What Democrats Need To Understand Before 2018

As you will figure out (if you haven’t already) from watching the Vox video below, technology and globalization aren’t going away. They are two powerful forces shaping our collective lives today, two forces that, in purely economic terms, have both good and bad effects. One of the bad effects is the increasingly large money gap between the wealthy and everyone else. Most Democrats believe that government, particularly the federal government, can help mitigate the rapidly worsening income and wealth inequality that is, essentially, a plague on our economic system. Unfortunately, it is Republicans who are in the position to reconstruct our tax code—an instrument of behavior modification—and they are hard at work reconstructing it to favor, even more than it does now, their rich donors. If they are successful, their plan will not only increase the federal debt for no good reason, but leave vulnerable populations even more vulnerable, when Republicans return next year with planned cuts to social programs to address “the debt” they are now ignoring.

There has been a lot of talk about just how Democrats should confront the next wave of elections in 2018 and 2020. Obviously, one domestic policy component of any electoral strategy is to run against Tr-mpism, which means embracing diversity and inclusion and, uh, reality. Another domestic policy component is to put forward a realistic plan for expanding health coverage (can anyone say, “public option”?). And still another component is to articulate an economic vision for the country that addresses income inequality without damaging our prospects for economic growth. In other words, Democrats have to come up with a plan—one that can be simply expressed—that acknowledges the reality of the changes brought upon us by technology and globalization, without trying to roll back the clock to simpler times, when America was the dominant economic force in the world. This won’t be an easy task, but it begins with acknowledging reality (and building on the ideas advanced by the Clinton campaign last year). The video below will help:

Watch It Again. And Again. And Again.

I know we have talked about income and wealth inequality a lot on this blog. And I know that many of you, like me, have already seen the video posted below. But every time I watch it I am amazed. And every time I watch it I am encouraged that if enough of us pay attention, close attention, to the message presented, and if enough of us make ourselves and others aware of what is happening to the country in terms of the lopsided (and dangerous) distribution of income and wealth, then maybe we can (eventually, alas) change our political system enough to make real reform possible.

Last week, mocking those who dare to champion the cause of people who don’t earn but a tiny share of the nation’s income and who don’t have but an atom-thick slice of our national wealth, Chris Christie, whose demagoguery has not been slowed down by all the scandals whirling around him, claimed that Americans don’t want “income equality” and that Democrats and liberals do. Lying through his scandal-plagued teeth, he said people on the left want everyone to “have an equal, mediocre salary.”

Well, of course no one wants that, and no one wants the government to enforce some kind of standard of income equality. What we want, besides the obvious equality of opportunity for those willing to seize it—and besides a strong safety net for those who can’t work or who have fallen or will fall through the cultural cracks—is an economic system that rewards hard work with at least enough money to pursue some Founders-ordained happiness, including a decent place to live, healthful food, and access to affordable health care.

And we want a tax system that attempts to mitigate the damage being done to the country by an over-concentration of wealth in the hands of a small minority of Americans, as demonstrated so well by this video (h/t to : Jo Ann Brown):

The Lingering Poison Of Cynicism

“Cynicism masquerades as wisdom, but it is the farthest thing from it.”

—Stephen Colbert, in a commencement speech to Knox College, 2006

A regular conservative commenter on this blog, who also writes a lot of “guest columns” for our local paper and used to be one of its paid bloggers, wrote in recently expressing a rather cynical opinion related to a piece I wrote on the restoration of the Duck Dynasty patriarch. You can read his entire comment here, but I will post below my full response. The reason I think it important to do so is because I think this particular conservative expresses a brand of cynicism that a lot of conservatives still cling to these days, even after the radioactive fallout produced by Mitt Romney’s “47-percent” nuclear blast that surely helped doom his low-denominator campaign and continues to contaminate the Republican Party.

Before I get to my response to this local conservative, I want to share with you a headline from a right-wing “news” site, one that claims with a shout that it “is here reporting THE TRUTH”:

 benefit recipients and full-time workers

That story generated a lot of buzz on the right (among others, Fox’s website picked it up, Bill O’Reilly did a segment on it, Towhhall.com featured it, etc.) because it supported (and still supports) the right-wing’s Romneyesque view of contemporary, Obama-led America. The story is false, of course. A nice summary of why it is false you can find here, but the idea persists that there are too many “takers” among us, and the country will eventually collapse because of them.

With that brief background, here is my response to the local conservative who wrote in:

Just now catching up with the comment section. I saw your post here and, well, I just don’t understand why you continually fail to empathize with others not in your shoes, or who have not walked the paths you have walked. I believe (or at least hope) you are better than this post indicates. 

You expressed your concern regarding “what to do about heterosexual ‘slugs’ always asking for more money for other people and not working to earn it themselves.” Then you added:

Top it all off and look at public education, a factory producing more and more people that demand more and more from government and fail to achieve the basic skills needed to produce more and more for themselves.

All that makes homosexuality and even discrimination (white against black or the reverse thereof) pale in significance as matters of real concern in America today!!

First, your ridiculous indictment of public education would require a much longer response than I am prepared to offer at this point. Suffice it to say that to claim public schools are factories that produce an increasing population of moochers is insultingly outrageous.

Second, you and your right-wing friends—most of whom have at some time or another benefited in some way from the help of others—have this strange fixation on the relatively small number of non-working adults who get relatively ungenerous government benefits for a relatively short period of time. I just don’t get what that fixation is all about, especially while the moneyed class is making off with the country’s wealth and trying to use some of it to bend the nation’s political will to theirs.

Third, because of your strange obsession with the poor “slugs” who get government help, you then fail to imagine just what it would be like to be discriminated against as a homosexual or an African-American. I would bet that if you had ever suffered from institutional and structural discrimination, such as getting fired from your job for being gay (or for merely being perceived as a gay person), you would feel differently. I would also bet that if you were ever told you couldn’t piss in a white toilet because the law suggested you were some kind of inferior being, you would most definitely not say that such things would “pale in significance” to “Democrat over spending.”

Alas, though, you have enjoyed, as a white man in a white-dominated culture most of your life, the relative privileges of that position, and you now fail, as that same white man, to understand or appreciate what every person who has ever suffered from law-blessed discrimination feels in their very bones. 

And that is too bad for you personally, even though it is problem you share with many white conservatives these days. And that sad fact, that so many white folks are so cynical about the country we all claim to love, makes it too bad for all of us.

Duane

Kudoka Theater, Or Why The Middle Class Is Disappearing And What We Can Do About It

On Saturday, The New York Times’ Opinionator published an excellent piece titled, “How Technology Wrecks the Middle Class.” It is co-authored by David Autor, an MIT economist who, among other things, specializes in “income inequality,” “impacts of technological change,” and “employment protection.” The article represents a slight pushback against the extreme pessimism that some economists and scholars have advanced as a response to mechanization and computerization, which seem to be bringing us “the end of labor.”

There will be no end of labor, of course. But we are watching what may be the end of the plethora of middle class jobs that once made America widely—as opposed to narrowly—prosperous and made us the envy of the world. As the Times article explains:

Computers excel at “routine” tasks: organizing, storing, retrieving and manipulating information, or executing exactly defined physical movements in production processes. These tasks are most pervasive in middle-skill jobs like bookkeeping, clerical work and repetitive production and quality-assurance jobs.

Logically, computerization has reduced the demand for these jobs, but it has boosted demand for workers who perform “nonroutine” tasks that complement the automated activities. Those tasks happen to lie on opposite ends of the occupational skill distribution.

On one end are the “so-called abstract tasks that require problem-solving, intuition, persuasion and creativity,” which “are characteristic of professional, managerial, technical and creative occupations, like law, medicine, science, engineering, advertising and design.” On the other end are “so-called manual tasks” like cooks, truck drivers, and hotel maids, which because “their skills are not scarce,” cannot command high wages. Thus, the conclusion:

Computerization has therefore fostered a polarization of employment, with job growth concentrated in both the highest- and lowest-paid occupations, while jobs in the middle have declined.

Timothy Noah, who has written about America’s “growing inequality crisis,” was on MSNBC this morning to talk about the New York Times article and income inequality and the loss of middle class jobs. Noah says the change, which David Autor elsewhere calls “job polarization,” is worldwide, noting that the Japanese have a term for it: kudoka (“hollowing out”). But, Noah continues:

It’s worse in the United States than it is in comparable countries that are facing precisely the same technological challenge. We seem to be handling it worse here in the United States.

When asked why, he explained, an explanation that should ring in the ears of anyone who gives a damn about the possibility of restoring a robust middle class in America:

I think it’s mostly government policy. Things like the minimum wage. Our minimum wage hasn’t gone up for a long time. Our government is pretty hostile toward unions. We don’t have a good early education program. There are all sorts of government programs that in other countries focus more on the needs of the middle class and focus on creating greater income equality.

Get that? Our government, despite what you hear from reactionary Republicans, can help with the hollowing out that technology, great for us in other ways, has caused. Noah offered a few things (he left out advocating for a more progressive tax system) that can help: provide more support for community colleges, which help train “middle skill” workers; make college more affordable;  end government’s hostility toward labor unions; make sure the Federal Reserve’s monetary policy is focused on job creation; and raise the minimum wage.

As far as the minimum wage, here is a video circulating that makes a salient point:

The Gray Line Of Stagnation And Why Income Inequality Should Matter To Hillary Clinton

Brad Plumer of Wonkblog published a piece today (“The shocking truth behind the saddest chart in Congress”) that readers of this blog will find all too familiar. It was accompanied by this chart:

Keep an eye on that bottom line, that depressing gray line that represents, quite likely, everyone reading this post. Think about all the colorful activity above and all the stagnation that defines the movement of that dreary gray line at the bottom.

Then think about the next presidential election. Many of us believe it is too late for anything meaningful to be done during the Obama administration about trying to make that bottom gray line as dynamically active as those colored lines above it. Improving the economic lot of the bottom 90% of Americans is not even on the radar screen for the Republicans who now effectively have control of the legislative branch of the federal government, as well as control of many governorships and state legislatures around the country.

But if I were Hillary Clinton, who most certainly is going to run in 2016, I would make that 90% my priority. In every speech, in every interview, in every op-ed she will write or every Tweet she will peck out between now and then, my focus would be on that 90%, that gray line of stagnation.

Wonkblog’s Dylan Matthews also published an interesting chart a couple of months ago:

Read this amazing paragraph that Matthews included with the graphic:

Until the 1970s, the bottom 90 percent had actually seen its income grow more than any other income group. The income gap was shrinking. But the ultra-rich quickly reversed that trend. In 2007, the top 0.01 percent had an average income almost seven times that of 1917; the average income of the bottom 90 percent had barely tripled. The country has grown more unequal, not less, since then. And, interestingly, the 90-99th percentiles all saw their average income grow faster than all but the tippy-top of the top 1  percent. The divide between the rich and the rest isn’t the only gap growing, in other words. The gap between the ultra-rich and the merely rich is growing, too.

Again, look at that graph. That red line representing you and me and most people in America was, from about 1940 through the early 1970s, on top of the stack. We did all right as a country, didn’t we? We did all right as a country with that red line on top, wouldn’t you say? And that red line of 90 percenters was on top of that deep blue line of the richest-of-the-rich until the 1990s. What happened to thrust that blue line of wealthy folks so high into the sky?

In 1997—with a Clinton in the White House—capital gains taxes were reduced from 28% to 20%, via the Taxpayer Relief Act of 1997, which was one of the largest tax cuts in history (the child tax credit and some other items meant to lure Democrats was a part of the mix).

The bill was sponsored in the House by Republican John Kasich (now the right-wing extremist governor of Ohio) and was opposed by some among my contingent of bellwether liberal legislators: Bernie Sanders (in the House at the time), Barney Frank, Elijah Cummings, Ed Markey (now running for John Kerry’s senate seat in Massachusetts), and Henry Waxman. Sadly, only eight Democrats in the Senate voted against final passage of the bill (the late and great Paul Wellstone was one of them).

Bill Clinton, Hillary’s husband, signed it into law, saying, among other things, that he had reservations about the capital gains tax cut component of the law:

I continue to have concerns that the across-the-board capital gains relief in H.R. 2014 is too complex and will disproportionately benefit the wealthy over lower- and middle-income wage earners.

Well, those “concerns” turned into reality fairly quickly, as the graph above demonstrates, especially since Republicans, via George W. Bush’s signature in 2003 (part of the infamous “Bush tax cuts”), further lowered the capital gains rate for the wealthiest Americans from 20% to 15%.  Just what effect have these insanely low tax rates had on income inequality? As Wonkblog’s Dylan Matthews says, a lot:

If you don’t look at capital gains, the top 0.01 percent only captures 3.15 percent of income in the United States. That’s about a third smaller a share as when capital gains are included. That suggests that capital gains income is exacerbating the income inequality problem.

Here’s my point: Hillary Clinton, running in 2016, can use the issue of income inequality as a nationwide campaign to not only win the White House, but, at least as important as far as I’m concerned, win control of the House and Senate for Democrats, which would be the only way she could effectively govern and do a damn thing about income inequality.

She should begin with Bill Clinton’s rather muted and understated warning in his signing statement in 1997 that the tax-cut law would “disproportionately benefit the wealthy over lower- and middle-income wage earners,” then move on to attack Republicans for the 2003 tax cut (she voted against it), and, finally, base her campaign on moving the trajectory of that sad, gray line that represents nearly the entire American electorate. The ridiculously low tax on capital gains, which overwhelmingly benefits the wealthy, is the perfect vehicle to make the case that America needs a come-to-Jesus moment over the growing disparity between the rich and poor in our country.

In other words, she should run for president not just because she has a very good chance of becoming our first female chief executive, an amazing achievement in itself, but because if she can do something to move that gray line of stagnation she will be the people’s champion in the vein of a Franklin Delano Roosevelt and go down in history as something more than being the first President of the United States without a Y chromosome.

And, even as conservative pundits and politicians are trying to pin blame on her for the the tragedy in Benghazi, she should start talking about these income inequality issues today.

Living and Dying In The Shadow Of The Dow Jones

As far as I’m concerned, all that needs to be said about the near record-breaking Dow Jones numbers (accounting for inflation, the true all-time high would be 15,731.54) was said by Jason Linkins and Zach Carter:

The distribution of the stock market’s largesse has been perhaps the most un-egalitarian aspect of American economics for years. A full 50 percent of all capital gains go not to the richest 1 percent of Americans, but to the richest 0.1 percent, according to The Washington Post.

But the stock market’s persistent upward climb since the spring of 2009 has revealed another massive disparity: the multinational corporate machinery that generates stock gains has become unmoored from the economic reality in which the vast majority of Americans live and die.

Will It Take A President Romney To Ultimately Fix America?

One might feel better about inequality if there were a grain of truth in trickle-down economics.”

—Joseph Stiglitz

 recent poll found that about 60% of all Americans think (falsely) that no matter who sits in the White’s House next January 21st, it won’t matter a whit to the economy or unemployment.

While it clearly will matter whether Romney-Ryan budget thinking prevails in November, perhaps there is at least a partially rational explanation for such public despair. Economist Joseph Stiglitz wrote, in a piece disturbingly titled, “America is no longer a land of opportunity,” the following:

US inequality is at its highest point for nearly a century. Those at the top – no matter how you slice it – are enjoying a larger share of the national pie; the number below the poverty level is growing. The gap between those with the median income and those at the top is growing, too. The US used to think of itself as a middle-class country – but this is no longer true.

Now, admittedly, I have been saying such things for years, but I don’t have a Nobel Prize in Economics. Stiglitz does and he adds:

…the median income of Americans today is lower than it was a decade and a half ago; and the median income of a full-time male worker is lower than it was more than four decades ago. Meanwhile, those at the top have never had it so good.

Here’s how it all happened:

Markets are shaped by the rules of the game. Our political system has written rules that benefit the rich at the expense of others. Financial regulations allow predatory lending and abusive credit-card practices that transfer money from the bottom to the top. So do bankruptcy laws that provide priority for derivatives. The rules of globalisation – where capital is freely mobile but workers are not – enhance an already large asymmetry of bargaining: businesses threaten to leave the country unless workers make strong concessions.

Stiglitz points out that the conservative argument that “increased inequality is an inevitable byproduct of the market” is demonstrably false:

Textbooks teach us that we can have a more egalitarian society only if we give up growth or efficiency. However, closer analysis shows that we are paying a high price for inequality: it contributes to social, economic and political instability, and to lower growth. Western countries with the healthiest economies (for example those in Scandinavia) are also the countries with the highest degree of equality.

The US grew far faster in the decades after the second world war, when inequality was lower, than it did after 1980, since when the gains have gone disproportionately to the top. There is growing evidence looking across countries over time that suggests a link between equality, growth and stability.

Mentioning that there is a real difference between Obama and Romney, in terms of whether America will “once again become a land of opportunity,” Stiglitz ends with a theme I find fascinating and have thought about frequently these days:

The country will have to make a choice: if it continues as it has in recent decades, the lack of opportunity will mean a more divided society, marked by lower growth and higher social, political and economic instability. Or it can recognise that the economy has lost its balance. The gilded age led to the progressive era, the excesses of the Roaring Twenties led to the Depression, which in turn led to the New Deal. Each time, the country saw the extremes to which it was going and pulled back. The question is, will it do so once again?

Are we yet to the point where a “new progressive” era or a “new New Deal era” can be born? Or will it be a President Mitt Romney—a genuine Gilded Ager— who finally impregnates America with enough despair and disgust and determination to produce one?

Unions And The Middle Class Decline

A great piece in today’s New York Times by Joe Nocera, who admits that liberals—many of whom made their way in the world thanks to unionized parents—made a “terrible mistake” by turning their backs on labor unions.

Relying on Timothy Noah’s latest book on income inequality, “The Great Divergence,” Nocera writes:

Noah places the high-water mark for unionism in the mid-1950s, when nearly 40 percent of American workers were either union members or “nonunion members who were nonetheless covered by union contracts.” In the early postwar years, even the Chamber of Commerce believed that “collective bargaining is a part of the democratic process,” as its then-president noted in a statement.

But, in the late-1970s, union membership began falling off a cliff, brought on by a variety of factors, including jobs moving offshore and big labor’s unsavory reputation. Government didn’t help either: Ronald Reagan’s firing of the air traffic controllers in 1981 sent an unmistakable signal that companies could run roughshod over federal laws intended to protect unions — which they’ve done ever since.

The result is that today unions represent 12 percent of the work force. “Draw one line on a graph charting the decline in union membership, then superimpose a second line charting the decline in middle-class income share,” writes Noah, “and you will find that the two lines are nearly identical.” Richard Freeman, a Harvard economist, has estimated that the decline of unions explains about 20 percent of the income gap.

Nocera ends his piece where Noah ends his book on income inequality:

…if liberals really want to reverse income inequality, they should think seriously about rejoining labor’s side.

A fitting thought on this recall election day in Wisconsin, where the Republican governor decided to start a war with unions and union workers.

I posted this graph last September and it seems appropriate today:

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