7 PROBLEMS WORTH PONDERING

1. Do we      want a society where income      inequality is increasing exponentially and the purchasing power      and strength of the middle and working classes in shrinking? Keep in mind      the mantra of numbers “20-45-13”. Those are the percentages of wealth held      by the top 1%, the top 10%, and the bottom 50% of the US      population. Maybe for some this is good and healthy or “natural      selection”—but for others it Is Not. So, What Is To Be Done? If not social      engineering, tax reform, or government action: what? Who will fix this?      Almost everyone agrees that Congress has become dysfunctional; more and      more are agreeing that aspects of the US economy are increasingly      dysfunctional.

2. Closely      related—and many of these points are just summaries of our previous      posts—the rich are “devouring their own children—and themselves.” By the      same, documented, reduced consumption power of the “bottom 75% of the      population, their standard of living and, eventually, that of all but the      most insulated of the super-rich are in jeopardy.

3. Objections      have been raised that some of this kind of talk is pushing “class warfare.” But class      warfare is already a reality. Just not the kind that alarms conservatives      and wealthy folks: that is, the demands of the weaker 50% for changes in      the system from the top 1% or 10%. The class war that is The Reality:      weakening regulations corporate/banks/environment/workplace, tax structure      and loopholes, ability to shelter money overseas, demonization of      government, attempts to disenfranchise or block registration of poorer and      not-likely-Republican voters, the War on Labor, the War on Teachers, the      corporatization and neutering of the media—These amount to class warfare      of a kind not talked about, the Real War.

4. “The      American Society of Civil Engineers estimates it would take $1.6 trillion      over 5 years to bring the nations bridges, dams, sewer systems, and other infrastructure up to good      [not excellent] condition” (L. Mishel and L. Cleeland in Lardner and      Lowenthal, Thinking Big, 2009, p. 11 That is a conservative estimates      and represent a Lot of Jobs and a national project far more worthy than      the Iraq and Vietnam Wars, probably most of Afghanistan, and arguably even      the Apollo Moon missions. Lots of jobs here. It is certain that government      and the private sector could work out an arrangement to create these jobs      and rationally pull this off. The pathetic thing is that the political      willpower and ideologizing has gotten in the way.

5. The      same could be said of education,      where all of the big talking has been on teacher productivity and school      responsibility and not putting money Into schools and teachers and teacher      training. A lot of jobs here too. What is wrong with this picture: advanced      European societies, with per capita incomes higher than the U.S.’s (mean)      and Median incomes considerably higher, put far higher proportions of      their national GDP and government budgets into education than does the US.      The US      is falling farther behind European and some Asian countries in this      econo-educational indicators. And, again the wealth disparity, related to      education equity, in the US      has led to resemble the Russian and Latin American patterns [Brazil is      actually catching up here] than to the European]. (Mishel and Cleeland,      p.8) These authors also estimate, along with others, that revamping the      physical plant of schools themselves is a minimum $20 billion project, the      addressing of which would generate At Least 250,000 jobs. If this is      socialism, bring it on.

6. Health care- It is time to      get off of the defensive in bringing 50 million Americans, especially in      2013-14, under national health care—of a sort. And the many other benefits      of the Affordable Health Care Act. This blog makes no apologies for these      benefits and urges the democrats to develop some more backbone and issue      fewer disclaimers about flaws in the reforms, many of which were caused by      concessions to the republicans in Congress, their far right constituencies,      the “bought” (e.g. Fox) media.

7.         National defense- Speaking of reordering priorities, The defense budget is still designed to protect a Cold War World (to say nothing of “Homeland Security” reality. The $700 billion currently spent (not including massive—and usually deserved veterans benefits, which arte, after all part of defense as well as being merited rewards for those who do the heavy lifting. Ex-defense officials turned policy scholars, such as Lawrence Korb of Brookings, have estimated, along with the Center for Defense Information, that easily 10-20% of defense costs could be trimmed with no impairment to the US world mission or any rational semblance thereof. More detail will follow in future columns, but the argument for sometime has focused on eliminating waste redundancy, duplication, mission creep and other dysfunctions, which, logically, must effect Defense bureaucracies as much as they effect all of the other public and private bureaucracies that we love to take aim at! (Excuse the pun).

PLAYBOOK FOR PROGRESSIVES: 2013-2020

One overarching idea: The Democratic Party showed what it could do in 2008 and 2012. It projected a more successful image campaigning than governing (cf early Reagan or Nixon—domestically). The Democrats need to forget about gloating and antagonizing the Republicans and aim for “holding the center while moving the whole operation ever so slowly and incrementally to the left” (the Europeans are good at it in both directions, we can do the same while avoiding what seems to be the epithet “European”).

 Sure there will be clashes with the Republicans; Obama needs experts in working with Congress (Daschle types) without the hemming and hawing of 2009-11. Of Course some questions just don’t have ready answers, and the Republicans may just try a “post Appomattox rearguard action”..but I don’t think the Bobby Jindals and Marco Rubios are going to settle for the Party of No. The idea would be for the Democrats to reify a Progressive movement with a call to centrists and “moderate”, Chaffee-Snow-Specter-even Christie Republican followers to join up. Perhaps this is too idealistic, but some Democrats need to get off their high horse and leave the vilifying of Republican troglodytes alone. Let some Keith Doberman’s bloom, but as free lance provokers

Race: Head of black dalliances with Republicans at the pass; let them call themselves indeprendent, but make sure they vote Progressive Democratic; Obama lost 2% of the black vote 95-93 this time. Black success stories should be wooed assiduously by Democrats and convinced that you do not have to become a Republican just because you have made millions selling Pizza, or—whatever

EDUCATION- Here is a real battleground, so many sub issues, but some more ripe fruit for progressives, if they play their cards right; the Scott Walkers need to be stopped and discredited, without necessarily turning the clock back to the status quo ex ante Walker, Ohio, Benno Schmidt, Charter-ists… All voices will have to be heard, but money and smart social media-ing should be put in the service of pragmatic reform that does not trash teachers, schools, tenure, liberal arts… maybe some pilot programs of job retraining and “trade” schools for displaced workers and smart high school students that simply aren’t cut out for Plato and Milton (sorry)

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The economy– Surely the Big Enchilada… again not really my area, so central and multi-faceted… the short term strategy must be search for common ground, but no capitulation to the Far Right—those people want respect but they also do not respect namby-pamby-ism.. god help us, but at least until 2016, we need some Avuncular Reagan types (Volker? Let’s get him to cut back on cigars)… after 2016, if Hillary wins or a talent hunt for a new Clinton with a chastity lock on his zipper turns up someone appealing and substantial, then we unleash the Robert Reich’s and Elizabeth Warren’s.. Until we can say that the electorate is Not Center-Right, but rather Center-Center (2016) moving Center Left (2020 or after—at best), we need to keep polarizing figures in Massachusetts and California, and try them out on the National stage… A dirty not so little secret is that when Obama finishes up, should a white candidate be the best PDP person, then the certifiably insane right will cool down like a reddened infection… but we cannot and will not turn the clock back.. the Zeitgeist rules, an in this USA place only 3 things can generate real change: 1. Truly charismatic leadership, 2. A looming catastrophe (maybe global warming), 3. Education and likeable, smart incrementalist reformers—Clinton/Obama types…TAXES also tough, but there are signs that sanity is widening http://www.washingtonpost.com/opinions/obamas-door-to-compromise-on-the-budget/2012/11/14/af4b75b8-2e97-11e2-beb2-4b4cf5087636_story.html

Book Recommendation: BEYOND OUTRAGE: What Has Gone Wrong with Our Economy, and Our Democracy, and How to Fix It

Vintage Books, 2012

As with the Thomas Frank book below, Occasionally we will be posting book recommendations that are designed to provoke debate, that are related to the political future(s) of the USA, and that may show why progressives are angry at the dysfunction in Washington as—to be sure—conservatives are as well. We welcome enlightened conservative readers’ recommendations of books that have insights.

Robert Reich, Professor of public policy at the University of California Berkeley Reich as many will know was a Brandeis professor and is now at U. Cal. Berkeley as a professor of public policy. He was Pres. Clinton’s Secretary of Labor and has advised President Obama. He has appeared on public TV and radio—notably “Marketplace”– and honored for his progressive, liberal, but highly informed writing. He is no radical.

We are posting some of Reich’s introductory big ideas about what is wrong with the American economy in outline form. This will be followed by discussions of Reich and Frank (see post below) and more detail on the very important things they have to say. While Frank offers an analysis of WHY the system has been rigged against the middle, working, and poor “classes,” especially since the Reagan 1980s, Reich talks more about the HOW of fixing what’s broken in this system in spite of his forceful title. But the two books complement each other nicely and  Reich’s has the advantage of having been published 3 years later (2012).

As many of the commentators on this blog to date have been conservative, it is important to note that Thinking conservatives will disagree with much that is in the book, but that they are important reading about what “ the opposition” is thinking. Much they same as we would want to read enlightened conservative material by writers such as David Brooks, Thomas Sowell, and Charles Krauthamer.

Here are the first set of a series of excerpts we will be quoting from, from this and other Reich books. Readers are urged to pause and simply consider the statements on their merits, without pigeonholing Reich into pre-formed mental images of “leftist” or “American socialist/”. After all, WALL STREET JOURNAL, has named him one of the ten most influential business thought leaders.

• …Increasingly, the rewards have gone      to the top, while risks have been borne by middle and lower income people.      At the same time, the very wealthy are getting a greater share of total      income than they did at any time in the last eight years. Their tax rates      are lower than they’ve been in a generation. Republicans want      us to believe that the central issue is the size of government, but the      real issue is whom government is for. Public institutions are      deteriorating. We’re saddled [2011] with the most anemic recovery from the      worst economy since World War II, while the basic bargain lining pay to      productivity comes apart.  (p.4)

• The Congressional Budget Office has      issued a report on the widening disparities. The issue has become front      page news. For the first time since the 1930s, a broad cross section of      the American public is talking about the concentration of wealth and      income at the top. (p.5)

• As recently as a decade ago, the      prevailing view was also that great wealth trickled downward, that the      rich made investment in jobs and growth that benefited all of us. So even      if we doubted that we ourselves would be wealthy, we felt we’d still      benefit from the fortunes made by a few. But that view too has lost its      sheen. Americans see that nothing has trickled down. The rich have become      far richer over the last 3 decades, but the rest of us haven’t benefitted.      In fact median incomes are dropping.        (p. 7)

• …The American economy is in trouble      because so much wealth and income have been going to the top that the rest of us no longer have the      purchasing power to keep the economy going… [italics mine] (p. 8)

• Some apologists for this extraordinary      accumulation of income and wealth have been going to the top attribute it      to “risk taking” by courageous entrepreneurs… The president of the Chamber      of Commerce, explains that this economy is about risk. “If you don’t take      risk, you can’t have success.” But in fact, the higher you go in today’s      economy, the easier it is to make a pile of money without taking any      personal financial risk. The lower you go, the bigger the risks and the      smaller the rewards. (pp. 8-9)

• In 2012, the Wall Street Journal      looked at the pay of executives at twenty one of the largest companies      that had recently gone through bankruptcy. The median income of those CEOs      was $8.7 million, not much less than the $9.1 median compensation of all      CEO’s of big companies. The reason CEO’s get giant pay packages for lousy      performance is that the stack their boards of directors’ compensation      committee’s with cronies who make sure they do. (p.11)

To be continued! Your thoughts??

The Original Reason for Economic Liberalism/Progressivism

This book is presaged on prediction—the next wave of U.S. politics will be liberal/progressive.

But it also has an advocacy element: That’s a good thing.

Why?

Because the challenges we face are not to be engaged by current conservative policies:

1. a.           Simply depending on free markets—laissez-faire. Indeed, the whole role of liberal/progressive policy came into being in reaction to the early industrial revolution resulting from free markets. Left to itself the free market produced great numbers of products, but provided no way for the producers to access these products. Their pay was too low to buy them.

The result was impoverished workers who could not afford to buy anything, well stocked warehouses with no demand to meet, and businesses with no sales going bankrupt.  (Classical Marxian analysis.)

It took liberal policy to impose wage standards, so that business paid its workers enough to buy its products.

It was necessary for government to do this for all society.  If only one business paid its workers enough, other businesses would sell their products at lower rates, and the well-paying business would fail. So all businesses had to be compelled to pay the minimum, saving businesses from themselves. (Yes.  The issue is who has the authority to do this in today’s globalized marketplace?)

1. b.                    The more nefarious conservative policy—gardez-nous: big government, but for the rich–welfare for the rich—skewing policies so that the rich benefit more than others. This, of course, makes the above worse. The rich are protected from not paying enough by government subsidizing them. They don’t have to worry about their workers not being able to buy their products. They can fill up warehouses, have low sales, and still get rich from government largess.

What are the challenges? Newspaper headlines give us the list: lack of opportunity and inadequate outcomes —in education, employment, healthcare, retirement, access to resources—water/air/fuel/food/safety.

Outsourcing: A New Example

Outsourcing has been a long term problem. It has been seen nationally and internationally.

Nationally we see firms and governments getting around union rules and legal contracts for workers by hiring outside firms for their work.

Typically they will outsource cleaning services and security—hiring low paying firms to do the job for less money than their contracts say they must pay their own workers.  Governments (and the voters) have followed private employers in these practices. First it was private business that outsourced, but now, governments (backed by taxpayer ballots) are doing the same.

And it went international.  If the work can be done by even lower paid workers outside of the country, that’s where the jobs were sent—even cleaning and security are being done this way—by siting whole factories/business offices abroad.

This has given rise to two problems and a boon.

1. a.               First problem: Lower pay to U.S. workers again makes it hard for workers to buy their own products—restricting the market and making it hard for businesses to sell products.

1. b.                    Second problem: Low payment of workers outside of the U.S. makes it next to impossible for U.S. workers to buy anything—they’re unemployed. And the foreign workers are paid too little to take up the slack.

The boon? The businesses are making money. Yes, they’ve insured that a large population of underpaid and unemployed workers cannot buy their products. But there are enough employed people who can buy–especially in positions that cannot (yet) be outsourced—especially services, many governmental. (Though, recently, with the fiscal challenges to state/local governments, we’ve been thinning their ranks too.)

And, there is always government to buy—and give them subsidies—to help.

So we have the development of great wealth–some very rich businessmen, including major stockholders. This has been noted (2012-13) in terms of high U.S. business profits.

Robosourcing: The Next Step

But now, we may be going further. The trend is the development of robots, to replace even low paid foreign workers. It’s not outsourcing, it’s robosourcing.

So now we have the possibility of making products with few wages paid at all. Businesses can make large amounts of products at low cost. The point is, who will be out there to buy them— since so many will be unemployed?

Yes, there will always be enough customers to keep some factories going—though perhaps in declining numbers—since there are a minimum of people who society cannot do without—even as robots take over more and more employment positions.

This possibility continues, with a vengeance, the current trend toward more income inequality—a few people, managers and stockholders, making a fortune, and everyone else struggling.

This is not just the possibility of massive unemployment. It also raises the issue of who is to fund public services and those jobs not yet robotized—doctors, nurses, classroom teachers, scientific researchers, police and firefighters.   

Solution?

Yes, there are solutions—it’s again a (democratic) Marxian analysis. Society has great wealth. But that wealth is bottled up in the back accounts of the few employed and owning class. The resources are there if applied to society as a whole, to fund all the positions that are not subjected to robotization, as well as making for early , well-funded, retirement for everyone else.

The key is to transfer the wealth from the few to the rest of society.  One answer would be taxation, leaving the wealthy with plenty, but taking enough for the rest of us.

Another: the rest of society becoming a/the stockholder—i.e., like pension funds writ large.

Unfair? After all, it’s the wealthy that produced the wealth.  No? Here we go to Obama’s “You did not build that.” How much do the wealthy depend on the broad backing of society—police, fire, hospitals, subsidies?

And how much do they have to lose if their wealth is not reinvested in the rest of society? For one, sales would go up if the rest of us could buy their goods. And investments in schooling, scientific research, community development, would give them a more supportive environment to prosper even further.

The idea is that with robots, great wealth can be produced for everyone, and society can move forward for all. But the robot owners must share the wealth—or end up living in fortified mansions, surrounded by electrified barbed wire and robot guards. They also may need their own oxygen masks to access breathable air and have their own robotized water purifiers.

Remember Marx’s ultimate vision. Most people will be materially supported by factories, turning out what everyone needs, in more than enough quantities. These factories would be tended by everyone on a part-time basis, since they wouldn’t need that much oversight.

What most people would do most of the time is work on self-development—tending to their poetry (see poetry by Frederick Shiels, for example), their art work, cultivating their minds and other talents.

Book Recommendation: THE WRECKING CREW By Thomas Frank, Henry Holt publishers, 2009

Occasionally we will be posting book recommendations that are designed to provoke debate, that are related to the political future(s) of the USA, and that may show why progressives are angry at the dysfunction in Washington as—to be sure—conservatives are as well. We welcome enlightened conservative readers’ recommendations of books that have insights.

Frank, author of WHAT’S THE MATTER WITH KANSAS?, a book which asked by so many Americans in Heartland rural states voted against their own economic self interest (so we recommend that book too) gets tough in this book, with a no prisoners approach to Reagan/Bush policies that led to the economic collapse of 2008 and the weakening of federal regulatory agencies. We are furnishing an excerpt from the final chapter, “Gotterdammerung,” without comment in this post, to be followed by a post after we get some reader reactions or at least people have time to read this. It essentially lays the blame for the 2008 economic collapse on conservative Reagan Bush policies, but perhaps is too optimistic that such policies are completely off the radar, even in the Age of Obama:

… What the wrecking crew ultimately wrecked was the economy itself. In 2008 the wealth of the world collapsed in a cloud of bad debt— debt that had been issued by unregulated institutions, sold on exchanges that lobbyists had made sure were unsupervised and held by banks overseen by an economy that was so hapless and so industry friendly that it dozed through every alarm.

Now it is probably unfair to lay the blame the financial disaster at the feet of any single federal policy or even one of the two national parties. It is entirely fitting, however, to describe it as a sort of judgment day for the conservative philosophy, shared as it was by leaders in both political parties and by players all across the economy.

Before the fall of 2008, the most acute consequences of rule by an elite dedicated to “inefficiency in government” had mainly befallen limited and distinct groups of people: citizens of New Orleans, union members, Iraqis, people who happened to eat tainted food. moreover, the conservative state’s screw-up’s could each be crowded with an inky squirt of culture war populism or dismissed with the usual rhetoric: See? Government can’t do anything right.

The economic collapse of 2008 was different. It was an effect of the same strategies of misgovernment that had wrecked the EPA and labor department, yes but the consequences now were so vast that virtually no one escaped. Nor could then ruination be brushed off although thousands of conservatives tried. This time the public’s fury would not be diverted: Americans pinned the blame squarely on those who had deserved it and on the individuals who had pushed those ideas along. And so the final casualty of conservatism’s Samson like effort to know down the pillars of the state was the movement itself. By the end of 2008 the economic theories had been and its political fortunes lay in ruins.

The policies that [in 2008] eventually flattened the nation’s banks, insurance companies and investment houses had originally been out in place of course at those very institutions’ request. These industries got what they wanted from Washington, and what they wanted ended up killing them.