Expect little, and you will be rewarded: Part Four
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(Previous Parts One, Two, & Three, best read in sequence.)

My review of a proposed progressive platform around which the left should rally continues. In my first note, I discussed the political background of the effort. Then getting into policy regarding inequality, in Two I considered benefits of the platform for the bottom of the income distribution, and in Three, costs for the top. Today I focus on the broad middle, what some dinosaurs like me prefer to call the working class. Lifting the living standards and prospects of working people is the sine qua non of anti-inequality policy.

This is both the strongest and weakest part of the enterprise. Everything invoked, if vaguely in places, is relevant and important. Minimum wage, labor rights, an expanded Earned Income Tax Credit, these are all key in my book. But something huge is missing.

The most powerful force putting upward pressure on the entire spectrum of wages is high employment, made possible with the right monetary and fiscal  policies. We want employers on their knees, begging people to work and offering higher pay and better fringes to entice them.

For all the gory details on what is involved, I invite you read Jared Bernstein’s new book (free PDF version here). For a summary, I’d direct your attention to Appendix C, starting on page 330. To save you the trouble of reading, I’ll try to give you the gist myself.

To get higher employment, in short, we need more government spending financed by higher deficits. That’s where the greatest inadequacies lie. There is no need to assign blame for the shortfalls; we could spread it liberally over both parties. The platform cites some worthy and important uses for such spending, but somebody needs to shout from the rooftops that austerity sucks. Reducing the deficit in a time of low employment is not an achievement, it’s a blunder.

Indicators often cited that attest to the health of the economy are bogus. We could start with the stock market, a source of income to relatively few, nor a harbinger of better days to come. Or GDP growth, not relevant to the working class when the benefits are concentrated on those with high incomes. Most importantly, the unemployment rate is not as informative when people who would work, given the opportunity, leave the labor force. A better fix on the labor market can be found in the employment population ratio for working-age people, or in the rate of growth of labor compensation. In those terms, economic performance is below par.

In short, the not-so-hip progressives of NYC betray the same fear of deficits as your ordinary politicians of other political stripes. Failure of policy in this realm positively cripples the working class. We have to do better.

 

Expect little, and you will be rewarded: Part Three
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I continue my desultory march through the platform of New York’s hip progressive Mayor Bill and friends. (Scroll down this page for Parts One and Deux.)

TAXIn my previous post I looked at how the platform treats the bottom of the income distribution, more specifically those outside the labor market, or with very tenuous connections to the labor market. On this score, the platform is found to be lacking. Remember, this is all supposed to be aspirational and not subject to abrupt dismissal on grounds of immediate political feasibility.

Today I look at what the platform does to compress the income or wealth distribution from the top. And the answer in this case as well is: not much. Some of the rich do get dinged here by the tax proposals, namely:

1. “Close the carried interest loophole.
2. “End tax breaks for companies that ship jobs overseas.
3. “Implement the “Buffett Rule” so millionaires pay their fair share.
4. “Close the CEO tax loophole that allows corporations to take advantage of “performance pay” write-offs.”

My instant appraisal: 1. the loophole is egregious but the benefits go to a small group; 2. hard to do for technical reasons; 3. A 30% minimum tax for millionaires, ok, but how; a tax on what? Interestingly, the White House blast on this provides zero details. 4. Provides more jobs for tax accountants.

The striking thing about the list is its neglect of the basic shortcoming of the Federal individual income tax: failure to fully include income from capital (capital gains, dividends, estates, etc) in the tax base. For how to do this, you’d have to rely on that commie source, the Congressional Budget Office. And what about taxing financial transactions? Why are we kissing up to Wall Street? I thought we were the 99 percent.

The pwoggie list seems to have been dreamed up by a PR person, about which fine, but who is going to educate the folks on what really needs to be done? If not here, where?

There are other ways the rich get richer with the assistance of the government. We could get into the weeds quickly in that case, so I can’t fault the platform for its concision. But as far as taxes go, they missed the big stuff.

My pet peeve about all of this is that under social-democracy, higher taxes will also be on the agenda for those between $100,000 and one million. If you’re serious about expanding the public sector with public revenues at about 40% of GDP, there is not enough money from the rich and corporations. It’s been a while since I did the numbers on this, but nobody has ever given me any reason to think otherwise. I realize this is a lot to ask of U.S. progressives, given their tendency to tell people we can have more social goods, but you won’t have to pay for them. Hey, if more social goods are desirable, shouldn’t people want to pay for them?

My next post will deal with the labor market.

MrNatural-kicks

Expect little, and you will be rewarded: Part Deux
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o-FUCK-THE-POOR-570Last Monday I promised a follow-up to Ask Little, and You Will Be Rewarded: Part One. The object of examination was a progressive platform originating in the political apparatus of New York City Mayor Bill DeBlasio on the theme of reducing inequality. My interest is in considering what I take to be yawning substantive oversights in the platform.

I should repeat that I’m happy to see BdB breaking his own lance for this line of discussion, and others signing on. I don’t see anything in the list that I don’t like. What’s on point here is what is missing.

Lists like this are potentially endless, so I want to make clear I am not trying to edit at the margins. The frame is reducing inequality, so other good things, like eviscerating the defense budget, are not on point in this context.

If we’re talking about money, and aren’t we always, inequality could be reduced to tightening the distribution of income. This is not limited to raising the floor and lowering the ceiling, but to, for instance, reducing the distance between those at the 40th percentile and the 60th. I’d also note that the latter does not imply reducing the incomes of everybody above the median, though some haircuts will certainly be in order.

It is useful to start with the extremes, meaning floors and ceilings. On floors, the inevitable dilemma is that some people who aren’t working cannot. This will always be the case, not least in our current, slow-growth economy. I speak of the victims of welfare reform, those who fall through the holes of the safety net and never recover. Single persons without children, who are eligible for little in the way of public assistance. Those rotting away in barren institutional warehouses, the deinstitutionalized, the homeless.

Jesus would be interested in these people, even if our Christian loudmouths are not. What about our friends in the Big Apple? Not so much, I’m afraid. The two exceptions are references to supporting education, not prisons, and universal pre-K. The first is more of a cliché than a proposal, while the latter is very important but not immediately relevant to the least of thine. (And just to be difficult, some investment in prisons will be necessary to assist in the reintegration of our huge incarcerated population into society. Interestingly, Hillary Clinton’s recent speech on mass incarceration had more bite than this platform.) In 2012, there were more than 11 million below half the poverty line, mostly adult and mostly non-hispanic white. Maybe it’s time to re-racialize poverty.

And:

Between 1995 and 2005, while overall child poverty declined significantly, the safety net became less effective at protecting children from deep poverty. The share of children living in deep poverty rose from 2.1 percent in 1995 to 3.0 percent in 2005.

The elephant in the room here is the dismal travesty of welfare reform, in which some Democrats remain invested. Who will speak of transforming the infernal Temporary Assistance for Needy Families block grant into a national guaranteed income for those without independent means or access to Social Security?

All the huffing and puffing about economic growth, jobs, public investment, and liberal yadda yadda yadda is not relevant to this end of the income spectrum. It would be nice if such people were not trapped in a political ghetto, considered indefensible and beyond help.

I understand the politics look to be somewhere between difficult and impossible. We need some political genius to weigh in; the least we could expect is some reference to the plight of the forgotten by the hip progressives of New York City.

When I began writing this, I thought I would wrap it up in a second post. But it turns out I’m just getting started. Stay tuned.

Lavatories of Democracy
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*   A new law in Kansas requires people receiving public benefits to limit their ATM withdrawals to $25 a day. ($20 actually, insofar as ATMs do not dispense $5 bills.)

*  In Wisconsin, recipients of food stamps may be restricted from buying non-white potatoes and ketchup. Also, no shellfish.

*  In Missouri, there are efforts to prevent food stamp recipients from buying “cookies, chips, energy drinks, soft drinks, seafood or steak.”

The 1996 welfare reform allowed state governments to reduce enrollment in what used to be Aid to Families with Dependent Children, now Temporary Assistance for Needy Families. In 1994, there were over five million families receiving AFDC benefits. In 2000, it was reduced to 2.2 million, and in 2011 it was 1.9 million.

Now that AFDC has been hacked, state wingnuts are taking aim at food stamps. Since it’s a federal program they can’t alter benefit amounts. But since they administer the program, they are trying to reduce the value of the program to its million beneficiaries, currently over 46 million of them.

 

What does ObamaCare have to do with postal banking?
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banking1_2For the self-employed, among others, a whole lot. To set the stage, consider the case of one Luis Lang, the now-famous self-employed ex-Republican who rejected the opportunity to sign up under the Affordable Care Act (ACA). (His GoFundMe page is here.) Then he got sick and saddled with the choice of crippling medical bills or going blind. His story is that it was risky to apply for subsidies when your future income is uncertain. If you underestimate income too much, you get a big tax bill the following tax filing season since the subsidy is means-tested (higher income, less subsidy). ACA subsidies are doled out monthly in the form of reduced premiums, so with higher-than-expected income you could be looking at the need to repay a loan from the Gov.

The underlying problem is that a worker’s accounting period (wherein he or she tries to balance in-go and out-go) is short. People spend as they get, except insofar as they can borrow to fill in gaps. When you borrow the piper must shortly be paid.

Of course, Medicare for all would be better. So would other permutations of public and private insurance. But the ACA is our world for the time being.

What does this have to do with banking? A postal savings bank is an institution that provides plain-vanilla financial services at low cost. For convenience its branches can be located in post offices, hence the name. Other countries have availed themselves of this simple device, including the U.S.A. in past years. Such a bank could provide low-cost insurance against an unpleasant ACA surprise, come April 15.

A related case is that of the Earned Income Tax Credit (EITC). In a book I’m reading, It’s Not Like I’m Poor: How Working Families Make Ends Meet in a Post-Welfare World, by Sarah Halpern-Meekin, Kathryn Edin, Laura Tach, and Jennifer Sykes, the use of the EITC as a convenient piggy bank for the working poor is elaborated. The credit functions as a nudge towards savings, since most people receive it for their year’s earnings the following February, after W-2s arrive and they have filed for the income tax. It’s used to pay off accumulated debt and big-ticket household purchases–appliance, auto repair, and the occasional special treat.

The bottom line is that earnings for the working poor besides being low are volatile. Volatility in and of itself is a burden that levies additional costs. In the semi-privatized world of the ACA, the interest in providing means-tested benefits is complicated by the underlying market model of linking subsidies to incomes. Short of expanding Medicaid and Medicare to drain the pool of uninsured and subsidized insured, a postal savings system would improve matters.

Not insignificantly, postal savings could also exterminate the world of usurious payday lending, check cashing, and installment loans, all of which cause burden the poor.

 

Expect little, and you will be rewarded: Part One
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I somehow missed this promulgation of progressive objectives. Apparently New York Mayor Bill DeBlasio provided the impetus. It came to my notice in this fanferiffic HuffPo piece on how Hillary is conquering liberals like Khaleesi coming down on Yunkai. Some of the signatories are friends of mine. Some of them I don’t care for. I don’t take exception to anything in it. What surprises me are some of the oversights, about which more in a bit.

The purpose of the document could be to hold Democratic office-seekers to a liberal standard, which I think would be just fine. Or, the purpose could be entirely different: to stage a dialog between Hillary Clinton and the domesticated left that ends in harmony and electoral season unity. With respect to Senator Bernie Sanders, someone described it as “sheep-dogging.” The mechanism in Bernie’s case is similar: stage a debate that can only end in reconciliation, since Bernie is emphatic that he will support the party’s nominee. It’s World Wrestling Federation practices brought to politics.

The problem in these exercises is that at the outset the progressive side rejects its greatest weapon–the threat of abstention, or even worse, opposition. You have exit and voice. With no exit, you don’t have as much voice. I’m not out of the woods here myself. There should be no question that in the national elections, a vote for Hillary is the correct vote. I’ve acknowledged that myself. I would help Bernie or others in the primaries, and HRC in the general, given the opportunity. However, there is another way of gathering voice without the threat of abstention.

Abstention or third-party opposition is a binary choice. You either do it or you don’t. But there are partial alternatives. In short, you can agree that a vote is an inevitable obligation, but you can also be a royal pain in the ass in the meantime. In other words, you can exact costs that might add to Progressive Voice by providing a constant blast of criticism. If a Left doesn’t do that, what is it ever for? What kind of left always reconciles itself to whatever the Democratic powers have decided?

In this light, there are some problems with The Progressive Agenda. For one thing, the endorsements are salted with hacks. Al Sharpton? Oh please. The signers are a tip-off that the standards of the agenda are modest and the associated rhetoric will be gentle. Otherwise we would be seeing something like the back-and-forth between Senator Elizabeth Warren and the Obama Administration. By contrast it is so easy for Mrs. Clinton to make agreeable noises about trade deals, like her husband before her, and like Barack Obama in 2008. Noises that culminated in endless lies, perfidy, and betrayal. Particularly on this issue, how could anyone take these people seriously?

I would not apply a purity test to any endorsements. But the tenor of the exercise should result in limited approval by your average politician. Otherwise it looks kind of squishy.

In the next post I’ll get into the meat and potatoes of the platform.

 

 

 

 

 

 

Notes from God’s Waiting Room
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mugI shouldn’t even be here. I discovered a couple of weeks ago I have a congenital heart condition which involved plaque building up in the aortic valve. A little piece breaks off and you’ve got yourself a stroke. Now that’s not happening. I had the valve replaced Wednesday. I’d show you my lovely scar, but for the sake of small children I will limit the exposure to the mug shot from Friday.

I’ve learned there’s a thin line between daydreams, dozing off, and hallucinations. For a good 48 hours it seemed I would be in some banal conversation with somebody, but when I open my eyes, there is nobody there. Happened dozens of times.

I feel like the beneficiary of gold-plated health care, thanks to Suburban Hospital in Bethesda and Blue Cross/Federal Employee. There was a constant stream of people coming and going, monitoring blood sugar, checking blood pressure, etc. etc. They had me set up for a pacemaker, in case I needed it. I didn’t. Pulling those little wires out of my chest was exciting.

I’ve spent time in a couple of other hospitals looking after others, and I wouldn’t go to either of them if I could avoid it. I’ve also seen a few nursing homes in my day, and boy do they ever suck. I guess if you don’t know anything else, you don’t know what you’re missing. Of course there are a lot of people with little or no access to health care, but there are a lot more with access to what might be called narrow care. Which is better than nothing, but speaks volumes about our retrograde welfare state.

This kind of operation involves a myriad of details to attend to, after the fact. You’re not quite fixed, you’re in some kind of indefinite maintenance regime (see gold-plated, above). Main thing is now I can get around the house by myself. I don’t need anybody constantly attending to me, though all such attendance is welcome.

I’m involved in a few different social media situations. Frequently someone announces a life event. I had previously foregone the common practice of wishing them well, since what’s another perfunctory note. After all the friendly remarks I received, I’ll have to change my habits. Every little remark or ‘like’ has value. Do them.

I can’t drive for a month. This continues to boggle my mind. The reason is the expansion of an airbag can send you right back to the hospital, since your sternum has been fucking sawed apart and reattached with chewing gum and paper clips. For the same reason, there are all sorts of things you shouldn’t do with your arms, like this:

One of my favorite positions. And looking at Frank makes me feel a bit better too.

That’s all for now, folks. Try to eat something, then nap time.

 

After Baltimore, II: A Wonk’s Notes
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Rockwell_1958_The-RunawayNow those responsible for the death of Freddie Gray have been charged, but all is still far from right with the world. The process could easily drag out for a good while and culminate unsatisfactorily. The local liberal-Democratic political establishment has changed the story for the time being, but what should be expected of them?

I can recite chapter and verse the story of the hollowing out of U.S. manufacturing, and the flight of good jobs and middle class incomes from the ghetto. Addressing this is a long-term project about which more below.

The more urgent priority is law enforcement applied to police forces. This means civilian-police review boards with subpoena power, backed by special prosecutors. I would not put it down to tanks or training. Police know when they’re doing it wrong. That’s why they don’t want people filming them. We could also support the idea of police being drawn from the neighborhoods in which they work.

The other curb on police abuse is a free press and a free citizenry. There should be no restrictions on the press going where they like to cover citizens who are free to assemble and monitor police.

Because a crisis stemming from police brutality is a terrible thing to waste, I would also take the opportunity to talk about decriminalization of drugs and plans to transition a good part of the prison population back to their communities.

When it comes to economics, the landscape shifts more to the state and national levels. Cities bereft of taxable resources aren’t in much of a position to heal themselves. The practice of offering tax breaks to business firms to locate anywhere in particular has been shown to be a huge waste of money. This also goes for sports stadium boondoggles, recognized by both left and right. A partial exception is that local land value taxation is a neglected municipal revenue source.

The dilemma when it comes to investment in broken areas is that some state governments might do it but others will not. Maryland is a good candidate for activism in this area, since its wealthy suburbs could afford more taxes. Other states dominated by retrograde politics will abstain. The Federal government is also stalemated in this respect by the Republican Congress. So in general the chatter about programs is blocked by the political consensus against such policies. If I knew how to fix the politics, you would have heard about it. The best I can do is support independent organizing, as noted in the previous post.

My attitude about the manufacturing story is a little jaundiced. There was no manufacturing renaissance in the late 90s, when wages and employment advanced by historic rates. That leads me to suspect it’s more about the Federal Reserve’s monetary policy and the Federal government’s budget.

Of course more manufacturing would be welcome. When I started working at the Economic Policy Institute in 1990, one of my portfolios was industrial policy. We gave it up because, frankly, nobody gave a shit about it. Some time ago, Herbert Stein wrote that people talk about industrial policy during recessions, then forget about it after the downturn has passed. If you think it’s important, it’s still a long-term project. Much simpler as a technical matter is to get the Federal government financing all manner of infrastructure repair and expansion. Get serious about high-speed rail, the national power grid, renewable energy sources, universal pre-K.

One stray thought about housing. I would not start with housing, something tried before in Baltimore. I would start with employment (see infrastructure, above). When people have incomes they will create demand for decent housing, and they can do some fixing up themselves. People aren’t children.

 

After Baltimore, I: Activism
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brokenRisking the wrath of Steve Randy Waldman, I have a few thoughts. My own ancient left prejudices led me to see the property destruction as an unhelpful distraction from the good, constructive folk marching and demonstrating. But this separates things that are organically linked. When order breaks down, beginning with the police violence victimizing the Freddie Gray, it can set off both responses. We have to ask whether the charges against the offending officers would have resulted if the response had been entirely peaceful.

There has been commentary to the effect that property destruction is a legitimate, justifiable tactic, or that it is a meaningful statement, in and of itself. The idea of a tactic implies a tactician, a self-conscious intelligence guiding an insurgency. But there has been no indication of any such guidance. No anarchist underground is in evidence. So it’s what I prefer to call random bullshit, or what Ta-Nehisi Coates called a “forest fire.” That doesn’t mean it is without any possibility of positive effect. It just isn’t anything a sane political person would try to actively foment. As a practical matter, the authorities would roll you up in, oh, about three days. Nor does it further actual mass organization, the actual substance of which–meetings, meetings, meetings–is not a natural transition from running the streets.

The charges against the officers mark a new stage, the end of the beginning. All systems are now go for a spring of mobilization. People have gotten a taste of redress, and they will want more of it.

Democratic politicians will try to get in front of the activism–Hillary Clinton actually uttered the phrase “mass incarceration”–but they have a lot to answer for, not least in Baltimore itself. The way pressure is built up is not by following these hacks, because their job is to get elected and keep doing very little. Pressure is created by doing just the opposite — creating independent force, on the ground. I’m reminded of the absorption of the protests in Wisconsin into Democratic electoral activity, which turned out to be an utter failure. Agitation ceased, and the a-holes still got reelected.

Social movements get results. An enduring weakness of the U.S. left is the proliferation of atomized efforts. Every specific issue has a group or groups focused on it like a laser beam, and my issue is more important than any other. What’s lacking is the merger of these efforts into a broad-based, united, national movement. The fragmentation is conducive to creativity and energy, but it can retard synthesis of problems and associated causes into the new world view on which our survival depends.

In my next post I will offer some ideas on tenable policies to highlight.