A Real Plan for Deficit Reduction

The Congressional Progressive Caucus has a budget proposal out that is worth considering. It should embarrass the Obama administration and any supporter of the administration still harbouring the illusion that the president is all about hope and change. Krugman gives it a thumbs up, the folks at The Economist give it a thumbs up too, ditto The Guardian . . . and, of course, I have to say that my own Congressional Representative is a CPC member . . . Louise Slaughter does Western NY proud!

Is a Reality Based Politics Possible?

One of the things progressives often wonder is why average working Americans don't repudiate Republican political-economic policies that privilege the wealthy. One clear reason is that average Americans somehow do not manage to align either their assessments of, say, the actual distribution of wealth or the ideal distribution that they would like to see with what is, in fact, the distribution of wealth in the U.S.; the result is that there is a massive disconnect between motivation, assessment of possibilities and actuality. Is it possible to surmount that predicament? That is the first step in any hope for progressive politics. The second step would be to recognize that the data reported here suggest that the average American hardly is an egalitarian.

Vacancy

Martin Luther King’s room at the Lorraine Hotel hours after he was shot,
Memphis, Tennessee (April 4, 1968). Photograph © Steve Schapiro.

At the risk of belaboring a point I have been making here for what now has turned into years, Martin Luther King, Jr. who was assassinated on this day in 1968, was in Memphis in solidarity with sanitation workers, who were striking the city not just for decent pay and working conditions but for recognition of their right to form a union. In light of the concerted, ongoing campaign by Republicans to subvert unions, it surely is plausible to wonder how far we remain from the promised land of which King spoke the night before he was shot. King did not "lead" the Memphis strike; indeed, he struggled to keep pace with the radicalism and resolve of the strikers. Who might now aspire to that role?

Using Imagination to Avoid Taxes . . .

The corporate logo is "Imagination at Work." My father worked for General Electric for nearly all of his adult life. That means G.E. paid for my childhood and my college. It pays for my parents's retirement too. The company also cut my home town Pittsfield , Massachusetts off at the knees when it pulled out of town. So, let's say I have pretty mixed feelings.

If you go to the G.E. web site there is a page called "G.E. in the News." When I checked this evening the top item was that the company's C.E.O. had been appointed by President Obama to head his Council on Jobs and Competitiveness; there was no mention of this report in The New York Times indicating the the company paid not a single dime of corporate income tax to the Federal Government for 2010.

Of course, company flack catchers are quick to point out that there is nothing "illegal" going on here. Maybe so. But it still reeks. On npr this evening we got the whitewash about how the company simply took advantage of a byzantine tax code, exploiting loopholes, tax breaks, and so forth. And, of course, G.E. is in good company as other corporations pursue the same shirking strategies. Sure enough. But that does not mean we can shift responsibility for the stench away from the capitalists onto the government. How did we get such a ridiculous tax structure? Might it have had anything to do with the lobbying that corporations pay huge amounts for?

This is - and should be - a major embarrassment for the Obama administration except for the fact that it is filled with people who think there is nothing the least bit malodorous about massive and massively profitable corporations paying no taxes.

Oh, and did I mention that the Federal Government bailed out G.E. Capital a couple years back?

(Among the Reason) Why I Loath Bi-Partisanship

My oldest son Douglas is set to graduate from college this coming May. He has been a good student and an athlete for four years. The obvious consideration at this point is what he is going to do with his B.S. in Biology (minor in Environmental Studies) once he navigates the end of the semester festivities. So, this installment from Paul Krugman hits home with even greater force than it might:

"I still don’t know why the Obama administration was so quick to accept defeat in the war of ideas, but the fact is that it surrendered very early in the game. In early 2009, John Boehner, now the speaker of the House, was widely and rightly mocked for declaring that since families were suffering, the government should tighten its own belt. That’s Herbert Hoover economics, and it’s as wrong now as it was in the 1930s. But, in the 2010 State of the Union address, President Obama adopted exactly the same metaphor and began using it incessantly.

And earlier this week, the White House budget director declared: “There is an agreement that we should be reducing spending,” suggesting that his only quarrel with Republicans is over whether we should be cutting taxes, too. No wonder, then, that according to a new Pew Research Center poll, a majority of Americans see “not much difference” between Mr. Obama’s approach to the deficit and that of Republicans.

So who pays the price for this unfortunate bipartisanship? The increasingly hopeless unemployed, of course. And the worst hit will be young workers — a point made in 2009 by Peter Orszag, then the White House budget director. As he noted, young Americans who graduated during the severe recession of the early 1980s suffered permanent damage to their earnings. And if the average duration of unemployment is any indication, it’s even harder for new graduates to find decent jobs now than it was in 1982 or 1983.

So the next time you hear some Republican declaring that he’s concerned about deficits because he cares about his children — or, for that matter, the next time you hear Mr. Obama talk about winning the future — you should remember that the clear and present danger to the prospects of young Americans isn’t the deficit. It’s the absence of jobs.

But . . . these days Washington doesn’t seem to care about any of that. And you have to wonder what it will take to get politicians caring again about America’s forgotten millions."

Douglas is, in the eyes of his father, indeed one in a million. But that phrase takes on an unhappily ironic cast in the age of bi-partisan political delusion. If it sometimes sounds like my criticisms of Obama and his failure to stand up to the right are personal that is because they are.

Excuse Me Dr. Barro, Your Ideology Is Showing

Economist Robert Barro has published this anti-union Op-Ed in The Wall Street Journal today. Pretty predictably, he wants to blame the fiscal crisis in the states on unions. Is there actual empirical evidence that, as Barro puts it, " the structure of strong public-employee unions . . . helped to create the unsustainable fiscal situation."* It would be nice to see it. The reason why Barro presents none is that, as far as I know, there is none to present. Even an economist should be able to do better than that.

Barro does present some evidence that right-to-work laws promote economic development. There is no real surprise that right to work states attract more robust corporate activity than more union friendly states. Of course they do. Corporate investment go where they don't face any countervailing power. And what about relative wages and benefits in those states? I don't know the empirics in any detail, but I am wagering that there are pretty impressive distributive consequences of disallowing unions. (Have a look at this report from CNN for some initial warrant on that score.) Surely Dr. Barro wouldn't want to discount the massive inequalities that untrammeled corporate power (and markets are meant to be power free zones, no?) generate!

As a theoretical matter Barro presses the claim that "collective bargaining on a broad scale is more similar to an antitrust violation than to a civil liberty." Of course that requires that we ignore the power asymmetries that exist in virtually any labor negotiation between an employer and individual employees. The historical corollary of this theoretical complaint is that Barro seems to want us to head directly back to the late 19th Century, to a time when the state imposed atomization on the labor market and thereby enhanced the power of employers. In other words, Barro doesn't like the way democratic politics has reshaped labor markets by sanctioning collective bargaining. After all, the Wagner Act (1935) cleared Congress and was signed by Roosevelt.

In this essay Barro displays a problem to which economists are quite susceptible: they too readily allow their ideology - usually some facile version of libertarianism - to impede their analysis. We know in general terms what markets (there is no such thing as "the market" except in the world of right leaning ideology) require to work effectively. We know too that allowing collective action can offset biases that prevent effective functioning of markets in atomized settings. There are lots and lots of efficient market outcomes. There is no reason why we ought to opt for the most asymmetrical and unequal of those on offer. At least nothing Barro says here suggests that we should.
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* Since he is preoccupied with Wisconsin, is there any evidence that the public employee pension system is in trouble there? Barro implies that it is, but offers not a shred of evidence.

Retirement? What was that?

For those who think privatizing social security is just a terrific idea, I recommend this story from The Wall Street Journal. How many of your friends and relatives will end up eating cat food in their old age? Not only do people discount the future and not save enough, but the private funds most of us must rely upon are insecure and volatile. The people getting rich off your 401(k) are the same financial firms that brought you the current depression.

Beck's Campaign Against Francis Fox Piven (3)

"I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income." - Martin Luther King, Jr. Where Do We Go From Here? (1967).

"It is our purpose to advance a strategy which affords the basis for a convergence of civil rights organizations, militant anti-poverty groups and the poor. If this strategy were implemented, a political crisis would result that could lead to legislation for a guaranteed annual income and thus an end to poverty." - Francis Fox Piven and Richard Cloward The Nation (1966).

In The Guardian today there is yet another story on Glenn Beck's ongoing campaign against Francis Fox Piven. I found it funny that Piven arranged to meet the correspondent from the paper at a NYC restaurant called "Havana Central."

One thing that strikes me about Beck is his ignorance about history. You can find a link to the 1966 essay by Piven (and her husband, the late Richard Cloward) that so exercises Beck here at The Nation. That is where I lifted the statement above - from the first paragraph of the essay. My point today is just to say that Piven and Cloward were advocating a strategy to implement a policy that, as I noted here a year ago, Martin Luther King, Jr. also endorsed. And since Beck has announced his aim to reinvigorate Dr. King's message, how is it that he objects to Piven and Cloward? What better way to end poverty does Beck envision than the one King came to embrace? Beck instead ought to be embracing Piven as an ally in that cause. Maybe that is why he has afforded her all the publicity that trails in the wake of his diatribes.
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P.S.: You might find this portrait of Piven and this more recent Op-Ed from The Los Angeles Times - both by Barabara Ehrenreich - interesting.

Interview: Eric Hobsbawm

Yesterday The Guardian carried this interesting interview with Eric Hobsbawm who, in addition to being an influential historian remains a pretty unrepentant Marxist. At the very end he offers this basic diagnosis of our contemporary situation:

"What I'm saying now is that the basic problems of the 21st century would require solutions that neither the pure market, nor pure liberal democracy can adequately deal with. And to that extent, a different combination, a different mix of public and private, of state action and control and freedom would have to be worked out. . . . What you will call that, I don't know. But it may well no longer be capitalism, certainly not in the sense in which we have known it in this country and the United States."

My own thinking about politics and culture (starting with my doctoral thesis) owes a considerable amount to Hobsbawm's historical essays on the "invention of tradition" - a conception of historical events that converges surprisingly with the work of Thomas Schelling. I will add that Hobsbawm also served pseudonymously for many years as the jazz critic for the New Statesman in Great Britain. You can find his reflections on that part of his career here.

Portrait of a Failed Politician?

“If you widen the lens, the public is being sold a big lie — that our problems owe to unions and the size of government and not to fraud and deregulation and vast concentration of wealth. Obama’s failure is that he won’t challenge this Republican narrative, and give people a story that helps them connect the dots and understand where we’re going.”~ Robert Reich

Just so. Obama has lost the political battle. Indeed, he never actually engaged it. Rather than challenge the right wing account of political and economic world, he capitulated to it. The result is more or less total failure. And other "liberals" - like Andrew Cuomo, for instance - are following in his footsteps. But that does not mean Obama failed; he is doing precisely what he aims to do. The result is - not "will be," but "is" - a disaster for working class and poor Americans.

*****

So, where might Obama (and his mini-me Andrew Cuomo) start if they wanted to tell a different tale instead of simply embracing the right wing view? It is not all that difficult! Consider a passage from this essay in The Guardian:

"No one is denying that this is a time for belt-tightening. Or that some unions have problems. Or that some union contracts look over-generous in austerity America. But the fundamental truth remains: powerful and reckless unions did not cause the Great Recession by rampant speculation. Nor did an out-of-control labour movement cause or burst the housing bubble. It was not union bosses who packaged up complex derivatives to sell in their millions and thus wrecked the economy and put millions out of work. Nor was it union bosses who awarded (and continue to award) themselves salaries worth hundreds of millions of dollars for doing nothing of social value. Neither was it the union movement that was bailed out by the taxpayer and then refused to change its habits.

All that was the work of the finance industry.

Yet, as America continues to search for solutions to its economic problems, it is the labour movement, and not the banking sector, that is getting it in the neck. This is despite the fact that many unions, especially in such cases as the bailout of Detroit's automakers, have proved themselves highly flexible in sacrificing wages and long-held workers' rights in order to preserve jobs. Meanwhile, the finance industry, where true and meaningful reform has failed to happen, still squeals as if President Obama were a raving socialist."

In other words, accurately identifying culprits is a reasonable place to start. And the anti-union story about the sources of our economic disaster simply holds no water.

Against Bipartisanship (yet again)

And here is a piece by Paul Krugman & Robin Wells, also from the most recent NYRB. They lay out the electoral imperatives that the Democrats confront quite nicely. In short, given the choice between actual Republicans and Republican-lite, voters tend to opt for the genuine article. Among the culprits here are those - from the feckless Obama on down - who've joined the cult of bipartisan consensus. It is way past time to call in the de-programmers.

Political Science, Incorporated

In the NYRB this week there is a useful article by Simon Head on the political-economy of higher education in the U.S. and U.K.; you can find it here. Corporatization run a muck? Well, since I work at a private University that has a tight budget, I understand the need to make hard financial decisions. But I can also see the sorts of pressures Head describes all around me. The idea of research on call or for profit is not simply ludicrous. It tends to generate tripe - in other words, bad research. The same goes for teaching.

Bye, Bye Euro? A Problem of Political Economy

"Alas, it may now be too late for the eurozone. Ireland and the southern European countries must reduce their debt burden and sharply enhance their economies’ competitiveness. It is hard to see how they can achieve both aims while remaining in the eurozone." ~ Dani Rodrik

And the problem, on his account, is not one of venal, short sighted politicians (personal responsibility!) or of simply unfettering economic markets but of constructing effective centralized political institutions.

Against Logo Politics

There has been a lot of hoop-la recently about the emergence of this "movement." You can find news reports here and here and here. Regular readers will not be surprised to learn that I have a pretty dim view of the enterprise. Beyond the exclusively top-down, logo-centric character of the putative "movement," there are two distinct substantive issues that seem objectionable about the group: (1) their presumption that the basic problem in American politics comes down to lack of civility (what they call "the tone of politics") and (2) their presumption that something called bi-partisanship is a smart way to approach democratic politics. I think the No Label folks are dead wrong on both issues.

As a good place to start I suggest this commentary by E.J. Dionne. That said, I am much less patient with the No Label types than he seems to be. Our problem, documented not by partisan accusation but by actual research (since we all want, in Dionne's terms, to be fact based), is a rapid, relentless move rightward among Republicans. That shift is grounded in and subsequently helps sustain dramatic increases in political-economic inequality. Incivility and the hectoring tone of politics is a symptom of that underlying reality. So simply making nice is not going to get us anyplace useful. What it will get us is Obama-esque capitulation to reactionary demands. In other words, the location the No Label crowd hope to occupy - what they call " the vital civil center" - is not the center; it consists in a set of right-leaning or flat out conservative positions that look "moderate" only in comparison to the reactionary views of conservative Republicans. If we neglect that, our politics will generate disastrous consequences. And talking nicely to one another as we head over the precipice does nothing to change that.

Politics is about competition and disagreement. One need not be a cynic to suspect that "consensus" is typically a way of papering over the way one or another group is getting the shaft. I have inveighed against bi-partisanship repeatedly here and won't do so again. It generates bad policy and undermines democracy more generally. The No Label folks simply don't get that. They think we need a new logo. I think we need democratic politics.

Lessons of Wikileaks

A system of free expression and other political rights is a pubic good. That means that for most participants in that system - say, corporations - there always is a powerful incentive not to pay the costs required to sustain that good. So when, as Paypal reportedly has admitted and other companies predictably soon also will*, the U.S. Government pressures them to toss commitment to free expression overboard, they will do so with alacrity. Principle goes by the board quickly when profits or legal exposure seem threatened.

The problem is that as Paypal, Mastercard, Visa, Amazon, Everydns.net and PostFinance (the Swiss bank handling funds for Julian Assange's legal defense fund) cut services to Wikileaks, they are acting on the government's allegation that Assange and/or Wikileaks may have committed a crime. To date there are no actual legal charges, let alone convictions in the fracas. And while Joe Lieberman is stomping around demanding that we simply dispense with the first amendment altogether it is not at all obvious that Assange and his compatriots have actually broken any law.

I am not big on conspiracy theories. But as the corporate world capitulates to government demands like this, I am tempted to reassess that propensity. And I wonder why it is that the companies are not nearly so interested in falling into line on say, tax compliance or environmental protections or whatever when the government stops by and says 'pretty please.'

It is important to note that not all the companies that the U.S. Government is pressuring in the anti-Wikileaks campaign have capitulated. According to this report The Guardian, the Swiss firm Switch, which now hosts the Wikileaks web site, is resisting the pressure. Just when one starts to think that all corporations are simply craven here comes a surprise.
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Update (later that same day): *I highly recommend this post by Henry Farrell - who, unlike me, actually knows a lot about this general topic of government interference with the Internet - over at Crooked Timber. No need to take my data free speculation for anything more than what it is.

Obama Capitulates . . . Again

"Some Democrats expressed wariness about the emerging deal.
But it was clear that Republicans were happier with the results."
- NY Times

This statement comes from a report on the imminent tax deal. Why are the Republicans relatively happy? Because Obama has basically capitulated. The very rich folks are getting another gift, just in time for the Holidays. Regular people are getting that stash of coal. This is pathetic. But don't take my word for it; I recommend Ari Berman's remarks at The Nation and also those of Paul Krugman here at The New York Times.

Keeping Your Eye on the Ball: Burma

Harn Lay (2010). Photograph © Platon, for Human Rights Watch.

It has been roughly a week since the military junta in Burma released Aung San Suu Kyi from house arrest. At the time I noted here that while this was a welcome turn of events, it represented a quite minimal step by the authorities. There are many prisoners being held and many others who have been driven into exile. Cartoonist Harn Lay is among the latter group. He has been in exile in Thailand since 1988. Human Rights Watch has commissioned photographer Platon to portray some of the many others who have born (and continue to bear) the brunt of military rule in Burma. You can find the results of his work on this project here.

The upshot? It is important that we outside of Burma continue to speak out against the junta and its authoritarian policies. And it is more important still to devise policies that might bring pressure to bear on the junta. Many observers think that is impossible given their intransigence. For example, here are remarks (part 1, part 2) made by Amartya Sen at this conference coordinated by Human Rights Watch last month. What is called for is not just moralizing, but concerted political action.

On Not Shopping

As a general matter I am not an anti-consumption type. I do worry about how much we are prepped to buy and how wasteful much of our 'products' turn out to be. But, in economics I buy broadly Keynesian approaches in which consumption - spending - looms large. But it is easy enough to think about how we might encourage spending on sustainable production that I think it is pretty easy to reconcile my views.

That said, I had occasion this morning to spend some time in the car, listening to npr. The amount of time and anxiety the local station devoted to 'black Friday' and variations on whether and what we should buy struck me as disgusting. On the one had we got lectures about being financially responsible in the realm of personal spending. On the other we got advice about how to plan our post-holiday spree (hint: focus on big ticket items today, since the savings are greater there and the sales will continue on less expensive things). All that was leavened by lots of moaning and anxiety regarding whether merchants would do well enough over the next few days to salvage a respectable year. It was nearly enough to get me to subscribe to Adbusters and their Buy Nothing campaign.

As a long term strategy for economic development in an impoverished region like Western NY this is nonsense. But, as a way of resisting, Ulysses-like, the twin shoals of moralism and profligacy I endured this morning it was yet a third temptation. I (again) recommend Juliet Schor instead. You can find her web page here. And, in case you are wondering, I didn't buy anything today.

Clegg, Obama, 'Old-Style Progressives' and 'Pragmatism'

In the U.S. political ideas seem to twist and turn at the whim of various right-wing media mouthpieces. Typically the re-fashioning occurs in cahoots with the right wing politicians. So, as the conservative DLC types in the Democratic Party make a hard charge to the right (which has been ongoing since the late 1980s) there is not much push-back from people who say ... ''Not so fast, that is a bastardization of this or that progressive or liberal idea ... or ... No, actually the constitution or our political tradition (or whatever) don't state or imply anything like what you claim!'

The problem, in part, is that any such voice of sanity is drowned out by the megaphones on the right. And, let's be clear here, I am not even talking about the Republicans with their party organ Fox 'News.' I am talking about the voices of 'moderation' among the Democrats. Of course, those voices are not typically attuned to intellectual discourse; they are concerned to show that they are realists. Think Bill Galston or Cass Sunstein. Think Rahm Emmanuel. No egg-head talk for them.

Here is an example from the U.K. Lib-Dem leader Nick Clegg offers this pronouncement on 'authentic' progressive politics in The Guardian. He constructs a dichotomy between old-style progressive who are obsessed with equality and new style progressives (like himself) who are properly re-focused on social mobility as a way of fracturing inherited, hence unjust, patterns. This rhetorical move brings to mind a remark from Vaclav Havel: "... hard and fast categories ... tend to be instruments used by the victors." In this instance, the distinction also fails - as Stuart White points out in this astute commentary - to grasp the actual claims of 'old style' progressives of a liberal or socialist stripe.

Distinctions, in other words, carry consequences. and in this instance Clegg surely is aiming to shift the terms of discourse rightward. It is not enough to say, as he does in numerous ways, 'let's work together,' 'let's think in non-zero-sum terms,' lets embrace bi-partisanship' (to echo our own hoper-in-chief). Because, having constructed a false dichotomy at the start he proceeds to neglect the fact that any reconciliation has profound distributional consequences. And those consequences are, as White notes, precisely the basis for pervasive inequalities that subvert the prospects for social mobility.

There are lessons here for the Obama is a pragmatist crowd. It is not enough to simply listen to everyone and split the difference. One has to look at where we stand, how we got here, assess responsibility and, most importantly, see how political-economic power has been used to shape the current circumstances, before making a plan to move forward. Simply splitting the difference leads to more of the 'winner take all' politics that Clegg claims to abhor simply because it takes the current state of affairs, with its already established winners and losers, as the point of departure. Old style progressives, in other words, insist on getting an historical grip before plunging ahead. Without that historical perspective, a putatively pragmatist focus on consequences simply re-confirms the fixed inequities we currently endure. On health Insurance; on war-crimes; on economic recovery; on foreign adventurism. On all those fronts, Obama has done lots of listening and little serious analysis of the sort I mention above. As a result we get not pragmatism but opportunism. There is a big difference.

Have a nice Thanksgiving.
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P.S.: (Added 26 November 2010) You can find yet another astute reply to Clegg here. The punchline: "This isn’t democracy. It isn’t a new way of being progressive. It is the deep marketisation of our society, carried out at breakneck speed."

Deficit Reform My Keester

President Barack Obama, center, walks with Erskine Bowles,
left, and Sen. Alan Simpson, R-Wyo., co-chairs of the National
Commission on Fiscal Responsibility and Reform (April 2010).
Photograph © Saul Loeb/AFP/Getty Images.

The fully predictable has happened. The right-leaning (Erskine Bowles) and 'aw, shucks' reactionary (Alan Simpson), co-chairs of Obama's "bipartisan" deficit reduction commission, have announced what they think should happen. As Paul Krugman writes in The Times today: "It seemed obvious, as soon as the commission’s membership was announced, that 'bipartisanship' would mean what it so often does in Washington: a compromise between the center-right and the hard-right."

As I have argued here many times before, bi-partisanship is bad politics - it gets us regressive, incoherent policy and, more importantly, it subverts the competition on which democracy itself relies. (If you are interested in reasons and examples aplenty look here and then here.) Fortunately, there are some people and groups out there who seem willing to call the co-chair's proposal what it is - reactionary twaddle. This proposal is clearly meant as an agenda setting move. The thinking goes like this: 'If we make an extreme initial claim we will likely end up with something only slightly less regressive." There is all sorts of talk about 'shared-sacrifice' in the face of deficits. But the sources of our deficits are easy to see (look here and here) and gutting Social Security (for instance) is irrelevant to getting them under control. The working and middle classes, to say nothing of the poor, in America already have undertaken sacrifices as the rich have run off with the goodies. That has been going on for three decades. What we need now is redress, not shared sacrifice.

As Krugman also writes: "It will take time to crunch the numbers here, but this proposal clearly represents a major transfer of income upward, from the middle class to a small minority of wealthy Americans." Obama, like the Clinton-ites before him, is adept at that game. It runs under the guise of bi-partisanship, so Obama can position himself between Bowles and Simpson and look like the great compromise-r. But being between two positions doesn't necessarily make you centrist.