Opening yesterday's show, Rachel Maddow devoted a good deal of detailed argument to making the point that the Republican Party is deeply committed to the culture wars, even as it pretends to be all about the economy. Given how this conflicts with the existing conventional wisdom--and how much evidence there is to support it, it's an important argument to make. Here's the first part of her opening segment--before she calls on Michael Steele as her guest to discuss it. But I would take this argument even farther: I would argue that the way Republicans are approaching the economy is itself an extension of the culture wars. First, here's Rachel:
Now consider these facts about how Republicans have approached the economy:
(1) The GOP has abandoned the traditional bipartisan support for unemployment insurance, and now are arguing that unemployed workers are lazy and shiftless--the same sorts of attributions traditionally made toward minorities during times when white workers are near full employment, but not made during times of general recession and high unemployment are now being made about all workers during a time of extraordinarily high unemployment. (For example, in Why Americans Hate Welfare: Race, Media, and the Politics of Antipoverty Policy, Martin Gilens presented the results of a survey of photo-representations of the unemployed, and found that during recessions and the following periods of high unemployment there were far more white people pictured than otherwise.)
(3) As described in Tuesday's diary, "GOP: Obama won't be crazy enough on cutting spending in SOTU", current GOP attitudes, not only opposing Keyensian spending policies, but also Friedmanite monetary expansion, have roots in late 19th Century culture war politics valorizing the gold standard and treating paper money as a corrupting influence. From Mike Konczal, as quoted in that diary:
Paper money decreases the power of the husband over his wife and the father over his family, loosens the natural leadership that serves as the best protection against "effeminate" manners, and gives us a democracy without nobility.
Which is to say, if you are a person who tends to use a capital N "Natural" to describe your political ideology ("I believe in a Natural Order with a Natural Hierarchy, which I get from my engagement with Natural Rights as observed through Natural Law...."), as many conservatives do, then you are going to be likely to think that the dollar is a Natural Thing too. Like women wearing pants and voting, any attempt to disrupt the Natural Order is going to be dangerous. That the value of a dollar is a social creation, and that if there is excessive demand for money the government should provide extra supply for money, isn't going to be a convincing argument.
There are more examples, of course. But these indicative examples should suffice to show why you shouldn't expect any sort of rational debate on economic matters--thay've all been swallowed up and incorporated into the culture wars.
The Economist, Great Britain's magazine for the American elite, recently published a special report on Latin America. While the magazine noted the continuing challenges facing Latin America, it also perceived that Latin America has made great strides in the past decade. This has especially been the case with reducing inequality, a perpetual curse of that region in the world - and perhaps the greatest obstacle to economic advancement in Latin America.
In doing this, The Economist published the following table:
This chart should be ingrained in the mind of anybody who cares about fiscal policy. The main things to note:
Federal taxes are the lowest in 60 years, which gives you a pretty good idea of why America's long-term debt ratios are a big problem. If the taxes reverted to somewhere near their historical mean, the problem would be solved at a stroke.
Income taxes, in particular, both personal and corporate, are low and falling. That trend is not sustainable.
Employment taxes, by contrast-the regressive bit of the fiscal structure-are bearing a large and increasing share of the brunt. Any time that somebody starts complaining about how the poor don't pay income tax, point them to this chart. Income taxes are just one part of the pie, and everybody with a job pays employment taxes.
There aren't any wealth taxes, but the closest thing we've got-estate and gift taxes-have shrunk to zero, after contributing a non-negligible amount to the public fisc in earlier decades.
If you were structuring a tax code from scratch, it would look nothing like this. But the problem is that tax hikes seem to be politically impossible no matter which party is in power. And since any revamp of the tax code would involve tax hikes somewhere, I fear we're fiscally doomed.
We need not have been doomed had Barack Obama (a) understood this simple situation coming in, and (b) had the least bit of inclination to take on the ogilopolies in particular (especially high finance, the medical-industrial complex, the military-industrial complex and the fossil fuel industry), and selfish super-rich in general. The fact that such a candidate with such a message of unity to face and solve our problems could be elected should not be forgotten or ignored simply because he turned out to be such a spectacular disappointment. The American people still have the will for national greatness in them. It's the leadership that's wanting.
But tax structure isn't the only problem. There's also the problem of employment, of jobs, which brings us to this chart:
Germany is a power on the rise. Unlike much of the Western world, the country's economy is humming along as if the Great Recession had never even happened. Indeed, in the last quarter German GDP grew by a heady 2.2.%. This was the highest growth rate since the Berlin Wall fell two decades ago.
German employment is also holding up. At 7.6% in August 2010, German unemployment is actually lower than it was before the Great Recession. For those familiar with the depressing figures of American unemployment, this is quite shocking. How did Germany do it?
With reckless behavior by the lords of finance now given the blessing of the government, the big question is not whether the era of bubbles is past but where the next one is being inflated. The pump of choice may have already been selected.
So if you've been following my work lately, you know that there is a renewed effort underway to change Social Security, and that the fight officially began just this very morning.
Now what's supposed to happen is that a television ad buy sponsored by a Wall Street billionaire is supposed to get you enthused about cutting your own Social Security benefits in the future; this is the tip of a "disinformation iceberg" that is trying to get you to act, right now, because if you don't you will never, ever, ever, ever, see a single dime of Social Security when you get older.
I was on a "let's talk strategy" conference call today that laid out some ideas for the "next steps"; we'll be talking about that call over the next couple of stories...but for today, we're going to talk about something you can do that will bring the message right to your favorite Member of Congress.
It is my job to bring to you not just the news that took place, but the news that has yet to happen.
Today, that's exactly what we have.
There is a war coming to try to change Social Security from a social safety net to a "revenue stream" for certain corporate interests, and that war is set to begin Tuesday morning, according to information that was provided to me yesterday afternoon.
Follow along, and you'll be both forewarned and forearmed.
Efficiency enjoys a nearly spotless reputation. Business leaders invoke it to justify activities that would otherwise be frowned upon, while politicians use it to explain why policy must follow their pet theories. Its limitations are once again being laid bare for anyone who cares to see, however.
With the election over, it's time to move on to new things, and the folks at the Campaign for America's Future have asked me to do some writing about Social Security, which sounds like some big fun, so here we are.
We're going to start with some reasonably simple stuff today, just to get your feet wet; by the time we get a few stories down the road there will be some complicated economic analysis to work through-but let's begin today by looking a bit south.
Those who support privatizing Social Security in this country often point to Chile as an example we could follow, and that seems like a good place to get the conversation going...so set your personal WayBack Machine to Santiago, May, 1981, and let's see what we can learn.
When all is said and done, this is what today is all about:
Not sure where to vote? This can help (but see note below):
Note: When I first tested this with my address, including state (CA), it didn't work properly, ignoring my street address & placing me at the zero address on my street. But playing around a bit, I entered my address without the state, and that worked--although there was an intermediate step required to tell it which state.
The Opportunity Agenda has created a series of tools for advocates and policymakers to use as they advocate for equal opportunity in the economic recovery process.
Quite frankly, there is not much of a choice here: if you don't vote, you will condemn us to changes in our country that will be hard to live with and harder to overcome in the future.
For instance, Republican Senate candidates Linda McMahon in Connecticut, Rand Paul in Kentucky, John Raese in West Virginia, and Dino Rossi in Washington have all pledged to roll back or eliminate the minimum wage.
Sharron Angle in Nevada, Ken Buck in Colorado, and Pat Toomey in Pennsylvania have all talked about privatizing Social Security - or eliminating it altogether.
"Questioning growth is deemed to be the act of lunatics, idealists and revolutionaries. But question it we must."
"the only thing that has actually remotely slowed down the relentless rise of carbon emissions over the last two to three decades is recession."
-- Tim Jackson
British Economist Tim Jackson studies the links between lifestyle, societal values and the environment to question the primacy of economic growth.
He currently serves as the economics commissioner on the UK government's Sustainable Development Commission and is director of RESOLVE - a Research group on Lifestyles, Values and Environment. After five years as Senior Researcher at the Stockholm Environment Institute, Jackson became Professor of Sustainable Development at University of Surrey, and was the first person to hold that title at a UK university.
He founded RESOLVE in May 2006 as an inter-disciplinary collaboration across four areas - CES, psychology, sociology and economics - aiming to develop an understanding of the links between lifestyle, societal values and the environment.
I want you to imagine a world, in 2050, of around nine billion people, all aspiring to Western incomes, Western lifestyles. And I want to ask the question -- and we'll give them that two percent hike in income, in salary each years as well, because we believe in growth. And I want to ask the question: how far and how fast would be have to move? How clever would we have to be? How much technology would we need in this world to deliver our carbon targets? And here in my chart. On the left-hand side is where we are now. This is the carbon intensity of economic growth in the economy at the moment. It's around about 770 grams of carbon. In the world I describe to you, we have to be right over here at the right-hand side at six grams of carbon. It's a 130-fold improvement, and that is 10 times further and faster than anything we've ever achieved in industrial history. Maybe we can do it, maybe it's possible -- who knows? Maybe we can even go further and get an economy that pulls carbon out of the atmosphere, which is what we're going to need to be doing by the end of the century. But shouldn't we just check first that the economic system that we have is remotely capable of delivering this kind of improvement?
Picking a new head for the National Economic Council is an important moment for the President's rapidly realigning White House staff. It is an opportunity to do two very critical things at once going into the President's crucial final full year before the re-election campaign gets into full swing. The first of these is the most urgent project of this next year: finding some way in this badly damaged economy to start seriously generating some new jobs. The second mission is possibly even more important to the President's re-election and long term political health and legacy: restoring the balance in the Democratic coalition.
Ever since William Jennings Bryan's Cross of Gold speech at the 1896 Democratic convention, after which the populists merged their movement and their party with the Democrats, the political party I am proud to call mine has on economic issues been an uncomfortable coalition of those working-class populists and urban business leaders. Woodrow Wilson was the first Democratic President to govern with this uncomfortable coalition, and he chose fairly evenly between the two. FDR and Truman were more clearly on the populist side, JFK was more in the middle between the two, and LBJ went more with the populists, but all of those Presidents had significant business figures as part of their advisers and political coalition. Carter and Clinton both leaned much more heavily toward the business (increasingly Wall Street) wing of the party but both had more populist progressive advisers as well. Having smart guys like Joe Stiglitz and Bob Reich on the same side as me during those White House policy fights didn't mean we won half the time, but us progressives inside won a few rounds at least.
Flip to the transition period in late 2008. As the economy was on the verge of crashing around us, the President-elect decided to make his bet overwhelmingly with the Wall Street-oriented side of the party, the folks who were proteges and aligned ideologically with Bob Rubin. There were a couple of exceptions (Volcker and Jared Bernstein) but they were relegated to relatively minor positions. I had the sense at the time that Obama felt that he needed to have people who understood the financial sector and industry players really well, and that in a time of crisis he was looking for a team that wouldn't be too torn apart ideologically to make clear quick recommendations. But whatever the reasons, what had become the wing of economic thinkers with a sizable edge in the Clinton years became virtually the only view Obama has heard since he became President. With Tim Geithner's mentor and ideological twin Larry Summers leaving the NEC, now is the time to restore a measure of balance to the President's economic.
The biggest reason that is so important is because of the jobs issue. The macroeconomic Wall Street-oriented guys like Geithner and Summers have never been focused on the specifics of how you produce jobs in the short term- it is just not how they think. Macroeconomists think in terms whether the GDP is going up or down, whether finance is flowing and the banks are healthy. They tend to think, as administration officials used to say ad nauseum until someone in the political team finally got them to stop, that jobs are a lagging indicator that will come back around someday, after the banks get more financially comfortable and start lending again. The problem is that the shock to this economy from the damage done by the financial crisis has made classical macroeconomics a dead-end street. Banks are more comfortable but they are still not lending money because (a) there are a lot of toxic assets still on the books, (b) no one thinks main street businesses will be making money anytime soon, and (c) the Wall Street banks think they can still make more money in speculative trading than in boring investment.
The old economic models are broken, and a little entrepreneurial populism is exactly what is needed right now: someone with fresh ideas re how to spur manufacturing, how to jump-start new industries and companies. You need someone to provide a balance to Geithner's classical macroeconomic thinking, someone who wants to invest in middle class jobs not somewhere in the future when the economy has healed itself a lot more, but now. Right now. The President needs to face the fact that there aren't a lot of creative new ideas coming from the financial macroeconomists and Rubin proteges.
Here's what is also true on the political side: whatever happens, there are few economic thinkers anywhere that believe prosperity and big job gains are right around the corner. We are very likely to still have an economy in the doldrums in the fall of 2012. If Obama stays with the an economic team all drawn from the same crowd as he has now, and they all keep advising him to do the same things he has been trying all along, no one is going to give him any political credit two years from now. He has to be seen as FDR was in 1936: things were still bad, but he was willing to keep trying and trying and trying some more on new ideas to spur the economy, and at least some working class folks- Social Security recipients, WPA workers, etc- had a little bit of money to spend. If Obama brings in a new economic team with some new middle-class jobs-oriented ideas, it will help him immeasurably in terms of keeping voters' patience. The other politically crucial thing it will do is that it will unite his party. The populists in the Democratic coalition- labor, poor people, working class women, immigrant laborers- want to feel like their President is on their side, that he is taking chances and trying new things that will help them economically.
There are a lot of good candidates from the progressive populist wing of the party. A former Senator like Byron Dorgan or Don Riegle or Jon Corzine (in spite of being a former Goldman Sachs guy, Corzine is a serious economist populist). A former labor guy like the brilliant Ron Bloom, who is already in the administration. Lots of good economic writers and thinkers as well. But I know the administration wants to check either the former CEO box or the woman box in terms of their symbolic hirings, so let me throw one choice into the ring that fits one of those two boxes: Leo Hindery. I'll admit some bias, as he is a friend of mine. But the economist I respect as much as any other, Rob Johnson (who would also be a great candidate but doesn't want it), said to me the other day that he thought Leo was the best candidate he could possibly think of, and I have to agree with him. One of the most successful CEOs in the country over the last couple of decades, a great manager, a longtime writer on issues of manufacturing and trade, he would be hard for business leaders to say he wasn't qualified. But Leo is a tried and true populist, a close friend of the labor movement in spite of being a retired CEO. He has great political relationships on Capitol Hill, and a good working relationship with new White House COS Pete Rouse. The only political downside, if you can call it that, is that he has been a critic of White House economic policy, but I think hiring him would show that Obama was open to new ideas.
Leo is not the only good candidate, but hiring him or someone like him, someone who will restore balance to the President's economic team and political coalition, and someone who will walk in the door with a raft of fresh ideas that Geithner and Summers haven't been thinking about, would go a long way in getting the President ready to take on the economic challenges of the next two years. The bottom line for me isn't a particular candidate, it is that the President understands that he, his party and governing coalition, and our country need an NEC head who is not tied to traditional Wall Street-oriented ideas about the economy, or someone from corporate America that isn't bothered by the outsourcing of jobs and the trade deficit. We need an NEC chair who has a track record of caring passionately about manufacturing jobs, our crumbling infrastructure, our trade deficit, and new approaches to creating good paying jobs for middle and working class Americans. Having someone like that to run the NEC to balance Geithner's macroeconomic financial sector orientation at Treasury is crucial to rebuilding our economy, and to rebuilding confidence in this administration that they care about the middle class who has lost so much in the last ten years.
Update: This post was written yesterday before I had the chance to look at the stunning NYTimes story in this morning's paper. Entitled "Cheap Debt for Corporations Fails to Spur Economy", it summarizes better than anything I could write why the classical macro-economic model embraced by the Bob Rubin wing of the Democratic Party is not working in the deeply damaged economy of 2010. The article describes how one major corporation after another is borrowing "vast sums of money for next to nothing- simply because they can", but instead of using that borrowing to invest and create jobs, they are using it to (a) stockpile cash against worries of future weakness in the economy; (b) invest in new technology that allows them to "be more efficient and cut jobs"; (c) lower their next year's tax bill; (d) buy long term bonds (in one case mentioned, a 100 year bond); and (e) finance new mergers and acquisitions.
In case you are keeping track at home, none of those 5 things creates jobs or benefits workers.
The old economic model is fundamentally broken, torn apart by the incredibly deep damage done to this economy by the last decade of erosion of middle class buying power, and the Bush recession and financial market collapse of 2008. We need an NEC head who will bring fresh ideas and a different economic model to the administration.
STATE BLOGS
