Bob Herbert is thrilled that we will finally have a president who "gets it" when it comes to job creation:
The idea that the nation had all but stopped investing in its infrastructure, and that officials in Washington have ignored the crucial role of job creation as the cornerstone of a thriving economy is beyond mind-boggling. It's impossible to understand.
Impossible, that is, until you realize that bandits don't waste time repairing a building that they're looting.
This nails it exactly, I think. After all, it wasn't Markos, or Chris, or Matt, or David, or even me who called the Bush Administration budgets "a kind of looting." It was Nobel Prize-winning economist George Akerlof. But, by the same token, getting this basic fact and pledging up front to take significant action on it does not equate to being a progressive. Heck, there was a time when someone might have cited this as evidence of being a proud, far-sighted, but sober-minded American conservative.
More importantly, perhaps, given how confused folks have gotten about labels lately, this pledge is not enough to make sense economically, in terms of basic economic justice. Which is why we need to raise the bar in terms of what we should expect from Obama. Without more details, this could be just be a different--albeit much more responsible--way to make wealthy Americans even wealthier, using taxpayer money. This was explained by economic analyst and historian Michael Hudson explained on Democracy Now! this morning, as part of a powerhouse interview also including Robert Kuttner and Naomi Klein. As Hudson explained, multi-billion dollar infrastructure investments routinely increase nearby property values by considerably more than the cost of such public investments:
AMY GOODMAN: Michael Hudson, at least when he is talking about infrastructure, is he talking about mass transportation?
MICHAEL HUDSON: Largely that.
AMY GOODMAN: I mean, as opposed to highways and roads, and actually mass transit?
MICHAEL HUDSON: That is certainly the key. Mass-transit and almost every country creates an increase in real estate values along the routes that could actually rental that is increased by this could actually finance the entire transport system. In London when they built the tube extension to their financial district of the loop, they created 13 billion pounds worth of increased in real estate value. The tube itself cost only $8 billion. They left this $13 billion real estate value in the hands of the private landlords. Same thing in Chicago in the US. It can be a very heavy investment in mass transportation here. This is going to create enormous real-estate values. The tax system, leaves these in private hands. I think all of the tax proposals that Mr. Obama have spoken about, have to do with income tax primarily. The rich people prefer not to earn income. They prefer to make capital gains. So the intention of the economic gain that Mr. Obama brought in is really to create a huge capital gains economy. Even more disparity of wealth while leaving in place the one thing that should address in the last year and that is the enormous debt overhead. Nothing is happening on that. He is adding to debt, not reducing it.
Hudson has been an economic advisor to Dennis Kucinich, and he writes books with words like "imperialism" in their titles, so I don't expect Obama to name him as a top economic advisor. But Hudson does have a point, and the fact that he makes it-while virtually no one else does-underscores something vital at the heart of the debate about the sorts of advisors Obama is appointing: without some who thinks about such things in the room, the idea of creating equity among the beneficiaries of large-scale investments will not even be raised in a rigorous fashion.
This is one very concrete reason why it matters whether or not you have progressives in the top ranks of Obama advisors. There are very real, very pragmatic consequences to excluding people on the basis of "ideology." Without such advocates for the economic interests of the broad mass of people, the vast majority of the benefits flowing from Obama's substantial infrastructure initiatives may be expected to flow to the already wealthy, much the same way that Bush's tax cuts primarily benefited that same group.
Of course, the infrastructure will be beneficial in and of itself. But if tens of millions of people will not only pay for it with their taxes, and then pay for it again with higher rents, or costlier mortgages, while a relative handful of wealthy real estate investors, land speculators and the like pocket literally billions of dollars, then it should not be hard to see how this doesn't exactly qualify as government for the people, of the people and by the people. Nor should it be hard to see why people might not keep voting Democratic in eternal gratitude for such an outcome.
This gets back to the great contradiction between the world's-eye-view and the Versailles view of things: In the Versailles view, progressives are "extremists" who are "beyond the pale," whose ideas will quickly lose Democrats all the power they've worked so hard to win. In the real world, however, it's precisely the popular "extremist" views that progressives espouse which makes them more popular than "pragmatic" centrists, who differ relatively little from their Republican counterparts.
So which one is really pragmatic, after all?
Update/Recap: What I'm saying, essentially, is that if you capture the externalized benefits, rather than letting wealthy speculators, investors and others pocket it for themselves, then large infrastructure projects can literally pay for themselves, leaving the construction profits, jobs and all the multpilier effects as pure gravy. It is, in fact, the legendary non-existent free lunch made manifest.
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