying liquid,” so that you can move money into new opportunities. Hmmm, if a second bank bailout is not in the cards, maybe you should put the money under the mattress and keep an AK-47 at hand.
This book is just another example, among many, of how pursuing one’s own self-interest, even at the expense of others, has become the norm in our country. The former British Prime minister Margaret Thatcher famously asserted that “there is no such thing as a society. There are only individuals and families.” (She conspicuously left out corporations.) My response, in The Fair Society and in an earlier blog item, is that a society exists if people believe it does and act accordingly – and vice versa. A deeply troubling thought is that we are becoming a vice versa.
Saturday, November 27, 2010
The Right to Life!
The “right to life” is a sacred principle to conservatives who oppose abortion, and to libertarians who adhere to John Locke’s claim (echoed by libertarian philosopher John Nozick in Anarchy State and Utopia) that we are endowed with “natural rights” that include “life, liberty and property.”
If so, the right to life certainly doesn’t end at birth. It extends through all of our lives. But, more important, any claim regarding a social or political “right” implies that everyone has an obligation to honor that right in whatever ways are necessary to protect it. Otherwise, we cause unjustified “harm” (in Nozick’s term) to others. This being the case, the right to life has (largely) unacknowledged implications that its many champions must accept and act upon or they will undermine their moral position.
In fact, a person’s life is not something you can passively endorse and then go back to whatever else you were doing. A human life can only be sustained if an array of some 14distinct “domains” of basic (biological) needs are continuously provided for. (All this is detailed in The Fair Society.) Accordingly, any person’s right to life imposes on the rest of us an obligation to ensure that his/her basic needs are met.
Conservative apologists for capitalism most likely would dismiss any such personal obligation by saying that this is already what free markets do. Our “revealed preferences” are provided for through the dynamics of supply and demand in the economic marketplace. If this is so, why is an estimated 25 percent of our population living in more or less severe poverty, with a vast array of unmet needs as a society? As the Microsoft founder Bill Gates put it in a TV interview with Bill Moyers, “markets don’t work for people who don’t have money.”
If capitalism can’t ensure that the full range of our basic needs are met -- and even full employment at a “living wage” (forget the delusionary minimum wage) won’t do that for many of us -- then we must accept a collective responsibility for the shortcomings of the marketplace. I call it a cradle-to-the-grave “basic needs guarantee,” and if the holders of vast wealth at the top of the economic pyramid reject this claim, then the rest of us have the “right” to assert our right to life through collective action. Indeed, the right to life is prior to the right to property, and the collective right of the many trumps the property rights of the few.
This, I predict, is the battlefield where the coming political war will be fought.
If so, the right to life certainly doesn’t end at birth. It extends through all of our lives. But, more important, any claim regarding a social or political “right” implies that everyone has an obligation to honor that right in whatever ways are necessary to protect it. Otherwise, we cause unjustified “harm” (in Nozick’s term) to others. This being the case, the right to life has (largely) unacknowledged implications that its many champions must accept and act upon or they will undermine their moral position.
In fact, a person’s life is not something you can passively endorse and then go back to whatever else you were doing. A human life can only be sustained if an array of some 14distinct “domains” of basic (biological) needs are continuously provided for. (All this is detailed in The Fair Society.) Accordingly, any person’s right to life imposes on the rest of us an obligation to ensure that his/her basic needs are met.
Conservative apologists for capitalism most likely would dismiss any such personal obligation by saying that this is already what free markets do. Our “revealed preferences” are provided for through the dynamics of supply and demand in the economic marketplace. If this is so, why is an estimated 25 percent of our population living in more or less severe poverty, with a vast array of unmet needs as a society? As the Microsoft founder Bill Gates put it in a TV interview with Bill Moyers, “markets don’t work for people who don’t have money.”
If capitalism can’t ensure that the full range of our basic needs are met -- and even full employment at a “living wage” (forget the delusionary minimum wage) won’t do that for many of us -- then we must accept a collective responsibility for the shortcomings of the marketplace. I call it a cradle-to-the-grave “basic needs guarantee,” and if the holders of vast wealth at the top of the economic pyramid reject this claim, then the rest of us have the “right” to assert our right to life through collective action. Indeed, the right to life is prior to the right to property, and the collective right of the many trumps the property rights of the few.
This, I predict, is the battlefield where the coming political war will be fought.
Friday, November 26, 2010
Monopoly and the Fair Society
We dusted off our seldom-used Monopoly game the other day for our visiting family, and it struck me that its basic values are morally offensive (at least to me). It’s a model for winner-take-all capitalism at its worst – rewarding people just for having good luck, and for being ruthless competitors.
What lessons does this game teach us? And what does it say about human nature and our culture that we actually enjoy playing the game (it’s one of the all-time favorites)? It says you should be greedy and do all you can to create monopolies, so that you can charge exorbitant rents to people who have had the bad luck to land on your properties, and that you should strive to drive them into bankruptcy (and poverty) without any qualms. (Gratitude, and humility, for your good luck plays no part.)
Yes, I know, it’s only a game, but, unfortunately, some of us play at life like they’re playing Monopoly. What matters in the end is what social behaviors we approve of, or at least tolerate, and how we reward them. So the Monopoly game is only a symptom, not a cause, of the capitalist disease.
Maybe it’s time for someone to develop a Fair Society game, modeled on the precepts in my forthcoming book The Fair Society: The Science of Human Nature and the Pursuit of Social Justice (University of Chicago Press, March 2011). Or maybe the game should model unfairness -- what actually goes on in our society. It would have such features as: starting the game with vast differences of wealth; whenever you pass “Go”, paying $200 in interest charges on the bank loan for your token; “going to jail” for 20 years for a crime you did not commit; collecting only a small fraction of the rents that the other players do; paying whatever rents the monopolist can get away with; “taking a chance” on a college education and finding yourself so burdened with debt that you can’t afford to buy any properties; and so on. In fact, very few of us would want to play this game – if we had any choice! Unfortunately, we don’t.
(This is a revision of an earlier blog item, in honor of the millions of Monopoly games, and various spinoffs like Farmopoly, that will be played over the Thanksgiving holidays.)
What lessons does this game teach us? And what does it say about human nature and our culture that we actually enjoy playing the game (it’s one of the all-time favorites)? It says you should be greedy and do all you can to create monopolies, so that you can charge exorbitant rents to people who have had the bad luck to land on your properties, and that you should strive to drive them into bankruptcy (and poverty) without any qualms. (Gratitude, and humility, for your good luck plays no part.)
Yes, I know, it’s only a game, but, unfortunately, some of us play at life like they’re playing Monopoly. What matters in the end is what social behaviors we approve of, or at least tolerate, and how we reward them. So the Monopoly game is only a symptom, not a cause, of the capitalist disease.
Maybe it’s time for someone to develop a Fair Society game, modeled on the precepts in my forthcoming book The Fair Society: The Science of Human Nature and the Pursuit of Social Justice (University of Chicago Press, March 2011). Or maybe the game should model unfairness -- what actually goes on in our society. It would have such features as: starting the game with vast differences of wealth; whenever you pass “Go”, paying $200 in interest charges on the bank loan for your token; “going to jail” for 20 years for a crime you did not commit; collecting only a small fraction of the rents that the other players do; paying whatever rents the monopolist can get away with; “taking a chance” on a college education and finding yourself so burdened with debt that you can’t afford to buy any properties; and so on. In fact, very few of us would want to play this game – if we had any choice! Unfortunately, we don’t.
(This is a revision of an earlier blog item, in honor of the millions of Monopoly games, and various spinoffs like Farmopoly, that will be played over the Thanksgiving holidays.)
Thursday, November 25, 2010
Fairness and Deficit Reduction
It’s (probably) a boring subject to most of us, but, unfortunately, our national deficit is a problem that we all share. All of us (and our children) will, in one way or another, pay a stiff price when the inevitable day of reckoning comes. Indeed, our national deficit is like the proverbial lead balloon. You can throw it up into the air, but gravity will have the last word. How our decade-long spending binge (remember, President Bush invented it, not President Obama) will finally come to an end is as yet uncertain.
In any case, we have a fundamental choice to make as a society. Either we will manage the return to fiscal reality in a way that is fair and equitable toward all of our citizens (fairness must be our guiding principle) or we will do it in a way that exacerbates the already deep and bitter division in our society between the “have mores” (as George Bush put it) and the many who “have less.”
What our choice boils down to is this. If the rich and powerful who largely (not completely) control our politics and national wealth do not take responsibility for the basic needs of the many who are in deep poverty and struggling to meet their basic needs, then those who have less will not feel a reciprocal obligation to respect the property “rights” of the wealthy. (Currently, almost 24 percent of the nation’s personal income each year goes to the top 1 percent of our income earners, who also control about 33 percent of the total personal wealth. The bottom 80 percent hold only 16 percent altogether.)
This is an extremely dangerous situation – a conflagration awaiting a spark. A society that must be sustained by coercion and suppression rather than willing consent (a social contract) is to all intents a slave system on its way to a real class war. It seems the elite in this country have forgotten the bloody lessons of history.
What would a fair burden of the costs for deficit reduction look like? One of the best ways (but alas least likely in the current political climate) is to take major steps to stimulate economic growth and job creation. An increase in “demand” at the bottom of the economic pyramid is both the most fair and most effective measure. Yes, it would further increase our national deficit in the short term, but (like any good investment) it would more than pay for itself in deficit reduction in the medium to long term. And we know it works (read Robert Reich’s new book, Aftershock). One interesting proposal is a one-year payroll tax “holiday.”
But economic growth can be only a part of the answer. “Revenue enhancement” (tax increases) will also be needed, and the principle of fairness requires that those who have the most and who will suffer the least from tax increases should bear the primary burden. (The objection that it would stifle economic growth is “humanure.” Much of the excess wealth at the very top of the pyramid is parked in unproductive places, like financial speculation, gold hoarding, fine art purchases, and the like.) Specific targets for tax increases should include a major increase in the Social Security tax cap, so that the wealthy will shoulder more of the burden.
Then there are all the "Christmas Tree" provisions in the tax code: tax deductions for equity line home loans; homeowner mortgage interest deductions at least for vacation homes and maybe for all home loans as the housing market recovers; taxing capital gains at the same rate as ordinary income; eliminating fat-cat subsidies for oil companies, wealthy farmers and various earmark beneficiaries; and maybe the reinstatement of a broad, World War II-style “luxury tax,” which amounts to a sales tax targeted to the rich.
The other side of the equation will require painful cuts, but these should not be loaded onto the backs of the poor and unemployed. Military pork, and there’s a lot of it, is one major target, though we must think about new jobs for the laid off workers. Delaying full retirement for Social Security beneficiaries (though not the minimum age for those who need to retire sooner) is another reasonable measure. Some of the extra padding, including early retirement, in our public sector pension programs could also be trimmed down.
Then there are the problems with Medicare. If we had a single payer system (Medicare for everyone) in this country we could at a stroke save perhaps 25 percent of the annual cost (much of it subsidized by the taxpayers) without sacrificing benefit levels. Some 25-30 percent of the total cost at present covers the administrative costs, lobbying expenses, advertising, and profits for private health insurers (we all pay for those TV commercials). Of course, this won't happen, so we will have to find efficiencies.
There’s much more on the “hit list” but you get the idea. We must find the least harmful and most “fair and balanced” way (to borrow the Fox News mantra for a better cause) to close our yawning budget gap. We know it can be done, but will we come together in a common cause or see an already deep tectonic crack politically become a yawning chasm?
In any case, we have a fundamental choice to make as a society. Either we will manage the return to fiscal reality in a way that is fair and equitable toward all of our citizens (fairness must be our guiding principle) or we will do it in a way that exacerbates the already deep and bitter division in our society between the “have mores” (as George Bush put it) and the many who “have less.”
What our choice boils down to is this. If the rich and powerful who largely (not completely) control our politics and national wealth do not take responsibility for the basic needs of the many who are in deep poverty and struggling to meet their basic needs, then those who have less will not feel a reciprocal obligation to respect the property “rights” of the wealthy. (Currently, almost 24 percent of the nation’s personal income each year goes to the top 1 percent of our income earners, who also control about 33 percent of the total personal wealth. The bottom 80 percent hold only 16 percent altogether.)
This is an extremely dangerous situation – a conflagration awaiting a spark. A society that must be sustained by coercion and suppression rather than willing consent (a social contract) is to all intents a slave system on its way to a real class war. It seems the elite in this country have forgotten the bloody lessons of history.
What would a fair burden of the costs for deficit reduction look like? One of the best ways (but alas least likely in the current political climate) is to take major steps to stimulate economic growth and job creation. An increase in “demand” at the bottom of the economic pyramid is both the most fair and most effective measure. Yes, it would further increase our national deficit in the short term, but (like any good investment) it would more than pay for itself in deficit reduction in the medium to long term. And we know it works (read Robert Reich’s new book, Aftershock). One interesting proposal is a one-year payroll tax “holiday.”
But economic growth can be only a part of the answer. “Revenue enhancement” (tax increases) will also be needed, and the principle of fairness requires that those who have the most and who will suffer the least from tax increases should bear the primary burden. (The objection that it would stifle economic growth is “humanure.” Much of the excess wealth at the very top of the pyramid is parked in unproductive places, like financial speculation, gold hoarding, fine art purchases, and the like.) Specific targets for tax increases should include a major increase in the Social Security tax cap, so that the wealthy will shoulder more of the burden.
Then there are all the "Christmas Tree" provisions in the tax code: tax deductions for equity line home loans; homeowner mortgage interest deductions at least for vacation homes and maybe for all home loans as the housing market recovers; taxing capital gains at the same rate as ordinary income; eliminating fat-cat subsidies for oil companies, wealthy farmers and various earmark beneficiaries; and maybe the reinstatement of a broad, World War II-style “luxury tax,” which amounts to a sales tax targeted to the rich.
The other side of the equation will require painful cuts, but these should not be loaded onto the backs of the poor and unemployed. Military pork, and there’s a lot of it, is one major target, though we must think about new jobs for the laid off workers. Delaying full retirement for Social Security beneficiaries (though not the minimum age for those who need to retire sooner) is another reasonable measure. Some of the extra padding, including early retirement, in our public sector pension programs could also be trimmed down.
Then there are the problems with Medicare. If we had a single payer system (Medicare for everyone) in this country we could at a stroke save perhaps 25 percent of the annual cost (much of it subsidized by the taxpayers) without sacrificing benefit levels. Some 25-30 percent of the total cost at present covers the administrative costs, lobbying expenses, advertising, and profits for private health insurers (we all pay for those TV commercials). Of course, this won't happen, so we will have to find efficiencies.
There’s much more on the “hit list” but you get the idea. We must find the least harmful and most “fair and balanced” way (to borrow the Fox News mantra for a better cause) to close our yawning budget gap. We know it can be done, but will we come together in a common cause or see an already deep tectonic crack politically become a yawning chasm?
Wednesday, November 24, 2010
“Let Them Eat Cake” (Again)
Legend has it that Queen Marie-Antoinette, when told that the peasants had no bread, responded “let them eat cake.”* I never thought I would live to see a time in our supposedly democratic and caring society when the attitude of some of the powers that be in Washington would resemble the nobility in pre-revolutionary France.
How else can we account for the moral myopia of the Republicans, who have been obstructing efforts to extend unemployment benefits and food stamps to the victims of the financial meltdown while, at the same time, fighting to extend the Bush-era tax cuts for the top 1 percent of income earners, many of them CEO’s, bankers and hedge fund managers (at a cost of about $700 billion).
Meanwhile, the USDA reports that some 50 million Americans, almost 15 percent of our families including 17 million children, suffered “food insecurity” (hunger) at various times last year. Of these, 12.7 million people, including 5.4 million children, experienced drastic food shortages and chronic hunger.
It seems the Republicans have lost their moral bearings, while the rest of us seem to have lost our sense of moral outrage. Shame on us.
__________
* Various sources agree that Marie-Antionette was most likely not the one who said it. The only published source for the quote is in the writings of the anti-monarchist philosopher Jean Jacques Rousseau (he actually used the word “brioche,” not “cake”), who attributed the saying only to a “great lady.” Marie-Antoinette was 12 years old at the time and was not yet Queen of France. In her later years, however, she was known to be a profligate spender at a time when poverty was rampant and some 50 percent of the average peasant’s income was spent on basic food items. She eventually came to be disparaged as “Queen Deficit.” In any case, this infamous line vividly connotes an attitude of uncaring self-indulgence while many others are suffering.
How else can we account for the moral myopia of the Republicans, who have been obstructing efforts to extend unemployment benefits and food stamps to the victims of the financial meltdown while, at the same time, fighting to extend the Bush-era tax cuts for the top 1 percent of income earners, many of them CEO’s, bankers and hedge fund managers (at a cost of about $700 billion).
Meanwhile, the USDA reports that some 50 million Americans, almost 15 percent of our families including 17 million children, suffered “food insecurity” (hunger) at various times last year. Of these, 12.7 million people, including 5.4 million children, experienced drastic food shortages and chronic hunger.
It seems the Republicans have lost their moral bearings, while the rest of us seem to have lost our sense of moral outrage. Shame on us.
__________
* Various sources agree that Marie-Antionette was most likely not the one who said it. The only published source for the quote is in the writings of the anti-monarchist philosopher Jean Jacques Rousseau (he actually used the word “brioche,” not “cake”), who attributed the saying only to a “great lady.” Marie-Antoinette was 12 years old at the time and was not yet Queen of France. In her later years, however, she was known to be a profligate spender at a time when poverty was rampant and some 50 percent of the average peasant’s income was spent on basic food items. She eventually came to be disparaged as “Queen Deficit.” In any case, this infamous line vividly connotes an attitude of uncaring self-indulgence while many others are suffering.
Tuesday, November 23, 2010
The Biochemistry of Fairness
“Neuroeconomics” is one of several new research areas in economics that have been probing the underlying sources of our motivations and behavior – human nature. One focus of this research has been on the role of oxytocin, a uniquely mammalian brain chemical, in helping to induce empathy and reciprocity in our social behavior.
In a series of laboratory experiments, neuroeconomist Paul Zak and his colleagues have demonstrated that oxytocin, which is closely associated with maternal behaviors, is also strongly associated with acts of giving and reciprocating. Indeed, artificial enhancement of oxytocin levels in the brain can augment these behavioral effects.
Some interpretations of this work make it sound as if oxytocin is the “cause” of morality in humans, but this is simplistic. It is an important link in a complex, evolved neurological system that is affected by many other “mechanisms” as well. But what it does show, unequivocally, is that our moral impulses are rooted in our biological nature. They are more than philosophical concepts, or the product of Kantian pure reason, or our legal heritage, or even our political ideologies.
The take home message here is that, when a society (and its economy and government) systematically violates these innate moral impulses, it is in deep trouble. As Plato rightly concluded in The Republic, the basic political challenge for every society is how to achieve social justice. Our future ultimately depends on it.
In a series of laboratory experiments, neuroeconomist Paul Zak and his colleagues have demonstrated that oxytocin, which is closely associated with maternal behaviors, is also strongly associated with acts of giving and reciprocating. Indeed, artificial enhancement of oxytocin levels in the brain can augment these behavioral effects.
Some interpretations of this work make it sound as if oxytocin is the “cause” of morality in humans, but this is simplistic. It is an important link in a complex, evolved neurological system that is affected by many other “mechanisms” as well. But what it does show, unequivocally, is that our moral impulses are rooted in our biological nature. They are more than philosophical concepts, or the product of Kantian pure reason, or our legal heritage, or even our political ideologies.
The take home message here is that, when a society (and its economy and government) systematically violates these innate moral impulses, it is in deep trouble. As Plato rightly concluded in The Republic, the basic political challenge for every society is how to achieve social justice. Our future ultimately depends on it.
Sunday, November 21, 2010
The Dark Side of Capitalism
There is much to be said in favor of capitalism, at least in principle. It gives people the freedom to innovate and be rewarded for their talents, their ideas, their hard work, and for their successes in serving the needs and want of others. These are values most of us share. Indeed, equity, or “merit,” represents one of the three fundamental fairness principles that constitute moral universals in humankind (as discussed in The Fair Society).
Capitalism in practice certainly deserves great credit for its many positive economic contributions over the years, which have benefited literally billions of humans. Who can deny this? But there is also a dark side to capitalism. It emerges whenever ideologues promote what has been referred to as the “utopian” model of free market capitalism without due regard for Adam Smith’s admonition that free markets must also have a moral foundation.
The financial meltdown of 2008 and Great Recession that lingers on even to this day testify to the dangers of trusting capitalism, and free market forces, to promote the general welfare without having rules of the game that are enforced. In reality, unconstrained free markets inherently favor those who are the most ruthless and exploitative in pursuit of their self-interests. Libertarian apologists for capitalism aver that “freedom” must not be allowed to cause “harm” to others, but when capitalism is cut loose from its moral foundation, we have seen what economist Jamie Galbraith calls “predatory capitalism.”
A case in point is what has happened to a noble concept in the hands of India’s private, capitalist banks. The idea of micro-financing – making small loans to poor people in local communities to help them get a start in various small business ventures – was pioneered by Muhammad Yunus and his not-for-profit Grameen Bank in Bangladesh. (Yunus won the Nobel Peace Prize in 2006 for his work). Over the years, the Grameen Bank and its many offspring and imitators around the world (including even in this country) have been hugely successful. Many thousands of small-time entrepreneurs have been helped and loan repayments have hovered at close to 100 percent.
Now the idea has been co-opted by for-profit banks in India, where loans are being made at exorbitant interest rates and without due regard for the ability of the borrowers to repay their loans. Nor do the borrowers get the kind of community support that is a key to the Grameen Bank formula. The result has been a growing nightmare of defaults, public anger and even suicides among the victims. Now the local governments in India are stepping in and imposing stringent rules on how the banks can make micro-loans. (It’s very similar to what happened in this country with the sub-prime mortgage scam and its aftermath.)
The bottom line here is what’s behind “the bottom line.” It boils down to a bank’s basic objective. Is it to help people in a sustainable way or is it to make a profit at all costs? If we don’t “get” this fundamental distinction, sooner or later it will get us.
Capitalism in practice certainly deserves great credit for its many positive economic contributions over the years, which have benefited literally billions of humans. Who can deny this? But there is also a dark side to capitalism. It emerges whenever ideologues promote what has been referred to as the “utopian” model of free market capitalism without due regard for Adam Smith’s admonition that free markets must also have a moral foundation.
The financial meltdown of 2008 and Great Recession that lingers on even to this day testify to the dangers of trusting capitalism, and free market forces, to promote the general welfare without having rules of the game that are enforced. In reality, unconstrained free markets inherently favor those who are the most ruthless and exploitative in pursuit of their self-interests. Libertarian apologists for capitalism aver that “freedom” must not be allowed to cause “harm” to others, but when capitalism is cut loose from its moral foundation, we have seen what economist Jamie Galbraith calls “predatory capitalism.”
A case in point is what has happened to a noble concept in the hands of India’s private, capitalist banks. The idea of micro-financing – making small loans to poor people in local communities to help them get a start in various small business ventures – was pioneered by Muhammad Yunus and his not-for-profit Grameen Bank in Bangladesh. (Yunus won the Nobel Peace Prize in 2006 for his work). Over the years, the Grameen Bank and its many offspring and imitators around the world (including even in this country) have been hugely successful. Many thousands of small-time entrepreneurs have been helped and loan repayments have hovered at close to 100 percent.
Now the idea has been co-opted by for-profit banks in India, where loans are being made at exorbitant interest rates and without due regard for the ability of the borrowers to repay their loans. Nor do the borrowers get the kind of community support that is a key to the Grameen Bank formula. The result has been a growing nightmare of defaults, public anger and even suicides among the victims. Now the local governments in India are stepping in and imposing stringent rules on how the banks can make micro-loans. (It’s very similar to what happened in this country with the sub-prime mortgage scam and its aftermath.)
The bottom line here is what’s behind “the bottom line.” It boils down to a bank’s basic objective. Is it to help people in a sustainable way or is it to make a profit at all costs? If we don’t “get” this fundamental distinction, sooner or later it will get us.
Saturday, November 20, 2010
Let’s Have a Class War
Well, the Republicans have certainly “listened” to the American people, as House Speaker-to-be John Boehner put it.
How else can you explain their unanimous action two days ago to help reduce the federal deficit by blocking an extension of unemployment insurance benefits? This at a time when there are five job seekers for every available job in this country and when long-term unemployment is at the highest level since the Great Depression. (Actually, a super-majority of Americans in public opinion polls support an extension;apparently the Republicans have a hearing problem.)
Meanwhile, Representative Boehner is seeking to restore $500 billion in Medicare “cuts” which have nothing to do with the services provided to beneficiaries and everything to do with continuing a huge, unwarranted “bonus” that Medicare pays private health insurers (thanks to George Bush and the GOP) for participating in the supplementary Medicare Advantage Program. It’s a bonus for fat cats.
Then, of course, there’s the $700 billion in lost tax revenues (and deficit reduction) that would result from extending the Bush-era tax cuts for the super-rich, the top 1 percent of income earners (who take home an astounding 24 percent of the total). Providing aid to the advantaged is another top Republican priority.
You might call it callous hypocrisy. I would call it class warfare. Eventually the rest of us will have to fight back or we will lose this war.
How else can you explain their unanimous action two days ago to help reduce the federal deficit by blocking an extension of unemployment insurance benefits? This at a time when there are five job seekers for every available job in this country and when long-term unemployment is at the highest level since the Great Depression. (Actually, a super-majority of Americans in public opinion polls support an extension;apparently the Republicans have a hearing problem.)
Meanwhile, Representative Boehner is seeking to restore $500 billion in Medicare “cuts” which have nothing to do with the services provided to beneficiaries and everything to do with continuing a huge, unwarranted “bonus” that Medicare pays private health insurers (thanks to George Bush and the GOP) for participating in the supplementary Medicare Advantage Program. It’s a bonus for fat cats.
Then, of course, there’s the $700 billion in lost tax revenues (and deficit reduction) that would result from extending the Bush-era tax cuts for the super-rich, the top 1 percent of income earners (who take home an astounding 24 percent of the total). Providing aid to the advantaged is another top Republican priority.
You might call it callous hypocrisy. I would call it class warfare. Eventually the rest of us will have to fight back or we will lose this war.
Friday, November 19, 2010
Time Banks
What a wonderful (and practical) idea -- one that also happens to affirm the instincts, though not the political agenda, of egalitarians and communitarians of various stripes.
The idea is simple but elegant. As reported on the PBS Evening News two nights ago, Portland Maine is pioneering what is called an “Hour Exchange” – a system of swapping services among members of a local network that now numbers some 600 people. Instead of one-on-one exchanges, however, the members record their earnings in a computerized “ time bank” in units of one “time dollar” for each hour of work they perform and then deduct one time dollar for each hour of services that they receive in return (their free choice).
The Hour Exchange’s founder, Dr. Richard Rockefeller (yes, those Rockefellers, believe it or not), explained that, in addition to the fact that no money changes hands, there is an even more radical difference between the Hour Exchange and our conventional economy. All time swaps are valued equally, so that even a doctor may get only an hour-long massage or an hour of carpentry for his/her house as a payback.
Mainstream economists call the idea “foolhardy,” but it works and it helps people who are struggling financially to meet their needs. Moreover, the IRS considers the Hour Exchange to be tax exempt, precisely because the swaps are voluntary and do not have different values.
One of the professionals who is a member of the exchange commented that sharing hours is not a sacrifice for him. It’s a way of doing what you are good at and helping other people in exchange for things you need or want. “We used to call it a community.” Another participant noted that this is not something new, but only something we are remembering. Indeed, it’s a memory that may trace back millions of years in our heritage as a species, but at least to the Great Depression.
The idea is simple but elegant. As reported on the PBS Evening News two nights ago, Portland Maine is pioneering what is called an “Hour Exchange” – a system of swapping services among members of a local network that now numbers some 600 people. Instead of one-on-one exchanges, however, the members record their earnings in a computerized “ time bank” in units of one “time dollar” for each hour of work they perform and then deduct one time dollar for each hour of services that they receive in return (their free choice).
The Hour Exchange’s founder, Dr. Richard Rockefeller (yes, those Rockefellers, believe it or not), explained that, in addition to the fact that no money changes hands, there is an even more radical difference between the Hour Exchange and our conventional economy. All time swaps are valued equally, so that even a doctor may get only an hour-long massage or an hour of carpentry for his/her house as a payback.
Mainstream economists call the idea “foolhardy,” but it works and it helps people who are struggling financially to meet their needs. Moreover, the IRS considers the Hour Exchange to be tax exempt, precisely because the swaps are voluntary and do not have different values.
One of the professionals who is a member of the exchange commented that sharing hours is not a sacrifice for him. It’s a way of doing what you are good at and helping other people in exchange for things you need or want. “We used to call it a community.” Another participant noted that this is not something new, but only something we are remembering. Indeed, it’s a memory that may trace back millions of years in our heritage as a species, but at least to the Great Depression.
Thursday, November 18, 2010
Media Whores
Strong words, I know. But how else can one describe the moral depravity behind some of what passes for “news” these days. Whereas the ladies of the night (and men, let’s be fair) lie down for pay, media prostitutes merely lie for pay.
What’s wrong with that? It happens all the time, after all. Bernie Madoff lied about his investment scheme. Enron lied about its financial performance. Many of the attack ads in this year’s mid-term elections reeked with the odor of mendacity. The Republicans also lied about the health reform law as a government “takeover.” Remember the “death panels?” Indeed, lying has become so pervasive in our society that we have long since lost our sense of outrage about it. What does it mean when lies no longer matter – or worse, are deliberately bought and sold?
I would argue that lying is fundamentally immoral, because it typically causes undeserved harm to others that is often serious and sometimes fatal. An obvious example is in a courtroom, where witnesses are sworn to tell “the truth, the whole truth and nothing but the truth.” Yet there are all too many cases, some notorious, where lies have produced wrongful verdicts that resulted in financial ruin, long prison sentences, executions and even the lynching of innocent defendants.
Beyond the material harm that lying so often does, it also undermines the very foundation of cooperation and social intercourse. Human societies are built on trust, and reciprocity, and mutual benefits – on fairness. Lying is the ultimate zero-sum game. (White lies, where the intent is to be kind or helpful, are excepted, of course.)
So let’s consider the appalling behavior of Fox News, whose claims to being “fair and balanced” are daily mocked by the egregious lies that its prostitutes purvey. A recent, stunning example was their rush to broadcast the nonsense that started with a bogus claim by Republican Representative Michele Bachman of Minnesota that President Obama’s trip to India and Asia was costing the taxpayers $200 million a day, or $2 billion for the entire trip.
This was quickly picked up by (the well-paid) Glenn Beck on his Fox News radio show, with the additional “information” that it was a “vacation” trip and included 3000 people and 34 U.S. Navy warships (one-tenth of our entire fleet). Similar nonsense was aired elsewhere by Rush Limbaugh and Michael Savage. (The cost of a comparable trip to Africa by President Bill Clinton in 1994 was $5.2 million a day in current dollars.)
The nineteenth century British statesman Benjamin Disraeli famously remarked that “There are three kinds of lies -- lies, damned lies and statistics.” We should amend this to read: There are three kinds of lies -- lies, damned lies and Fox News.
What’s wrong with that? It happens all the time, after all. Bernie Madoff lied about his investment scheme. Enron lied about its financial performance. Many of the attack ads in this year’s mid-term elections reeked with the odor of mendacity. The Republicans also lied about the health reform law as a government “takeover.” Remember the “death panels?” Indeed, lying has become so pervasive in our society that we have long since lost our sense of outrage about it. What does it mean when lies no longer matter – or worse, are deliberately bought and sold?
I would argue that lying is fundamentally immoral, because it typically causes undeserved harm to others that is often serious and sometimes fatal. An obvious example is in a courtroom, where witnesses are sworn to tell “the truth, the whole truth and nothing but the truth.” Yet there are all too many cases, some notorious, where lies have produced wrongful verdicts that resulted in financial ruin, long prison sentences, executions and even the lynching of innocent defendants.
Beyond the material harm that lying so often does, it also undermines the very foundation of cooperation and social intercourse. Human societies are built on trust, and reciprocity, and mutual benefits – on fairness. Lying is the ultimate zero-sum game. (White lies, where the intent is to be kind or helpful, are excepted, of course.)
So let’s consider the appalling behavior of Fox News, whose claims to being “fair and balanced” are daily mocked by the egregious lies that its prostitutes purvey. A recent, stunning example was their rush to broadcast the nonsense that started with a bogus claim by Republican Representative Michele Bachman of Minnesota that President Obama’s trip to India and Asia was costing the taxpayers $200 million a day, or $2 billion for the entire trip.
This was quickly picked up by (the well-paid) Glenn Beck on his Fox News radio show, with the additional “information” that it was a “vacation” trip and included 3000 people and 34 U.S. Navy warships (one-tenth of our entire fleet). Similar nonsense was aired elsewhere by Rush Limbaugh and Michael Savage. (The cost of a comparable trip to Africa by President Bill Clinton in 1994 was $5.2 million a day in current dollars.)
The nineteenth century British statesman Benjamin Disraeli famously remarked that “There are three kinds of lies -- lies, damned lies and statistics.” We should amend this to read: There are three kinds of lies -- lies, damned lies and Fox News.
Wednesday, November 17, 2010
Our Two-Tiered Society
The Wall Street Journal yesterday reported that pre-tax total compensation for the CEOs of the top 456 American companies was up three percent during the last year, to an average of $7.23 million. Net income for these companies also doubled and shareholders’ total return was up 29 percent. Even before financial meltdown in 2008, the top one percent of the working population took home 23.5 percent of the nation’s total pretax income. Now the percentage is likely to be even higher.
Meanwhile, our “official” unemployment rate hovers at close to 10 percent, though the more realistic alternative figure, which counts the underemployed and discouraged workers, remains at about 17 percent. An estimated 25 million people are living in severe poverty. One indicator is the fact that, according to the USDA, 17.4 million families, or about 15 percent of all U.S. households, experienced hunger at some point during the past year for lack of money. Of these, 6.8 million, including one million children, missed meals “regularly.”
The Republicans and their corporate golfing buddies deny that there is any class warfare in our society. Whatever you choose to call it, the rest of us are losing out while the fat cats are getting fatter.
Meanwhile, our “official” unemployment rate hovers at close to 10 percent, though the more realistic alternative figure, which counts the underemployed and discouraged workers, remains at about 17 percent. An estimated 25 million people are living in severe poverty. One indicator is the fact that, according to the USDA, 17.4 million families, or about 15 percent of all U.S. households, experienced hunger at some point during the past year for lack of money. Of these, 6.8 million, including one million children, missed meals “regularly.”
The Republicans and their corporate golfing buddies deny that there is any class warfare in our society. Whatever you choose to call it, the rest of us are losing out while the fat cats are getting fatter.
Tuesday, November 16, 2010
Outliers
Malcolm Gladwell’s wonderful book, Outliers: The Story of Success, ought to be required reading for knee-jerk libertarians and the Ayn Rand/Grover Norquist capitalists. And all the rest of us who want to understand better the complex interplay in every success story of talent, family history, cultural traditions, opportunities, and luck (like when you were born or where you happened to grow up).
In Gladwell’s words: “Personal explanations of success don’t work. People don’t rise from nothing. We do owe something to parentage and patronage…. [People are] invariably the beneficiaries of hidden advantages and extraordinary opportunities and cultural legacies that allow them to learn and work hard and make sense of the world in ways others cannot. It makes a difference where and when we grew up. The culture we belong to and the legacies passed down by our forebears shape the patterns of our achievement in ways we cannot begin to image.” In other words, we cannot take sole credit for our achievements.
Gladwell provides many examples of the subtle advantages that many of our successful people enjoyed, from the Beatles band to computer industry pioneers like Bill Gates, Steve Jobs and Bill Joy, Canadian professional hockey players, top New York Jewish lawyers and even Gladwell’s own personal family history, which traces back to Jamaican slaves.
In short, the Horatio Alger, rags-to-riches, self-made-man myth is exactly that – a deeply ingrained and self-serving ideology that is used to rationalize unconstrained egotism and justify unlimited wealth. Bill Gates, for one, knows otherwise. As the beneficiary of a supportive family and a unique opportunity to master computer programming skills just before personal computers were perfected for the mass market, the Microsoft founder acknowledges that “I was very lucky.”
In Gladwell’s words: “Personal explanations of success don’t work. People don’t rise from nothing. We do owe something to parentage and patronage…. [People are] invariably the beneficiaries of hidden advantages and extraordinary opportunities and cultural legacies that allow them to learn and work hard and make sense of the world in ways others cannot. It makes a difference where and when we grew up. The culture we belong to and the legacies passed down by our forebears shape the patterns of our achievement in ways we cannot begin to image.” In other words, we cannot take sole credit for our achievements.
Gladwell provides many examples of the subtle advantages that many of our successful people enjoyed, from the Beatles band to computer industry pioneers like Bill Gates, Steve Jobs and Bill Joy, Canadian professional hockey players, top New York Jewish lawyers and even Gladwell’s own personal family history, which traces back to Jamaican slaves.
In short, the Horatio Alger, rags-to-riches, self-made-man myth is exactly that – a deeply ingrained and self-serving ideology that is used to rationalize unconstrained egotism and justify unlimited wealth. Bill Gates, for one, knows otherwise. As the beneficiary of a supportive family and a unique opportunity to master computer programming skills just before personal computers were perfected for the mass market, the Microsoft founder acknowledges that “I was very lucky.”
Monday, November 15, 2010
Ethical Leadership
A colleague of mine at a Midwestern college is involved in developing an undergraduate program devoted to the ethics of leadership. My reaction on hearing about this was “spot on.” This is surely one of the most important problems in our country today. Many of our recent economic and political crises are rooted in irresponsible or even corrupt leadership behavior.
Exhibit A is BP, where the root cause of the big oil spill appears to be what the New York Times calls “a culture of carelessness” – and worse, internal pressures from the top down to get a “problem well” that was behind-schedule into production even at the cost of ignoring safety concerns.
Or consider Goldman Sachs, which was secretly betting against its own clients in the run-up to the financial meltdown of 2008. Or Rupert Murdoch, whose Fox News empire daily mocks the truth and abuses the principle of freedom of the press. Or how about Bernie Madoff and his giant Ponzi scheme, which harmed many of his “friends”-- among many others. Or recall CEO Ken Lay and the criminal behavior of Enron. Or, for that matter, a President who, all the evidence suggests, did not carefully weigh the likely consequences of his decision to invade Iraq.
But for sheer chutzpah and rampant cynicism, consider the report that House Speaker in waiting (God help us) John Boehner, riding a tide of voter anger against the corruption in Washington, is reportedly getting ready to eliminate the non-partisan House Office of Congressional Ethics!
There is a line in my forthcoming book, The Fair Society, that comes to mind. It was in rebuttal to (then) British Prime Minister Margaret Thatcher’s infamous claim that there is no such thing as a society, only individuals and families. My response was that a society exists when people believe it does and act accordingly – and vice versa.
Exhibit A is BP, where the root cause of the big oil spill appears to be what the New York Times calls “a culture of carelessness” – and worse, internal pressures from the top down to get a “problem well” that was behind-schedule into production even at the cost of ignoring safety concerns.
Or consider Goldman Sachs, which was secretly betting against its own clients in the run-up to the financial meltdown of 2008. Or Rupert Murdoch, whose Fox News empire daily mocks the truth and abuses the principle of freedom of the press. Or how about Bernie Madoff and his giant Ponzi scheme, which harmed many of his “friends”-- among many others. Or recall CEO Ken Lay and the criminal behavior of Enron. Or, for that matter, a President who, all the evidence suggests, did not carefully weigh the likely consequences of his decision to invade Iraq.
But for sheer chutzpah and rampant cynicism, consider the report that House Speaker in waiting (God help us) John Boehner, riding a tide of voter anger against the corruption in Washington, is reportedly getting ready to eliminate the non-partisan House Office of Congressional Ethics!
There is a line in my forthcoming book, The Fair Society, that comes to mind. It was in rebuttal to (then) British Prime Minister Margaret Thatcher’s infamous claim that there is no such thing as a society, only individuals and families. My response was that a society exists when people believe it does and act accordingly – and vice versa.
Saturday, November 13, 2010
Free Trade?
Not any more. Tea Party backers have a point. Free trade may be killing us as a prosperous nation. During the last decade alone, we have lost 5.6 million manufacturing jobs, mostly to China, and perhaps another million service jobs to India and other countries. We have also run a trade deficit of $4.3 trillion and a foreign investment deficit of $2.74 trillion. In the next decade, senior economist Alan Blinder predicts that we could export as many as 28 to 42 million more service jobs overseas.
As Robert Lighthizer points out in the New York Times today, China is the major culprit to date (no surprise), in more ways than most of us appreciate. Not only have they been aggressive about manipulating the exchange rate of their currency to keep it artificially low against the dollar, but they have heavily subsidized their export manufacturers and have been lax in enforcing intellectual property rights that protect many American companies. They are playing to win.
Another disturbing sign, less widely appreciated, is the growing disconnect between what is happening to the American economy and the performance of the stock markets. In recent months, our markets seem to have been more sensitive to such things as the threat of inflation (and possible interest rate increases) in China, and economic growth in the emerging markets, than to economic trends in our own country. By the same token, our multi-national corporations have had robust profits, despite the economic doldrums here in the U.S. American automobile companies, for instance, have been doing quite well overseas.
The meaning of all this is that many of our most powerful corporations and wealthy individuals have less of a stake in our future as a nation and, as we have seen, less willingness to pay taxes to help our nation prosper. This is a very ominous development.
Is it too late for us to change course? We’ll never know if we don’t try. It’s time to assert the principle of “fair trade” – not just in relation to the treatment of field workers in developing countries but at all levels in the trading relationships between nations. More important, we may have to launch a trade war (though maybe not in the traditional sense) to get to a more level playing field. It’s clear that China, for one, will not back down without coercion. This is not a happy prospect, and there could be all manner of unforeseen consequences that should be carefully considered in advance. But the alternative of doing nothing may be worse.
As Robert Lighthizer points out in the New York Times today, China is the major culprit to date (no surprise), in more ways than most of us appreciate. Not only have they been aggressive about manipulating the exchange rate of their currency to keep it artificially low against the dollar, but they have heavily subsidized their export manufacturers and have been lax in enforcing intellectual property rights that protect many American companies. They are playing to win.
Another disturbing sign, less widely appreciated, is the growing disconnect between what is happening to the American economy and the performance of the stock markets. In recent months, our markets seem to have been more sensitive to such things as the threat of inflation (and possible interest rate increases) in China, and economic growth in the emerging markets, than to economic trends in our own country. By the same token, our multi-national corporations have had robust profits, despite the economic doldrums here in the U.S. American automobile companies, for instance, have been doing quite well overseas.
The meaning of all this is that many of our most powerful corporations and wealthy individuals have less of a stake in our future as a nation and, as we have seen, less willingness to pay taxes to help our nation prosper. This is a very ominous development.
Is it too late for us to change course? We’ll never know if we don’t try. It’s time to assert the principle of “fair trade” – not just in relation to the treatment of field workers in developing countries but at all levels in the trading relationships between nations. More important, we may have to launch a trade war (though maybe not in the traditional sense) to get to a more level playing field. It’s clear that China, for one, will not back down without coercion. This is not a happy prospect, and there could be all manner of unforeseen consequences that should be carefully considered in advance. But the alternative of doing nothing may be worse.
Thursday, November 11, 2010
Shared Sacrifice
The President’s deficit commission is on the right track. Fairness has to be the moral foundation if painful budget cuts and tax increases are required to put our fiscal house in order, as a nation. But fairness has three distinct elements -- equality, equity and reciprocity – that must be combined and balanced to achieve the ideal of a just society.
The most important element is equality with respect to the basic needs that we all share and that are imperatives for our survival. Whatever cuts are undertaken must not harm the poorest and most vulnerable in our society. The second element is equity. It is only fair that we should continue to reward genuine merit (and aggressively punish cheaters). We do not want to discourage initiative and achievement in our society. The third element is reciprocity, the requirement for everyone to make a proportionate contribution to the general welfare in return for the benefits they receive.
Overall, the deficit commission seems to be taking the right approach, but there is more that should be added to their list, like ending overseas tax havens for the super-rich and many of our corporations, reducing or eliminating tax subsidies for oil and gas companies, putting an end to giveaways of our natural resources, and taxing capital gains at the same rate as ordinary income, among other things.
If in the end there is a fair distribution of the sacrifices, it may also have the unexpected benefit of bringing us together around the shared purpose of doing what is right for our future as a nation.
The most important element is equality with respect to the basic needs that we all share and that are imperatives for our survival. Whatever cuts are undertaken must not harm the poorest and most vulnerable in our society. The second element is equity. It is only fair that we should continue to reward genuine merit (and aggressively punish cheaters). We do not want to discourage initiative and achievement in our society. The third element is reciprocity, the requirement for everyone to make a proportionate contribution to the general welfare in return for the benefits they receive.
Overall, the deficit commission seems to be taking the right approach, but there is more that should be added to their list, like ending overseas tax havens for the super-rich and many of our corporations, reducing or eliminating tax subsidies for oil and gas companies, putting an end to giveaways of our natural resources, and taxing capital gains at the same rate as ordinary income, among other things.
If in the end there is a fair distribution of the sacrifices, it may also have the unexpected benefit of bringing us together around the shared purpose of doing what is right for our future as a nation.
Wednesday, November 10, 2010
It’s the Demand, Stupid!
One of the perverse results of the mid-term elections (the law of self-defeating politics) is that it foreclosed any chance of doing the one thing (or at least the best thing) that might have helped to get our economy out of the doldrums.
This election was about “the economy, stupid,” to echo a famous battle cry from the 1992 Presidential election, but the Republicans don’t seem to understand that stimulating demand – putting purchasing power in the hands of consumers – is the answer, stupid. A huge amount of idle money is sloshing around on the balance sheets of our businesses and banks (and the bank accounts of the super rich), some of it being misallocated to financial investments, because the private sector is disinclined to invest in creating jobs while their sales (demand) are weak.
Now the triumphant Republicans are poised to weaken demand further (and cause all manner of “collateral damage” to people’s lives) by making drastic cuts in state budgets, perhaps $100 to $200 billion all told, plus another $100 billion in Federal budget cuts (near term). This is exactly the wrong medicine for the economy.
Meanwhile, the stock market continues to “effervesce,” thanks in part to the Federal Reserve’s decision to print $600 billion in phony money to encourage business loans and investments and keep interest rates low (a complicated policy known as “quantitative easing,” or QE2). It amounts to a “Hail Mary,” and it puts money in the wrong pockets.
You can’t pump up a balloon if air is leaking out the bottom.
So what’s the answer? We’ve known what it is ever since the Great Depression, but we seem to have a habit in this country of forgetting the lessons of the past and clinging to our ideological catechisms. Fiscal policies designed to balance government budgets by making drastic spending cuts proved to be a disaster back in the 1930s. Now we’re doing it again. As economist John Maynard Keynes and (then) Federal Reserve Chairman Marriner Eccles argued, when consumer demand is weak, the government must step in and “prime the pump.” This is in fact how the Great Depression was finally ended, and this is what the flawed Obama “stimulus package” was designed to do, but it was not nearly enough to meet the need. (A detailed account of this historical episode and a compelling case for demand-side fiscal policies today can be found in Robert Reich’s new book, After-shock.)
My own prescription, in The Fair Society, is that we should finally (65 years after it was first proposed) commit our nation to a full-employment program – a broad effort to assure that everyone willing and able to work has useful, productive employment at a “living wage.” How this would be accomplished – and paid for – is discussed in the book. Suffice it to say here that it is not an “impossible dream,” and it would ultimately pay for itself with more vigorous economic growth and increased tax revenues.
Winston Churchill once said (I’m paraphrasing here) that Americans can always be depended upon to do the right thing, after they have exhausted all the other possibilities. Let’s hope he’s right.
This election was about “the economy, stupid,” to echo a famous battle cry from the 1992 Presidential election, but the Republicans don’t seem to understand that stimulating demand – putting purchasing power in the hands of consumers – is the answer, stupid. A huge amount of idle money is sloshing around on the balance sheets of our businesses and banks (and the bank accounts of the super rich), some of it being misallocated to financial investments, because the private sector is disinclined to invest in creating jobs while their sales (demand) are weak.
Now the triumphant Republicans are poised to weaken demand further (and cause all manner of “collateral damage” to people’s lives) by making drastic cuts in state budgets, perhaps $100 to $200 billion all told, plus another $100 billion in Federal budget cuts (near term). This is exactly the wrong medicine for the economy.
Meanwhile, the stock market continues to “effervesce,” thanks in part to the Federal Reserve’s decision to print $600 billion in phony money to encourage business loans and investments and keep interest rates low (a complicated policy known as “quantitative easing,” or QE2). It amounts to a “Hail Mary,” and it puts money in the wrong pockets.
You can’t pump up a balloon if air is leaking out the bottom.
So what’s the answer? We’ve known what it is ever since the Great Depression, but we seem to have a habit in this country of forgetting the lessons of the past and clinging to our ideological catechisms. Fiscal policies designed to balance government budgets by making drastic spending cuts proved to be a disaster back in the 1930s. Now we’re doing it again. As economist John Maynard Keynes and (then) Federal Reserve Chairman Marriner Eccles argued, when consumer demand is weak, the government must step in and “prime the pump.” This is in fact how the Great Depression was finally ended, and this is what the flawed Obama “stimulus package” was designed to do, but it was not nearly enough to meet the need. (A detailed account of this historical episode and a compelling case for demand-side fiscal policies today can be found in Robert Reich’s new book, After-shock.)
My own prescription, in The Fair Society, is that we should finally (65 years after it was first proposed) commit our nation to a full-employment program – a broad effort to assure that everyone willing and able to work has useful, productive employment at a “living wage.” How this would be accomplished – and paid for – is discussed in the book. Suffice it to say here that it is not an “impossible dream,” and it would ultimately pay for itself with more vigorous economic growth and increased tax revenues.
Winston Churchill once said (I’m paraphrasing here) that Americans can always be depended upon to do the right thing, after they have exhausted all the other possibilities. Let’s hope he’s right.
Tuesday, November 9, 2010
Our Corroded Age
In an op-ed piece in The New York Times the other day, historian David Kennedy compared our turbulent politics with an equally volatile time in our history, the so-called Gilded Age of the latter nineteenth century.
The comparison is apt for more important reasons even than Prof. Kennedy mentioned. He barely alluded to the fact the Gilded Age, like our own, was marked by an unconscionable concentration of wealth at the top of the economic pyramid and mass poverty and hardship at the bottom. Booms and busts, accompanied by financial crises, were also endemic. Labor unrest was also common, and sometimes there were bloody strikes and riots.
Political theorists ever since Plato have warned us about the dangers associated with having extremes of wealth and poverty in any society. The volatility of our electoral politics in the Gilded Age was a reflection of the voters’ deep frustration with a Federal government that was in effect a captive of corporate interests and incapable of reforming a deeply inequitable economic system. The voters kept “throwing the bums out,” as Prof. Kennedy put it, in hopes that our elected representatives would get the message. It seems our modern-day politicians are just as tone deaf as their predecessors.
But there is also an important difference between our era and the latter nineteenth century. Back then America was on the rise, fulfilling its “manifest destiny” with rapid population and economic growth, technological progress and a still-expanding westward frontier. As a nation, we exuded a spirit of unlimited opportunities and confidence about the future.
Nowadays, however, the rich are continuing to get richer while more people in the middle class and working class are sinking into poverty, homelessness, and hopelessness. A once mighty industrial nation is rusting away while “cockeyed optimists” (to borrow a Broadway lyric), like New York Times columnist David Brooks, tell us our future lies with social networking and cottage industries. Too bad you can’t eat Facebook.
Meanwhile, many other developed nations are surging ahead of us across a range of economic and social indicators, from economic growth and the distribution of wealth to the percentage of college graduates (we’re now 12th) and basic health statistics like life expectancy, infant mortality, obesity, and crime and suicide rates, where we lag far behind. It could aptly be called the “Corroded Age.”
The other great lesson from the Gilded Age may be a more hopeful one. Finally, at the turn of the twentieth century, a powerful reform movement arose that was led by some of our most powerful and influential people – the so-called “progressives” – who were ultimately were able to change our politics and society for the better. There is no reason why this cannot happen again. This time around, the focus should be “The Fair Society.”
The comparison is apt for more important reasons even than Prof. Kennedy mentioned. He barely alluded to the fact the Gilded Age, like our own, was marked by an unconscionable concentration of wealth at the top of the economic pyramid and mass poverty and hardship at the bottom. Booms and busts, accompanied by financial crises, were also endemic. Labor unrest was also common, and sometimes there were bloody strikes and riots.
Political theorists ever since Plato have warned us about the dangers associated with having extremes of wealth and poverty in any society. The volatility of our electoral politics in the Gilded Age was a reflection of the voters’ deep frustration with a Federal government that was in effect a captive of corporate interests and incapable of reforming a deeply inequitable economic system. The voters kept “throwing the bums out,” as Prof. Kennedy put it, in hopes that our elected representatives would get the message. It seems our modern-day politicians are just as tone deaf as their predecessors.
But there is also an important difference between our era and the latter nineteenth century. Back then America was on the rise, fulfilling its “manifest destiny” with rapid population and economic growth, technological progress and a still-expanding westward frontier. As a nation, we exuded a spirit of unlimited opportunities and confidence about the future.
Nowadays, however, the rich are continuing to get richer while more people in the middle class and working class are sinking into poverty, homelessness, and hopelessness. A once mighty industrial nation is rusting away while “cockeyed optimists” (to borrow a Broadway lyric), like New York Times columnist David Brooks, tell us our future lies with social networking and cottage industries. Too bad you can’t eat Facebook.
Meanwhile, many other developed nations are surging ahead of us across a range of economic and social indicators, from economic growth and the distribution of wealth to the percentage of college graduates (we’re now 12th) and basic health statistics like life expectancy, infant mortality, obesity, and crime and suicide rates, where we lag far behind. It could aptly be called the “Corroded Age.”
The other great lesson from the Gilded Age may be a more hopeful one. Finally, at the turn of the twentieth century, a powerful reform movement arose that was led by some of our most powerful and influential people – the so-called “progressives” – who were ultimately were able to change our politics and society for the better. There is no reason why this cannot happen again. This time around, the focus should be “The Fair Society.”
Deficit Hawks
A breed of Republicans that most people thought had died off during the profligate years of the Bush Administration, (when there were unfunded mandates for tax cuts, wars, and Medicare drug benefits, among other things), are now back in vogue.
Egged on by the triumphs of the Tea Party, these new merchants of fiscal rectitude want to lower taxes while taking the axe to government spending in as yet unspecified ways. But one hint came from Senator Jim DeMint of South Carolina, who thinks Federal government wages should be cut. He claims these “bureaucrats” make much more than comparable workers in the private sector.
Actually, that’s only true in some quarters, but it’s hardly the case for Fortune 500 companies. If Senator DeMint and the Republicans are serious about this, I wonder if they will also impose pay cuts on their own salaries. And how about the legion of civilian employees working for the military? Or the many government contractors, from Boeing to Halliburton, whose employees are, in effect, supported by the taxpayers and our mounting deficits? Or is it only the “small people” (as the BP chairman famously put it), that should take pay cuts?
All this budget cutting talk is either one of two things: cheap political rhetoric as usual or another economic disaster in the making.
Egged on by the triumphs of the Tea Party, these new merchants of fiscal rectitude want to lower taxes while taking the axe to government spending in as yet unspecified ways. But one hint came from Senator Jim DeMint of South Carolina, who thinks Federal government wages should be cut. He claims these “bureaucrats” make much more than comparable workers in the private sector.
Actually, that’s only true in some quarters, but it’s hardly the case for Fortune 500 companies. If Senator DeMint and the Republicans are serious about this, I wonder if they will also impose pay cuts on their own salaries. And how about the legion of civilian employees working for the military? Or the many government contractors, from Boeing to Halliburton, whose employees are, in effect, supported by the taxpayers and our mounting deficits? Or is it only the “small people” (as the BP chairman famously put it), that should take pay cuts?
All this budget cutting talk is either one of two things: cheap political rhetoric as usual or another economic disaster in the making.
Monday, November 8, 2010
Fear and Compassion
There is a line in the recent movie, “Amazing Grace” (about William Wilberforce and the campaign to abolish the slave trade in England decades before our Civil War), that really seemed to me to illuminate the underlying psychodynamics of our own angry era. “When [people] stop being afraid, they rediscover their compassion.”
Indeed, people who are experiencing great personal stress and anxiety tend to become self-absorbed, self-protective, and indifferent or even hostile to the needs and suffering of others. And when whole societies are under severe stress, this can lead to various forms of collective irrationality – and brutality. Witness such aberrations as the short, barbaric reign of Pol Pot and the Khmer Rouge in the former Cambodia, which led to the wholesale slaughter of some 20 percent of the country's population, or the genocidal civil wars that destroyed the former Yugoslavia. Or, most tragic of all, the rise and fall of Hitler and the Nazis in the defeated and deeply depressed post-World War I Germany.
The great lesson here, is that we must come to grips with the underlying cause of our societal angst – an economy that was already failing the middle and working classes in this country even before the current recession. If we do not, we will have more political opportunists, like the merchants of hatred who daily barrage us with lies and demagoguery, and we will continue to be susceptible to the rationalizations of the super-rich, who will exploit our anxiety and anger to advance their self-interests. And we will also see a withering of the compassion that is needed to aid those who are unemployed, and homeless, and hungry.
To modify a line from FDR, we have more to fear than fear itself. We must fear the causes of fear.
Indeed, people who are experiencing great personal stress and anxiety tend to become self-absorbed, self-protective, and indifferent or even hostile to the needs and suffering of others. And when whole societies are under severe stress, this can lead to various forms of collective irrationality – and brutality. Witness such aberrations as the short, barbaric reign of Pol Pot and the Khmer Rouge in the former Cambodia, which led to the wholesale slaughter of some 20 percent of the country's population, or the genocidal civil wars that destroyed the former Yugoslavia. Or, most tragic of all, the rise and fall of Hitler and the Nazis in the defeated and deeply depressed post-World War I Germany.
The great lesson here, is that we must come to grips with the underlying cause of our societal angst – an economy that was already failing the middle and working classes in this country even before the current recession. If we do not, we will have more political opportunists, like the merchants of hatred who daily barrage us with lies and demagoguery, and we will continue to be susceptible to the rationalizations of the super-rich, who will exploit our anxiety and anger to advance their self-interests. And we will also see a withering of the compassion that is needed to aid those who are unemployed, and homeless, and hungry.
To modify a line from FDR, we have more to fear than fear itself. We must fear the causes of fear.
The Fair Society: A Fantasy
Imagining what could be – and should be – is the essential first step toward achieving any “impossible dream.” It's always the starting point for reform. So why not dream of a fair society – the subject of my forthcoming book, The Fair Society – as an alternative to a failing system? Let’s have a go at it.
First, we need to replace the institutionalized incompetence of the existing political system with a focused, and empowered, reform movement that has a clear agenda. (This is no small task. It’s discussed further in the book.)
A high priority would be a set of “structural” reforms in a system of government that has become a major obstacle to good government. These would include total public financing of national (and ultimately state) elections and a ban on the use of private money. It would also include scaling back the rampant use of the filibuster rule in the Senate, say by circumscribing the allowable uses and lowering the threshold to 57 votes. (An argument can be made for ensuring that major legislation like the health reform law must achieve an “extraordinary” majority as a check on transcient impulses.)
Another structural reform would be to “pack” the Supreme Court, as FDR proposed to do in 1937. If the number of Justices were increased from nine to eleven, or even thirteen, and if there were a mandatory retirement age, say 70, this would have the effect of increasing the turnover on the Court, so that it would not tend to become so out of step with our changing times. (Of course, this would require a Constitutional amendment.)
Equally important, needless to say, are a series of substantive reforms to eliminate the gross economic inequities, and outright corruption, in our economy and to revive a battered and sclerotic nation. (We have the highest income disparity and the highest poverty rates of any industrialized country.)
Here are a few of the reforms discussed in The Fair Society. A national full employment program (an important, untried idea that goes back to the 1940s), coupled with a system of publicly funded, high-quality child care (as some other industrialized nations do), a single payer health insurance system (i.e., Medicare for all), which would at a stroke save at least 30 percent in our national health care expenses, a single payer education system that would provide free public funding for education (and a level playing field) through high school, vocational schools and perhaps even higher education (again, as some European countries do), sharp cutbacks in the military pork barrel (excluding essential defense spending, of course), and much-needed upgrades to our tattered safety net.
Finally, we urgently need a top-to-bottom reform of our monstrous, 16,000-page tax code, which Time columnist Fareed Zakaria calls “institutionalized corruption.” This would include such things as eliminating special “earmark” provisions for law makers’ constituents, cutting subsidies for highly profitable industries like oil and gas and industrial agriculture, eliminating the favored tax treatment for capital gains over ordinary income, disallowing tax deductions for mortgage interest on “second homes” and equity line credit cards, requiring hedge fund managers to pay the full tax rates applicable to everyone else, and much more. But perhaps most important would be a return to a more progressive tax system, where the very wealthy pay a larger share of the taxes that are required if we are to have a civilized and fair society.
As I said at the beginning, it all sounds like an impossible dream. It’s worth remembering, though, that this is a dream only in our own country. An important recent book by Steven Hill of the New America Foundation, Europe’s Promise, details how European countries are generally far ahead of us in ensuring a high standard of living for their citizens. Hill calls it “social capitalism.” Others refer to it as “welfare capitalism.” It involves a strong commitment to the economic and social well being of a society as a whole, and the results are evident across range of social indicators, from life expectancy and infant mortality to poverty levels, educational outcomes, divorce and crime rates and much more. Sad to say, we rank far below these countries in such measures.
So, we know that it’s not an impossible dream. It already exists elsewhere, and we can clearly see the benefits for the general welfare – if only we can open our eyes – and act on what we see.
First, we need to replace the institutionalized incompetence of the existing political system with a focused, and empowered, reform movement that has a clear agenda. (This is no small task. It’s discussed further in the book.)
A high priority would be a set of “structural” reforms in a system of government that has become a major obstacle to good government. These would include total public financing of national (and ultimately state) elections and a ban on the use of private money. It would also include scaling back the rampant use of the filibuster rule in the Senate, say by circumscribing the allowable uses and lowering the threshold to 57 votes. (An argument can be made for ensuring that major legislation like the health reform law must achieve an “extraordinary” majority as a check on transcient impulses.)
Another structural reform would be to “pack” the Supreme Court, as FDR proposed to do in 1937. If the number of Justices were increased from nine to eleven, or even thirteen, and if there were a mandatory retirement age, say 70, this would have the effect of increasing the turnover on the Court, so that it would not tend to become so out of step with our changing times. (Of course, this would require a Constitutional amendment.)
Equally important, needless to say, are a series of substantive reforms to eliminate the gross economic inequities, and outright corruption, in our economy and to revive a battered and sclerotic nation. (We have the highest income disparity and the highest poverty rates of any industrialized country.)
Here are a few of the reforms discussed in The Fair Society. A national full employment program (an important, untried idea that goes back to the 1940s), coupled with a system of publicly funded, high-quality child care (as some other industrialized nations do), a single payer health insurance system (i.e., Medicare for all), which would at a stroke save at least 30 percent in our national health care expenses, a single payer education system that would provide free public funding for education (and a level playing field) through high school, vocational schools and perhaps even higher education (again, as some European countries do), sharp cutbacks in the military pork barrel (excluding essential defense spending, of course), and much-needed upgrades to our tattered safety net.
Finally, we urgently need a top-to-bottom reform of our monstrous, 16,000-page tax code, which Time columnist Fareed Zakaria calls “institutionalized corruption.” This would include such things as eliminating special “earmark” provisions for law makers’ constituents, cutting subsidies for highly profitable industries like oil and gas and industrial agriculture, eliminating the favored tax treatment for capital gains over ordinary income, disallowing tax deductions for mortgage interest on “second homes” and equity line credit cards, requiring hedge fund managers to pay the full tax rates applicable to everyone else, and much more. But perhaps most important would be a return to a more progressive tax system, where the very wealthy pay a larger share of the taxes that are required if we are to have a civilized and fair society.
As I said at the beginning, it all sounds like an impossible dream. It’s worth remembering, though, that this is a dream only in our own country. An important recent book by Steven Hill of the New America Foundation, Europe’s Promise, details how European countries are generally far ahead of us in ensuring a high standard of living for their citizens. Hill calls it “social capitalism.” Others refer to it as “welfare capitalism.” It involves a strong commitment to the economic and social well being of a society as a whole, and the results are evident across range of social indicators, from life expectancy and infant mortality to poverty levels, educational outcomes, divorce and crime rates and much more. Sad to say, we rank far below these countries in such measures.
So, we know that it’s not an impossible dream. It already exists elsewhere, and we can clearly see the benefits for the general welfare – if only we can open our eyes – and act on what we see.
Saturday, November 6, 2010
The Meaning of it All?
In the after-myth of this “historic” election, many explanations have been advanced to account for what happened. There is some truth to the charge that the health reform initiative was badly managed by the Democrats. And maybe they overreached with what they believed was a mandate for progressive “change.”
It’s equally true that the health reform measure, and much else passed by the current Congress, was systematically slimed by the Republicans (“a failure,” “anti-American,” “socialism” “death panels,” “Armageddon”), and by their allies at Fox News. The filibuster rule in the Senate, which makes 60 votes the new norm for any significant piece of legislation, also shares the blame. Corporate money, in the tens of millions of dollars, also influenced the election outcome.
However, it is likely that the deep public angst about the recession also played an important role. Many people simply voted for a course change. As Curtis Gans, director of the Center for the Study of the American Electorate observed, it was a mandate for going in a better direction. This helps to explain some of the ambiguous poll results. In exit polls, 39 percent wanted deficit reductions and 37 percent wanted more spending on job creation. Only 40 percent favored extending the Bush tax cuts for the wealthy, while 60 percent opposed it. Other polls have shown that the public has historically low expectations for Congress generally, with an even lower opinion of Republicans than of Democrats.
So the overall meaning of the election results would seem to be that neither party has a mandate for more of what they have been doing in the past. It also implies much more radical changes than either of them has been willing to sign on for to date. I have a few suggestions. (To be continued.)
It’s equally true that the health reform measure, and much else passed by the current Congress, was systematically slimed by the Republicans (“a failure,” “anti-American,” “socialism” “death panels,” “Armageddon”), and by their allies at Fox News. The filibuster rule in the Senate, which makes 60 votes the new norm for any significant piece of legislation, also shares the blame. Corporate money, in the tens of millions of dollars, also influenced the election outcome.
However, it is likely that the deep public angst about the recession also played an important role. Many people simply voted for a course change. As Curtis Gans, director of the Center for the Study of the American Electorate observed, it was a mandate for going in a better direction. This helps to explain some of the ambiguous poll results. In exit polls, 39 percent wanted deficit reductions and 37 percent wanted more spending on job creation. Only 40 percent favored extending the Bush tax cuts for the wealthy, while 60 percent opposed it. Other polls have shown that the public has historically low expectations for Congress generally, with an even lower opinion of Republicans than of Democrats.
So the overall meaning of the election results would seem to be that neither party has a mandate for more of what they have been doing in the past. It also implies much more radical changes than either of them has been willing to sign on for to date. I have a few suggestions. (To be continued.)
Friday, November 5, 2010
This is Going to Get Ugly!
It seems the war has only just begun. The House Speaker in waiting, John Boehner, has declared war on the health reform “monstrosity” (even though voters split 48-47 percent in exit polls on repeal versus support or even expansion, and that doesn’t include the opinions of those who didn’t vote). Given the fact that the Democrats still control the Senate and the White House, Boehner will most likely try for now to “starve the beast” (a long-time conservative strategy) by denying it funding and will blame the Democrats for causing “gridlock.”
It has also been reported that Boehner will seek $100 billion (yes billion) in immediate cuts to “discretionary spending” (read health, education and welfare programs that are targeted to the poor and middle class) and will seek to repeal the $550 billion in Medicare cuts that, it should be emphasized, do not affect retiree benefits but involve an extra, unearned bonus to private insurers for the Bush era Medicare Advantage program. So there will be more “gridlock.”
There is perfect fiscal consistency here: tax cuts for the rich and bonuses for the insurance companies (and their shareholders) would be offset with spending cuts for the rest of us.
It has also been reported that Boehner will seek $100 billion (yes billion) in immediate cuts to “discretionary spending” (read health, education and welfare programs that are targeted to the poor and middle class) and will seek to repeal the $550 billion in Medicare cuts that, it should be emphasized, do not affect retiree benefits but involve an extra, unearned bonus to private insurers for the Bush era Medicare Advantage program. So there will be more “gridlock.”
There is perfect fiscal consistency here: tax cuts for the rich and bonuses for the insurance companies (and their shareholders) would be offset with spending cuts for the rest of us.
Thursday, November 4, 2010
Take Home Lessons
As usual, the Republicans and the Democrats have drawn very different “lessons” from the mid-term election earthquake. Both are wrong, in my view.
The Republicans, of course, are claiming a mandate for their long-time agenda -- lower taxes and “smaller government.” Also high on their agenda is reducing the “burden” of government regulations, but their special target is the new health reform measure. As the House Speaker in waiting, John Boehner (who says he is listening to the voters), expressed it yesterday:
“I believe that the health care bill that was enacted by the current Congress will kill jobs in America, ruin the best health care system in the world and bankrupt our country…That means that we have to do everything we can to try to repeal this bill, and replace it with common-sense reforms that will bring down the cost of health insurance.” Earlier in the day, Mr. Boehner called the health care law a “monstrosity.” Back when it passed, he also called it “Armageddon,” you may recall.
The Democrats, by contrast, say they expected to be punished for the bad economy and the bank bailouts (which were enacted under President Bush and actually worked; almost all of the money has been paid back). President Obama thinks he did not do a good enough job of “communicating” on the stimulus package and the health care law. Democrats also believe that the recent Supreme Court decision, which opened the floodgates to corporate money in politics, played an important role in many races, where vulnerable Democrats were targeted. But there are no regrets about the stimulus package, the health care reform law or the new regulations imposed on the financial industry. In fact, these have been widely libeled by the Republicans. Many American’s are misinformed about them. (For instance, 40 percent of the stimulus package consisted of tax cuts, and most economists think it made a big difference; things would have been much worse.)
If there are shards of truth in both of these sets of rationalizations, they both miss the central message of the election, I believe. What the exit polls and other recent public opinion surveys indicate, is that the outcome was mostly a protest vote against the failure of both parties to address effectively the broad economic crisis in this country, which is cutting deep into the well being and future prospects for the middle class. It was about that “giant sucking sound” of outsourcing (as the failed third party candidate Ross Perot put it back in 1992), which continues to drain good jobs from this country. It was about a wasteland of unemployment, underemployment and spreading poverty. It was about the home foreclosure nightmare that has gutted the American Dream. And it was about a government (Republicans and Democrats included) that is a captive of powerful corporations and banks.
The voters (and the many more who did not vote) think that our government is broken, but they have only two words in their vocabulary, “yes” and “no”. Since the Democrats were overwhelmingly in the majority over the past two years, many voters simply voted “no” by voting against any candidate with a “D” next to his/her name. What nobody voted for is what we are likely to get for the next two years: posturing, partisan warfare, and political gridlock. Worse, we are likely to see the Republicans do whatever they can to weaken and undermine the health care and financial reforms. The oligarchs will get what they paid for in this election. Meanwhile, the economy will continue to struggle with “structural unemployment” and the suffering will go on.
The Republicans, of course, are claiming a mandate for their long-time agenda -- lower taxes and “smaller government.” Also high on their agenda is reducing the “burden” of government regulations, but their special target is the new health reform measure. As the House Speaker in waiting, John Boehner (who says he is listening to the voters), expressed it yesterday:
“I believe that the health care bill that was enacted by the current Congress will kill jobs in America, ruin the best health care system in the world and bankrupt our country…That means that we have to do everything we can to try to repeal this bill, and replace it with common-sense reforms that will bring down the cost of health insurance.” Earlier in the day, Mr. Boehner called the health care law a “monstrosity.” Back when it passed, he also called it “Armageddon,” you may recall.
The Democrats, by contrast, say they expected to be punished for the bad economy and the bank bailouts (which were enacted under President Bush and actually worked; almost all of the money has been paid back). President Obama thinks he did not do a good enough job of “communicating” on the stimulus package and the health care law. Democrats also believe that the recent Supreme Court decision, which opened the floodgates to corporate money in politics, played an important role in many races, where vulnerable Democrats were targeted. But there are no regrets about the stimulus package, the health care reform law or the new regulations imposed on the financial industry. In fact, these have been widely libeled by the Republicans. Many American’s are misinformed about them. (For instance, 40 percent of the stimulus package consisted of tax cuts, and most economists think it made a big difference; things would have been much worse.)
If there are shards of truth in both of these sets of rationalizations, they both miss the central message of the election, I believe. What the exit polls and other recent public opinion surveys indicate, is that the outcome was mostly a protest vote against the failure of both parties to address effectively the broad economic crisis in this country, which is cutting deep into the well being and future prospects for the middle class. It was about that “giant sucking sound” of outsourcing (as the failed third party candidate Ross Perot put it back in 1992), which continues to drain good jobs from this country. It was about a wasteland of unemployment, underemployment and spreading poverty. It was about the home foreclosure nightmare that has gutted the American Dream. And it was about a government (Republicans and Democrats included) that is a captive of powerful corporations and banks.
The voters (and the many more who did not vote) think that our government is broken, but they have only two words in their vocabulary, “yes” and “no”. Since the Democrats were overwhelmingly in the majority over the past two years, many voters simply voted “no” by voting against any candidate with a “D” next to his/her name. What nobody voted for is what we are likely to get for the next two years: posturing, partisan warfare, and political gridlock. Worse, we are likely to see the Republicans do whatever they can to weaken and undermine the health care and financial reforms. The oligarchs will get what they paid for in this election. Meanwhile, the economy will continue to struggle with “structural unemployment” and the suffering will go on.
Wednesday, November 3, 2010
Hearing Voices in the Air
In his tearful moment of triumph last night, the presumptive new House Speaker, John Boehner, told us that the Republicans are listening carefully to what the American people are saying.
Well, apart from the ones who have been brainwashed by Fox News and by the barrage of Republican lies over the past two years, what about the overwhelming majority of Americans in various public opinion surveys who do not want tax cuts for the rich to be extended, who do not want the health reform bill to be gutted or repealed, who favor immigration reform, who believe that global climate change is real and that we should be doing more about it, and who will not take kindly to having the Republicans play subpoena politics to harass the Obama administration.
Many things can be said about this election, but the anger that fueled the Republican resurgence was not about coddling fat cats, protecting the bonuses of investment bankers, decimating the safety net, or becoming born again global warming deniers for the Koch brothers. Progressive policies are still overwhelmingly favored by the public. Remember that the roughly 40 percent of the electorate who voted this time were more conservative leaning overall. The other 60 percent, unfortunately, were not represented in the results.
So another lesson of the election is this: You are more likely to get what you don’t bother to vote against.
Well, apart from the ones who have been brainwashed by Fox News and by the barrage of Republican lies over the past two years, what about the overwhelming majority of Americans in various public opinion surveys who do not want tax cuts for the rich to be extended, who do not want the health reform bill to be gutted or repealed, who favor immigration reform, who believe that global climate change is real and that we should be doing more about it, and who will not take kindly to having the Republicans play subpoena politics to harass the Obama administration.
Many things can be said about this election, but the anger that fueled the Republican resurgence was not about coddling fat cats, protecting the bonuses of investment bankers, decimating the safety net, or becoming born again global warming deniers for the Koch brothers. Progressive policies are still overwhelmingly favored by the public. Remember that the roughly 40 percent of the electorate who voted this time were more conservative leaning overall. The other 60 percent, unfortunately, were not represented in the results.
So another lesson of the election is this: You are more likely to get what you don’t bother to vote against.
Soak the Rich? Hell No!
Senator-elect Rand Paul of Kentucky, one of the stars of the Tea Party movement, gave us a taste last night of what lies ahead. Will we never learn?
When asked by CNN’s Wolf Blitzer if he would support the proposal to end the Bush Tax cuts for the top income earners, at an estimated savings to the Treasury of $700 billion over the next ten years, Paul said absolutely not because it would hurt all the rest of us. “This country’s integrated. We’re all tied together…People either work for the rich, or they sell things to the rich.” In other words, it’s in our best interest to let the rich get richer, so that more of us can either work for them or sell things to them.
Here’s a prediction for the next two years (call it the three Ps): Posturing, partisan warfare, and political gridlock. It may be time to re-boot our system.
When asked by CNN’s Wolf Blitzer if he would support the proposal to end the Bush Tax cuts for the top income earners, at an estimated savings to the Treasury of $700 billion over the next ten years, Paul said absolutely not because it would hurt all the rest of us. “This country’s integrated. We’re all tied together…People either work for the rich, or they sell things to the rich.” In other words, it’s in our best interest to let the rich get richer, so that more of us can either work for them or sell things to them.
Here’s a prediction for the next two years (call it the three Ps): Posturing, partisan warfare, and political gridlock. It may be time to re-boot our system.
Tuesday, November 2, 2010
Soak the Rich?
It would seem to be a no-brainer that the Bush tax cuts for the super-rich should be allowed to expire at a time when we have a Grand Canyon of budget deficits and when the income of the rich is still gushing upwards despite the recession. (Last year, Goldman Sachs paid an average of $600,000 in bonuses to each of its employees, a company record.)
The Republican argument that a “tax increase” at the top of the economic pyramid would hurt the (non) recovery is nonsense. As the billionaire George Soros pointed out in the New York Review of Books this week, the super-rich won’t spend the extra money. They will simply add it to their “liquidity” instead of using it to stimulate the economy. “So the common interest will be sacrificed to the special interest of the top 2 percent,” Soros concluded. “This is truly tragic.”
The Republican argument that a “tax increase” at the top of the economic pyramid would hurt the (non) recovery is nonsense. As the billionaire George Soros pointed out in the New York Review of Books this week, the super-rich won’t spend the extra money. They will simply add it to their “liquidity” instead of using it to stimulate the economy. “So the common interest will be sacrificed to the special interest of the top 2 percent,” Soros concluded. “This is truly tragic.”
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