Warren’s M4A, Round 1

Just read this blast from Brother Matt, lambasting Warren’s M4A financing plan as “a disaster.” Wrong on several counts. Every count, actually.


Matt castigates Warren’s employer tax as a “Medicare head tax,” contrasting it unfavorably with a straight payroll tax. (The ‘head tax’ in this case is a firm-specific dollar amount based on prior health insurance costs; a payroll tax is simply a rate — a.k.a. ad valorem —  applied to taxable payroll). Matt glosses over the fact that the status quo is also a head tax, also known as employer-paid health insurance, in his sense.

Warren’s tax is less disruptive than a straight employer tax. It would be lower for firms that had cheaper insurance, because of healthier workforces and/or more narrow coverage. I don’t know how it would apply to firms with no coverage.

Matt’s comparison of the head tax with a non-existent payroll tax does not follow. In public finance jargon, a head tax is the same fixed charge applied to all persons. Warren’s tax varies with prior health insurance premium costs, which are generally assumed to be borne by the worker.

That exemption of smaller firms would encourage a wave of outsourcing and vertical disintegration may be doubted. There are already incentives for this, and we are stuck with what we have, at least for the time being. Currently, employer provision of coverage is voluntary, so if their costs are not much altered under Warren’s ‘head tax,’ there is less reason to fear some wave of spin-offs. Firms are a bundle of non-market transactions for reasons that supersede the purported efficiencies of fragmented, competitive sub-markets, as someone wrote in the 1930s.

Matt gives the game away by acknowledging he might start with Warren’s plan, horrible though it may be, but transition it towards a payroll tax. At first blush I would agree this end result is preferable to a nationally-uniform charge per worker.

There are going to be plenty of reasons to take exception to Warren’s proposal, but these aren’t very good ones.

Bruenig & UBI

“Politics is not arithmetic.”

– Álvaro Cunhal, former Secretary-General, Partido Comunista Português

My friend, the semi-notorious Matt Bruenig, responded to my bit in Jacobin on Andrew Yang and Universal Basic Income (UBI) on his Peoples Policy Institute website, so here I return the favor. (An older piece is here.)

He leads off with a claim that there is five trillion in capital income available to pay for a three trillion UBI. There are two problems with this claim, one a matter in national income accounting, the other – much the more important one – in political economy.

The five trillion (line 9 in BEA Table 1.10) of Matt’s “Net Operating Surplus” includes the incomes of proprietors, much of which is implicitly labor income. If you run a candy store you record your net income as profit, even though it’s basically a wage. In the same vein, another component, rental income, is received by Uncle Joe who rents a house as well as by the Trumps. Some corporate profits and interest are received by workers as a return on their savings.

I note in passing that Matt characterizes capital income as passive income paid to those who do not have to work for it. This is not exactly right. Besides the candy store and Uncle Joe, if I save part of my wage and receive interest, dividends, or capital gains, the latter types of income are not quite benefits for which I did not have to work. And finally, a piece of that is tax already being paid, which can’t be paid again to finance a UBI.

I would grant that the bulk of the five trillion is received by the top quintile of the population, with a disproportionate, gross amount to the top tenth of a percent.

This is quibbling in light of the larger point, which is that financing a UBI is not a matter of arithmetic, but of political economy. The Federal budget includes about $4.4 trillion in spending. Diverting one-tenth of the cost of the UBI from other uses would be daunting. Three trillion? End of story. Carving it out of capital income? Ambitious goals deserve praise. But at some point ambition can give way to hallucination. Matt acknowledges this, saying “Liquidating the capitalist class will of course be difficult to pull off politically.” Ya think? When he says “pull off,” I think of the difficulty of pulling off a thirty-foot putt or winning a tango contest.

Matt wants to distinguish between political difficulty and “what is possible as a policy matter.” Policy requires arithmetic, but it is never reducible to arithmetic. It is only made possible by struggle. Power concedes nothing, notwithstanding the technocratic elegance of any proposal.

The distraction implied by UBI chatter is underlined by the primacy of other priorities on the Left, especially Medicare For All and the Green New Deal, neither of which individuals could buy on their own with a UBI check.

The way things look now (9/4/19), I’d say we have an excellent chance in 2020 for a President Sanders or Warren, and a conceivable opportunity to flip the Senate. In that scenario, we can look forward to non-trivial expansions of health insurance coverage and the green transformation of the economy. Liquidating the capitalist class is about as likely as that dude Andrew Yang being elected president.




Liz Warren and the Correct Line

Every sane American will be greatly relieved if any Democrat displaces the current occupant of the White House in 2020. However, we should be positively thrilled if that person is either Bernie Sanders or Elizabeth Warren. They have contrasting strengths and weaknesses, but their most impassioned supporters are dwelling on points of contention that are either trivial or specious. We would have a much better debate if the important differences were hashed out.

Some of Sanders’ support is founded on his radical bona fides. This interests me because I happen to come from an odd place in the distant past, as someone with a prior commitment to doctrinaire Marxism-Leninism (no Mao Tse-Tung thought, thank you very much).

I’m not the only such type who has migrated to the Democratic Socialists of America (DSA). We know a few things. We know there isn’t going to be any smashing of the capitalist state. Marx is still enlightening, “Revolutionary Marxism” is a fantasy. Been there, done that. Now we could be on the right wing of DSA. Given our background, the radical postures of some Sanders and DSA peeps can be adorable.

By now it is a commonplace that Bernie Sanders’ version of “democratic socialism” is not different from FDR’s New Deal or Lyndon Johnson’s ‘Great Society.’ Sanders evinces no interest in nationalizing the means of production, the traditional socialist touchstone. In his recent speech aimed at elaborating his own vision of democratic socialism, Sanders invoked the ‘Four Freedoms’ of FDR, and more generally the idea of economic rights. Every single one of these rights (to a job, to health care, to education, etc.), which I enthusiastically endorse, can be satisfied with an expanded welfare state. Socialism in the traditional sense is not necessary.

A much-discussed point of distinction for Elizabeth Warren is her insistence that she is a capitalist and believes in markets, rather than a socialist like Sanders. Both campaigns get more exercised about this than is warranted. Sanders would not nationalize the means of production. The government would not end up owning IBM. Nor has Sanders shown any interest in any sort of economic planning. The inescapable implication is that a Sanders economy would continue to rely on markets.

Guess what? Sanders is no more opposed to markets than Warren, and Warren is no more dedicated to them than Sanders. Their differences are purely rhetorical, or what economists call “product differentiation”—the practice of inventing cosmetic differences in otherwise identical products for the sake of marketing advantage. These days they call it “branding.”

I could note that the idea that somebody is a “capitalist” by virtue of some accumulated wealth is also a non-sequitur. Of course, both Sanders and Warren are considerably better off than the average person, but properly speaking, in Marx the term “capitalist” refers to a collective body – a class. “Capital” is not a hoard of wealth but a social relation. If you owned a thousand shares of Amazon, you would be worth nearly two million dollars, which would be glorious, but it wouldn’t give you any sort of lever over the means of production. Even Trump as a Manhattan real estate hustler had little control of that sort. From a radical standpoint, neither Sanders nor Warren are capitalists in any meaningful sense.

Sanders’ commitment to socialism, if we’re talking about current or recent times, has never quite hung together. The New York Times columnist Jamelle Bouie has proposed an interesting explanation for Sanders’ rhetoric. By relating his program to the New Deal of Franklin D. Roosevelt, Sanders is making socialism wholesome, even if it isn’t what his real hero Eugene Debs espoused a hundred years ago. After all, a genuine socialist of the 1930s, Norman Thomas, remarked that FDR carried out the socialist program “on a stretcher.” For Sanders, FDR’s economic rights are a point of departure from which the road leads, and for which the destination is open-ended. Today, this is the radical aspect of democratic socialism.

It’s possible that “socialism,” as opposed to socialism, will be the central bogeyman in Trump’s 2020 campaign. It could become an election problem for Democrats, or it might prove energizing. For the past hundred years, Republicans have described most anything proposed by Democrats as socialism. They may have exhausted its shock effect. Sanders chooses to own the term, rather than run away from it.

Political predictions are more hazardous these days than ever. But socialism as epithet should really be retired, as far as the intra-Democratic primary campaign is concerned. Colorado Governor Hickenlooper might testify to that, as the ship of his campaign sinks before leaving the harbor. By dwelling on it, more important matters are neglected. And the more contenders for the nomination invoke it as a negative, the more it will prove useful to Trump in the general election, regardless of whom the Democratic nominee may be.

One important policy difference between Sanders and Warren is foreign policy. Sanders breaks new ground in several places, such as Israel/Palestine and the international neo-fascist surge, which has to hearten any erstwhile anti-imperialist. Still, one would be at pains to discern much of a difference from, say, George McGovern in 1972.

Regarding the national security state, Sanders still hasn’t caught up with Senator Frank Church (from Idaho, of all places), circa 1975. To be clear, it’s all still a breath of fresh air, so leaden at the highest level has been the foreign policy debate for the past forty years.

Thus far, Warren has resolutely avoided any heterodoxy in foreign policy. She might be in the mainstream of the Democratic Party in this respect, but the mainstream leaves much to be desired. To her credit, Warren has recently taken steps to stand against a potential war with Iran, co-sponsoring a bill to this effect authored by, you guessed it, Sanders. At best, she’s playing catch-up.

Sanders has gotten lefty black marks voting for defense budgets. This reflects a failure to understand how the Congress operates. Sanders is a Democrat in all but name. He caucuses with Senate Democrats, he votes with them, and he is assigned leadership tasks by them. It is amusing to note that some senators, such as unlamented alumni like Claire McCaskill or Heidi Heitkamp, routinely classified as Democrats, may have voted differently than their caucus more frequently than Sanders, while the Sanders-is-not-a-Democratic wailing from Hillary dead-enders continues.

When the Democratic caucus arrives at consensus on their budget proposals, including defense, he is obliged to keep in step. The alternative is to have none of his concerns considered. Sanders abstention would have no positive impact on the outcome. There is no socialism in one senate seat.

Candidates are often rated against a menu of desirable stands. Items in the litany include Medicare for All, the Fight for 15, reparations, abolition of ICE, reproductive rights, Black Lives Matter, and the Green New Deal.

Ambitious, “aspirational” demands need not be scorned. They get the political juices flowing. Beckoning towards Utopia inspires people and stokes mobilization. Simplification helps folks to sort themselves out. It intensifies the energies of those already focused on a specific objective.

The downside of binary check-the-box tests is twofold. One is that an intense minority does not necessarily prevail politically, which can lead pragmatic politicians to consider incremental changes that appeal to a broader constituency. Of course, for some candidates, rejection of an ambitious goal can be a refuge from commitment of any sort.

Two is that when it comes to actual policymaking, a binary framework obviates any tactical considerations bearing on the practical disposition of issues – on actually getting shit done.

The health care debate encapsulates the most important difference between Sanders and Warren, one that does not necessarily credit either. There is a continuum of health care reform options from ObamaCare to Medicare For All. The likelihood is that under the best of circumstances, we will end up somewhere on that continuum, short of the maximum program. (The real socialist option in health care is actually a bridge further than the Sanders plan, something like the British National Health Service.)

There are multiple channels through which more uninsured Americans could obtain insurance, or better insurance. Subsidies under ObamaCare could be expanded. The minimum age for Medicare could be lowered. The income limits for Medicaid could be raised. A robust public option for insurance could be made available to all. Automatic enrollment in a universal Medicare plan – the Sanders option – is not the only possible remedy for the uninsured.

The Sanders approach entails a significant shift of finance from the private to the public sector, and the elimination of private health insurance. The merits of this option aside, its political prospects are undeniably uncertain. While it is possible that the total cost of health care could be reduced, what would be in prospect is a massive shift in payments from individuals and their employers to taxpayers. In the process, many will find their costs have decreased, and many others – perhaps not as many – could see increases. In advance of the implementation of any such reform, many will prefer the devil they know to the other kind. The vast majority might be persuaded to expect that they will benefit, but the vast minority could become a huge political obstacle to change.

Warren has shyed away from ‘M4A’ and failed the popular lefty litmus test, though in the first debate she endorsed it. For her ambiguity she is criticized. For instance, Tim Higginbotham in Jacobin asks why Warren has no plan for health care. In fact, along with her pro forma endorsement of M4A, Warren has related her own plan. It is threefold. First, it is to defend ObamaCare, to block Republican efforts to squeeze enrollment. Second, it is to target some narrow, attainable objectives, such as reducing prescription drug prices. And third, it is to pursue what she judges to be more politically tenable devices for expanding coverage.

There’s a lot of there there. Higginbotham pretends the only alternative to M4A is the preservation of the execrable private health insurance industry. Agitating for M4A is praiseworthy, but the notion that universal coverage cannot be obtained in a satisfactory way without the wholesale elimination of private insurance is simply false. The fact is that private insurance of different types survives in European social-democratic systems that provide universal coverage. As University of Chicago economist Harold Pollack recently wrote, the principle at stake is not “single-payer,” a mere means to an end, but the end itself of universal coverage.

The problem with the left critique of Warren is not that M4A is an unworthy objective, or that it is a political non-starter. It is that the practical, political difficulties of getting it are entirely glossed over. Sanders people envision the force of a mass uprising, non-violent of course, that will bludgeon the Congress into following orders from President Bernie.

This same distinction between Sanders and Warren affects virtually every item on the domestic agenda. It is less a disagreement on objectives than it is on process. But process does not typically enter the discussion.

The neglect of process, or more simply, the current political state of play, takes a lot of air out of the litmus tests. Of the House of Representatives’ newly triumphant Democratic majority, there are presently 27 members who have joined the “Blue Dog Coalition.” A hundred or so have declared fealty to the so-called “New Democratic Caucus” (descendants of the Bill Clinton political tendency, and not so new any longer). The Democratic edge in the House is fewer than twenty seats.

If the Democrats do well enough to retake the Senate in 2020, the incoming victors will be much like the moderates in the House. In this setting, the fate of the medley of ambitious criteria erected by the left is dubious, to say the least. It is fine to strive for consensus on ambitious goals. It is folly to insist upon them well in advance of any prospects for their achievement. One can make a case that polling supports the premise that the public favors major changes. But any radical analysis understands the barriers between public support and actual legislative accomplishment.

The implication is that the sparring over support or rejection of maximalist demands in the primaries, and not just in the Bernie vs. Liz conflict, is a waste of oxygen. The real action for a Democratic president may well turn out to be in the realm of executive actions, rather than legislation. A recent piece by Meagan Day in Jacobin acknowledges the near-term political obstacles to change and explores the executive orders that a President Sanders might issue. We could note that insofar as this is the most relevant field of play, whether any candidate gloms onto M4A or similar proposals becomes less salient.

I’m not suggesting that either Sanders or Warren are correct in their appraisal of the political prospects for reform. My point is that people are sorting themselves into opposite poles founded on vague intuitions: either very ambitious things will be possible, or that much less will be possible.

What should be undeniable at this point is that U.S. politics is in a fluid, not to say frightening, state. Shifts in public opinion and political forces, both good and bad, have come at a rapid and disruptive tempo. It’s hard to say how little or how much will be possible. As Ta-Nehisi Coates recently pointed out in his advocacy of reparations, it wasn’t that long ago that support for gay marriage was a seriously inconvenient position for a politician. Now rejection of the institution is more of a burden. Ideally, voters would become versed in the full spectrum of progressive options and be prepared to go as far as they would like to go. Arguments about the political unfolding are a premature exercise in thinly sourced speculation.

The biggest difference between Sanders and Warren is outside the realm of legislative proposals, domestic or foreign. Sanders has been self-consciously building a movement that he envisions outlasting his own time on this Earth. He indicates that this movement and the greater mobilization it would attempt to foment is the essential foundation for genuine reform. Sanders’ organization links itself to progressive struggles outside of the campaign proper.

Sanders’ enemies have a difficult time understanding the concept of an enduring, progressive movement. Why didn’t Bernie go home once he had lost the nomination? Why does he keep grandstanding? Why doesn’t he just shut up?

I do have to ask why Sanders keeps his operations separate from the only bona fide democratic socialist organization on the ground, the aforementioned Democratic Socialists of America. Sanders’ is basically a top-down operation, not unlike the defunct Nader outfits, which raises the question of its democratic credentials.

By contrast, Barack Obama built a formidable organization to power him to electoral success, but he demobilized it once his electoral victory was secured. Of course it was never democratic either. In this way he was following the usual pattern of conventional Democratic politicians – excite the electorate up until the point where it has provided the donations and votes to attain office. After that, it’s goodbye Charlie. In this sense, Warren has thus far shown no indication of being any different.

The deck of American politics is increasingly stacked against progressive reform. We are looking at an enduring right-wing Supreme Court majority, an implacable Republican Senate elected by a national minority of white voters in rural states, the ongoing deformation of the political process by vast inequalities of wealth and unaccountable flows of money in service to that inequality, and the increasing disenfranchisement of people of color.

The likelihood is that for Warren or Sanders, and for most any other Democrat, continuous popular mobilization will be needed to advance their policies, if not to merely survive. There will be no permanent victories. Even venerable institutions of the public sector are not safe. The magnitude of the neo-fascist threat demands the reform of the Democratic Party itself.


Free Everything

Image result for abbie hoffmanNobody seems impressed by my point that the prospective incidence of benefits from Sanders’ plan for ‘free college’ will be different — and less regressive — than the retrospective distribution. So I will hit it again. But there is a bigger issue, see below.

We’re getting tales of lawyers and doctors making six figures who would get huge debt relief. But these folks were able to borrow is the first place because they were good credit risks — their families had money. Going forward, ‘free college’ would benefit a different class of people, including more of those who were not able to borrow in the first place. And the very rich don’t have to mess around with student loan applications. They wouldn’t qualify for loans in the first place. My daughter could hardly get anything when she was still a dependent, and I was very far from rich.

An obvious rejoinder is to limit the relief only going forward, but that has an ambiguous impact on the politics. Those who are currently indebted and done with school would get their noses out of joint. The reduced cost of the program reduces the ‘where’s mine’ objections but does not eliminate them.

More generally, in keeping with the reductionism of what the once-rational Mickey Kaus called ‘money liberalism’ and the narrowness of distribution calculations, there is the general interest in de-commodification.

The objection to Sanders’ plan as un-socialist comes mostly from people averse to socialism. It is dubious as a radical objection. Marx didn’t fuss around with distribution tables. He was interested in replacing markets. Reduce the extent to which people have to pay for stuff. To everyone according to their needs.

I’m duly cautioned by a point in this vein regarding organ traffic. When a trade is dominated by thievery and a gamut of horrific practices, a legal market could be an improvement. But just as I wouldn’t say either everything should be privatized or nothing should be, I would say some markets with real scarcity might be better off commodified (under regulation), while others might not be. The scarcity of higher ed is artificial — we could have as much as we wanted, tax-financed. The scarcity of organs (assuming humane collection procedures) is not artificial.

Another pet peeve of mine is the notion that $X billion could be better used elsewhere. Of course, there are always better allocations of resources than existing ones in the public sector. But that’s not the way decisions are made. If we ‘save’ money from one less fruitful purpose, it doesn’t mean it will be reprogrammed into something better.

So by all means push the envelope for more free stuff, as long as it’s the right stuff. The messaging would obviously employ different terminology, but that’s not my job.

BlacKkKlansman reviewed

Image result for blackkklansmanI saw Spike Lee’s latest movie, BlacKkKlansman, last night, and I have thoughts. (Spoilers ahead! Do not read if you haven’t seen the film, and if you haven’t seen it, do Netflix and chill with it.)

My interest is not in the movie as an artistic achievement. I’m not really qualified to judge it in those terms. In my untutored view, Spike Lee is really good at the technical side of making movies. I mean cinematography, editing, and music. As a writer, his dialogue is often very good as well. Otherwise, the content from one film to the next is more open to critique. At any rate, this film’s politics are my subject.

To cut to the chase, as a movie-watching experience the film is a pretty ordinary cops-vs-racists deal. As agit-prop, however, it is by turns engrossing and electrifying. I don’t mean to diminish it. By my lights, there is nothing wrong with a great propaganda vehicle, especially if it’s for causes I favor.

The racists in the film – Klansmen, including their national leader, David Duke – are caricatured as completely deluded, ignorant, vicious clowns. They are all fat, dumb, and ugly. There are two ways to take this. On the one hand, the underlying ideology deserves all the scorn that can be put upon it. On the other, it doesn’t pay to underestimate the enemy. Duke, for instance, is a much more imposing figure in real life than the pencil-necked Topher Grace could manage in the film.

There are hints in the film of the Klan’s ambitions to mainstream itself, but because the members are shown in such reduced terms, it is difficult to see this emerging from the withered roots on display. By contrast, the film’s inclusion of modern news footage at the close confirms that this is indeed what has happened. The problem is the gulf between point A – the setting of the film – and point B – the current United States of America. How did we get here from there? The film can’t tell us.

One facet of the bifurcation is the depiction of the Colorado Springs police force. Now by the testimony of the real protagonist in this story – police detective Ron Stallworth, whose memoir is the source – said depiction is accurate. Stallworth’s initiative in investigating the Klan was supported by his superiors and colleagues. Bully for them. But this is not a documentary.

Some events, including the climax to the story, are pure fiction. The decision over what truths to show and what story elements to dream up remains the choice of the auteur. The benign image of the police in the Lee’s movie may be true to the particular, real events upon which the film is based, but it is not true to the reality of law enforcement in America today. Not a few white police officers are aligned with the very same forces whose germination is targeted in this film. In short, today the cops need a lot of work in the field of race relations.

To his credit, Lee doesn’t shrink from contradiction entirely. Perhaps the central one in the film is the dilemma of a black police officer being sent to infiltrate local civil rights agitation, when he isn’t getting after the Klan. To emphasize this problem, Lee ingeniously invents a romance between the officer and the leader of a local Black Student Union. (In reality, Stallworth had a German girlfriend.)

Near the close of the film, when Stallworth’s membership in the police force is exposed, and notwithstanding his heroic role in destroying the local Klan organization, she rejects him for aligning with the enemy pigs. At the same time, the threat of a cross-burning outside their apartment brings them together in armed unity. There is a scene of the pair of them, each pointing pistols at the camera, floating almost ethereally towards the window.

The truth is, the radical politics on display here are pretty lame. The police are the pigs and Black is beautiful. Sure. There is one bit of a speech by Stokely Carmichael, which is just a string of clichés. Now back in the day I heard Stokely speak myself, and although I didn’t care for his politics, he was much deeper than his namesake in Lee’s film.

I do have to say at one point in the film, the members of the Black Student Union plus their police infiltrator are dancing and singing in a bar, to the sound of the Cornelius Brothers and Sister Rose (“Too Late to Turn Back Now”). The scene does go on for the better part of the song. Lee wants to say, these were my people, beautiful and graceful, who deserved better than they got. My late wife could have been one of them. Imagine seeing your spouse at age 19, dancing, being happy. It was sweet.

Another affecting aspect for me is Lee’s invention of Stallworth’s alter ego ‘Flip’ (short for Philip), the cop drafted to stand in for Stallworth when a personal appearance at a Klan gathering is required, as a Jew. He is played by Adam Driver, whom I had been ignoring since I first saw him in an episode of Girls (I’ve only ever watched part of that one episode). He didn’t stand out much in the newer Star Wars either, though I’m not much into Star Wars since it became a brand more than a movie serial. I’ve decided Driver is a damn good actor.

Lee’s Flip is secular and barely ever thought about his roots until his Klan infiltration. The anti-Semitism of the Klan makes him think more about those roots, something which most Jews have experienced now and again. The Klan’s historic anti-Semitism (among other prejudices) was a fact.

At various points in the film, assorted bits of Trump rhetoric crop up. One that caught my notice was the Klan’s espousal of “America First.” I thought it was a bit of a stretch. Of course, all students of U.S. anti-Semitism know the origins of the slogan in Charles Lindbergh’s 1930s campaign to keep the U.S. out of World War II. But for the Colorado Klan of the 1960s, as one reviewer pointed out, it turns out to be accurate as well.

The film closes with news footage of the president and the contemporary “alt-right,” better understood as modern neo-Nazis, highlighting their recent offenses in Charlottesville, Va. It effectively knits together the Black Klansman tale with our present dangers.

At bottom, the politics of Black Klansman hardly verge beyond liberal/anti-racist/anti-anti-Semitic. Its view of law enforcement is roughly benign. It is hard-core anti-Trump, though not especially anti-conservative. It’s obvious why it was a success with Hollywood.

More significant, I would say, is that it brings, or should I say returns, Jews to the civil rights struggle and signals the emerging common interests of people of color, Jews, Muslims, and everyone of non-standard sexual orientation or identity.

We still have some way to go for a genuinely epic, radical film. Lee got closer with his Malcolm X. Why hasn’t anybody ever done the story of Toussaint Louverture? That’s a hell of a fucking story. There are others.



Plan, Market, and Wal-Market

Image result for socialist planning“Men plan, and God laughs.” – Yiddish proverb, origin unknown

More and more people are talking about socialism, but nobody’s doing anything about it. If we’re talking about “nationalizing the means of production,” Bernie Sanders’ avowedly democratic socialist political revolution falls well short. Old notions of the state owning the “commanding heights” of industry and employing central planning to guide the economy fit a classic concept of socialism. Old-fashioned lefties are given to gripe that Bernie’s vision extends little beyond a beefed-up New Deal.

An extension of the space that Sanders has cleared is the new book by Leigh Phillips and Michael Rozworski, “People’s Republic of Walmart: How the World’s Biggest Corporations Are Laying the Foundation for Socialism.” Their elevator pitch could be, our largest, successful corporations are founded on extensive planning systems, and the success of these firms, such as Walmart and Amazon, demonstrates the growing feasibility of socialist planning.

Central planning means the government owns and directs the operations of the bulk of land, plant, and equipment – capital — used to produce most of the economy’s goods and services. It is distinct from the expanded public sector promised by Sanders that would provide more benefits, facilities, and services where the private sector is most delinquent. Health insurance is currently the most cited example.

In efforts to render ‘socialism’ more wholesome, some voices urge us to regard the humblest public facilities as examples. Your beloved library is Socialism! But this will not do. If we’re talking about planning, we are really referring to the next level of public provision of goods and services that are usually produced by business firms.

In centrally-planned economies, instead of business firms we have enterprises. These enterprises are given instructions from a central authority on what to produce, how to produce it, and what to sell it for. Capital investment is decided by the government, which owns all the capital goods. For an enterprise to expand, or to switch to some different production method, agreement must be secured from higher authorities. Moreover, ‘lower authorities’ – the enterprises – have to obey instructions finally arrived at.

An alternative to central planning is the market socialist model. In that system, individual enterprises are controlled by their own workers. They produce for profit and compete with other enterprises for market share. The authors are non-committal as to their preference for either model, though libertarian-socialist sympathies for market socialism are detectable in their account.

Central planning was taken up by the communist governments of Eastern Europe and the Soviet Union, and in recent decades, abandoned by them. State-owned enterprises were sold to private parties. Usually the beneficiaries of these transfers, at fire sale prices, were former communist bureaucrats. Meet the new boss, literally the same as the old boss. Exhibit A is the fabulously wealthy president of the Russian state, whose business experience was acquired in the KGB.

Market socialism never got much further than Yugoslavia and has also left the scene. Even so, the libertarian socialist vision scratches the right itches – decentralization, democracy, communal ownership, equality. Feasibility remains a question.

State-owned enterprises and state-run economies were famously unproductive, among other deficiencies. When it came to provide a competitive supply of consumer goods, central planning failed. Competitive in this context means that these planning systems could produce, but they could not produce enough at acceptable quality to discourage their citizens from envying capitalist alternatives in the west.

Yugoslavia’s story was different. The authors might have devoted more attention to its devolution, since it goes to the heart of their appeals. At any rate, there is little question that today, labor-managed firms, cooperatives, and non-profit organizations are ubiquitous in capitalist economies and have proven capabilities of producing marketable, profitable goods and services.

The burden of analysis from Phillips and Rozworski (P&R) is that communist planning systems, aside from their multiple affronts to human freedom, failed at logistics, and were further handicapped by the limited computing power available in their heydays. Now we have giant corporations that rely on planning, and they are doing just fine.

The authors are keen to emphasize that the prosperity of these firms does not hinge on market efficiency, since the internals of these firms are not organized along market lines. They are right to cite the economist Ronald Coase of the University of Chicago, who pointed this out in the 1930s, though they might have also given attention to John Kenneth Galbraith, who cultivated this field in more recent decades.

Under the hallowed theory of supply and demand, we get an efficient market when many well-informed buyers and sellers come together, prices are thrown back and forth, and equilibrium is reached.

The departures of really-existing markets from this best of all possible worlds were always obvious. Coase’s insight was that internally, business firms’ operations do not rely on market forces at all. The custodian summoned to fix the furnace does not begin dickering with the supervisor over his fee. There is no bidding war for who will sweep the floor. Workers on an assembly line do not auction off their services for each task performed.

Internally, business firms have always run as little command economies, or “islands of power.” What’s remarkable about Amazon or Walmart is not only the fact of this planning, but the scale at which it operates successfully.

The analogy of Walmart’s internal operations to central planning is tantalizing but limited. Our largest corporations’ outputs exceed the Gross Domestic Product of entire countries. Has planning become feasible for an entire nation? The differences between Walmart and an entire economy elaborated by the authors present a set of challenges for the advance of planning.

One reason that planning appears to function is due to what economists call survivorship bias. Walmart is successful, but what about firms with internal planning that are no longer with us, or that were never able to scale up in the first place? The authors offer one counterfactual bit of evidence – the failure of Sears, in which a scheme to organize competition among different subdivisions of the firm ended in fiasco.

Second, one feature of Walmart’s operations vociferously rejected by P&R – the cramdown of labor costs and the suppression of workers’ voices at work – could be reasons for its success. The authors are right to suggest that ‘flatter’ organizational pyramids with bottom-up participation can function effectively, but one must ask, if such alternatives are more profitable, why don’t more firms resort to them?

Third, another egregious practice that comes with the market power of Walmart and Amazon and helps them to succeed, planning aside, is a feature of their scale and dominance of their markets: the ability to grind down the prices paid to their suppliers. Moreover, not a small share of these suppliers operates in nations that suppress labor costs in ways that the worst American robber baron might envy. Neither state-owned nor worker-managed enterprises would necessarily be immune to such temptations.

Fourth, Walmart and Amazon are in large part intermediaries – they don’t manufacture the products they sell. As large as they are, so too are the worlds of their suppliers and customers. The planning problem is largely solved for them. They can obtain information on costs of production and consumers’ willingness to pay for this and that by surveying markets external to them. They are similarly informed on whether to contract out some component of their production, such as custodial services. They know the prices offered by outside vendors. This information would be lacking under central planning, if not under market socialism.

Fifth, one feature of corporations is that decisions are made in a hierarchy. The results may be unlovely from a social standpoint, but they are arrived at more quickly. A drawback to the authoritarianism of extinct communist governments, was the tendency for the information flow to be stifled. The authors urge the replacement of hierarchy by democratic procedure: “Democracy is the beating heart of socialism.”

But democratic rule by councils of interested, not always unbiased or informed parties, brings its own costs, particularly in time. A decision arrived at by a central authority that must be run back and forth through subordinate councils, or councils of councils, takes longer to be resolved. By the time it is resolved, it could be rendered obsolete by subsequent events.

Great advances in computing power combined with big data certainly enlarge the ability to plan. The extent to which such capacity is adequate to the problem of determining production and consumption decisions in an economy is still an open question. Alongside the greater scope for calculation, moreover, comes the greater threat to individual privacy.

Socialism in the U.S. is back, at least as something to talk about, so chances are we are not done talking about planning either. A myriad of social problems cries out for the intervention of a higher, regulating authority to restrict or transform the way business firms operate. These interventions imply planning, though not necessarily of the sort hoped for in this book.

We need better planning for cities and regions. We need a plan to reduce carbon emissions through the reorganization of transportation and electricity generation and distribution. We need a plan to reverse the trend of residential segregation by race.

We need to ask which problems we hope for central planning to solve. Some of the most popular causes nowadays do not require planning. The lowest priority for planning may be the basic production decisions of corporations.

The government could require Walmart to phase into renewable energy. It could devise trade agreements that inhibit the super-exploitation of labor in nations that export to the U.S. It could put floors on the wages Walmart can pay its employees and indirectly, its vendors, and mandate equal pay by race and gender. It could tax the incomes and inheritances of Walmart’s chief shareholders and executives at progressive rates. It could purchase shares and expand public ownership stakes in corporations. None of these measures require central planning, but with their proliferation, the U.S. would be a different country. You might even call it “democratic socialism.”

Muellerus Interruptus

A great event can throw into sharp relief the virtues and flaws of political tendencies. Regarding the anti-climactic report of Special Counsel Robert Mueller, the greatness lies in the loudness of the dog that didn’t bark. Evidently there are no new indictments of Trump cronies, nor hard evidence of Trump collusion with the Russian state.

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For Trumpaphobic, MSNBC obsessives who have placed their hopes on the machinery of state bringing down the president, this Hindenburg ending leaves them deflated, if not in flames. Meanwhile, radicals who reject the legitimacy of that legal process remain in a political wilderness, armed with little more than their alienation. And finally, it hardly needs to be said, the glorious victory of another week without being indicted is just the latest dubious achievement of our toxic, ruling junta.

It happens a lot with some liberals. They focus their discontent on a clear but narrow point of criticism and work it energetically. But when it fails or falls apart, they are left at a loss. For instance, in the case of the run-up to the Iraq war, we got assorted procedural objections to invasion. There was no buy-in from the UN. We should keep inspecting for weapons of mass destruction.

The foundational point was glossed over. Iraq was no kind of existential threat to the security of the U.S., with or without WMDs, and in fact the entire enterprise was never motivated by any concern for U.S. national security. The same process is playing out now with respect to Iran and Venezuela. There is no meaningful liberal bulwark against some new U.S. military misadventure in either of those places. If you indulge economic warfare, it is not a giant step to the military kind.

Now in the case of Trump, liberal hopes hinge on a continuing uprising in the suburbs. To be sure, there is ample evidence of such discontent, mostly recently in the midterm electoral successes of Democratic candidates for Congress. The suburban campaign, however, is founded on generalized revulsion at the plethora of corrupt practices on display in the Administration, as well as the Russian suspicions. This posture is at odds with the actual habits of winning Democratic candidates in 2018, who talked more about health care and other pocket-book issues than about Trump. Matt Taibbi made a useful point, that raising expectations on the legal front will turn out to be unhelpful, if not backfire.

The shortcoming of the legalistic, suburban approach is that it fails to unravel the hard core of Trump’s support – the 35 percent or so who block most Republican senators from basic human behavior. They don’t care about Trump’s crimes; in fact, these crimes, as well as his Putin friendship, fortify his above-the-law, ‘big man’ persona, and his pretense to the power to right all wrongs.

Trump’s constituency needs to be demobilized, broken up, and ultimately eliminated as a political force. For one thing, it shelters a smaller but homicidal contingent from which terrorist attacks have been staged against an assortment of minorities. To impeach Trump, enough supporters need to be peeled off to flip the U.S. Senate. The same goes for winning the Electoral College in 2020. For that to be within reach, class politics are required. The extent of Trump’s support from the “white working class” has often been exaggerated, but it is not insignificant.

The fact is that, uncomfortable though it may be, racist voters can be mobilized to useful ends. The Democratic Party and the welfare state have advanced to their current state in no small part thanks to such votes. These voters can be approached without resort to racist appeals, which appeals would in fact be totally, stupidly counter-productive considering the trending, Democratic Party base.

For its part, most of the left rejected the entire Mueller project, and worked itself into a posture of quiescence with respect to an explicitly neo-fascist president. Imagine for a second that Russia is entirely out of the picture, as far as the 2016 election and the White House are concerned. In the face of the president’s lengthy criminal career and the avalanche of misdeeds by his cronies, his children, and his Cabinet members, is there not a target-rich environment for any garden-variety leftist?

Although it requires getting more deeply into the weeds, the contrast between the current Administration and its 2016 alternative – the Clinton political machine – should be obvious. There is no category of domestic policy where anything that Hillary Clinton might have initiated could possibly have been worse than what Trump has either done, tried to do, or aims to do. Anyone who doesn’t understand this has not been paying attention. The gradient is clear – the Republicans are worse in every dimension, to a non-trivial degree.

This should be starkly obvious in the field of foreign policy. From this standpoint, the misgivings of those who failed to vote Democratic in 2016 because of purported dangers of Hillary starting World War III shift from misguided to idiotic. The greater threats of Trump to peace, compared to Clinton, are undeniable. What some have missed is that isolationism in the case of Trump does not mean abstention from violent meddling in foreign affairs. It means rejecting traditional alliances, but finding new alliances among less savory, traditional U.S. adversaries. It also finds political sustenance in threatening other countries. Fascists subsist on fantasies of violence. Fascists in power have the means to actually play out such fantasies.

But this still understates the reality. We need to step back to see the bigger picture: Trump would lead the U.S. into an international coalition of neo-fascist regimes. Some on the left might celebrate the passing of an ancien neoliberal regime responsible for numerous crimes since World War II. Its successor, however, promises to be worse. To their credit, Bernie Sanders and Yanis Varoufakis have taken a stand on this front.

The prominence of Russia in this new, revolting constellation leads some to caution against Cold War or Red Scare rhetoric. But there is no communism under attack. An anti-Russian/Putin message has no negative implications for efforts in the U.S. to advance the welfare state or the well-being of the working class. There can’t be a Red Scare without Reds. Instead the Putin regime should be called what it is – an expansionist, authoritarian criminal syndicate that participates in attacks on the working classes of other countries, not least of all, our own.

Some folks are still running on the fumes of U.S.-Soviet Friendship Society talk. Sure, nuclear war would be really bad. Nobody wants it. We ought to seek peaceful coexistence with the Russian state. But there are a lot of ways to constructively reckon with the current, rightward drift of the Russia short of Armageddon.

Trump has advanced the interests of Russia in several overarching, strategic ways. He has downgraded the NATO alliance. This helps Putin. (That we don’t need that alliance is a separate question.) He has promoted the break-up of the European Union, through support for ‘Brexit’ and for neo-fascist regimes in continental Europe. (The EU has grave shortcomings, but not as many as a Europe salted with neo-fascist regimes, with no EU to check their worst anti-democratic impulses.) He has blocked aggressive implementation of sanctions enacted by the Congress. He has rejected the human rights framework, all its hypocrisies notwithstanding, that would be basic to criticism of Putin, and prospectively to other dictators. He seeks to bring discredit on the U.S. government’s own counter-intelligence capabilities while resting satisfied on the “very strong” protestations of innocence from Putin.

This is really a Marxian moment – Groucho, not Karl. Who are you going to believe, me or your lyin’ eyes? Trump collaborates with Putin. It could not be more obvious. And Putin does not have the interests of the U.S. working class at heart. The election is over; whether Putin decisively tilted the result, difficult to know under any circumstances, is secondary. It’s obvious which side he and his Wikileaks poodle were on.

Arguments about the degree and details of the collaboration, about its strictly legal ramifications, are all beside the point, if of great interest to journalists, political scientists, and lawyers. Under current circumstances, the Senate is not going to vote to impeach. We’ve got a neo-fascist president who has taken over the country’s conservative party, done considerable damage to the welfare state, and unleashed murderous hounds from the bowels of the Internet-fed grass roots.

The alliance with Putin is secondary in this sense, but salient in light of the international ramifications of the regimes and political tendencies to which Trump and Russia lend comfort. How about a little internationalism, comrades?

For his crimes, both past and ongoing, Trump should be brought to account. The political focus, however, should not be on graft and legally unconfirmable, politically invulnerable collusion with a foreign power. Rather, it should be twofold: on attacks on our basic democratic norms, economic security, racial justice, and environmental sustainability; and, second, on threats to peace embodied in aggressive acts towards countries who pose no threat to the security of the U.S.

The focus on scandal is analogous to the frenzied horserace coverage of polls in the heat of election campaigns. Scandal is diverting, and when sex is involved it is huge fun. It is also a distraction from the overarching ideological struggle – socialism or barbarism – on which our survival depends.

Universal Child Care, In View

In this era of progressive upsurge, we’re at a point where we should start translating aspirational demands, in other words, stuff that just isn’t going to happen right away, into practical terms, which includes consideration of potential difficulties.

One such demand that appears increasingly within reach is the goal of universal child care. Senator Elizabeth Warren has put a specific proposal forward, and Matt Bruenig has offered a full-blown program of aid to families with children. Kathleen Geier covers the Warren plan here, and she argues with Bruenig about one aspect of the latter’s plan here.

It should be clear that the world would be better with either of these options, as well as with Geier’s suggested modifications.

I only want to address Geier’s argument with Bruenig, which hinges on the issue of child care subsidies for at-home care, in other words, for parents (usually mothers, which is an issue discussed below) caring for their own children at home. Bruenig is for it, Geier is against.

Geier favors a network of excellent, tax-funded facilities, open to all. I would welcome this as well. The dilemmas arise not in the abstract, but in the real. In other words, what would we actually get if the government set out to construct a network of excellent, free facilities open to all? The point is to think about the consequences of implementation. What could go wrong?

  • Free, open-access facilities do not necessarily escape falling into patterns of stratification by class, and in the U.S., inevitably by race as well. In other words, the quality of the service tends to mirror the incomes or, in the U.S., the caste status of its local consumers. An old book by Julian LeGrand, The Strategy of Equality: Redistribution and the Social Services, discusses this in the British setting.
  • If the supply of a really-existing network of child care centers is limited, then the alternative of support for home care becomes more important. In the same vein, the inclusion of community organizations, including the “faith-based,” looked upon by KG with well-deserved skepticism, becomes more important.
  • The interest in quality services, which entails well-appointed facilities and well-qualified, well-paid workers, goes against the grain of ordinary budgeting constraints, with the possibility of additional, negative ramifications for the first problem bulleted above.
  • The chief dilemma of the at-home care subsidy is that it reinforces existing gendered social and employment realities. While a male partner or spouse could choose to perform the care-giving role, the likelihood is that for a heterosexual couple it will be the woman. (And by the way, the likelihood is also that most workers in public facilities will also be women.) One response is to split the weeks of support between partners. Denying flexibility in this way could have a significant financial impact on a family, where one or the other partner’s earning power is much higher. The underlying motive for such a policy becomes absurd in the case of single-sex couples, which are growing in number. I would also look askance at any policy wherein the State seeks to re-engineer, by fiat, family roles at this intimate level. Suppose Mom really, really wants to be home with the baby or toddler? The family could abstain from the public facilities, though their taxes would continue to pay for them. In other words, there would be an implicit tax on home care. Philosophy aside, do child care advocates really want to fight this one out politically? Is this the best hill to die on, when it comes to combatting sexism in the U.S.? I frankly don’t know. I will defer to the movement, either way, but hope that the leaders have thought of how it would all go.

The bottom line is nothing is easy. Every positive feature of a new arrangement entails a possible trade-off with some other desirable attribute. I can’t tell you where to come down among these alternatives. I can say with confidence that these issues are likely to loom over the realization of any new system.


Fun with the Family Fun Pack

Another interesting policy proposal from Matt Bruenig inspires some comments here.

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The proposal’s framework has more potential than might be evident. In particular, with regard to problems with the availability of child care services, since school districts (which are everywhere) would administer the program, they could provide facilities too. There is money in the program for capital expenditures. It wouldn’t be too much of a stretch to include churches in the system as well (which could be done with school districts as intermediaries). The program also supports child care in the home.

I appreciate the interest in the child care of high quality. I’ve needed some dodgy caregivers in my time. We ought to be careful not to raise standards to the point where the supply of care is unduly restricted, especially in low-income locations.

Many school systems are run by local governments, not school districts. I presume they would be part of what grant wonks call the ‘geography’ of the program. This geography (the array of school districts plus local governments) is severely underserved in the Federal grants-in-aid system. Not incidentally, it reflects deep racial disparities. Instituting a new pipeline of funds into it could end up with a broader scope than the Family Fun Pack. School districts and local govts could expand their provision of other social services, the subject of decades-long austerity.

The lack of attention to reproductive rights is well-taken. Of course, family planning is intrinsic to family well-being. There is no reason to classify it separately under health care. I wouldn’t say the choice is a sin or indicative of any buried, malignant bias, but it is an oversight.

Accusations of “natalism” are a bum rap. The proposal significantly increases the EITC for childless singles and couples. Of course, the bulk of the money is for children. The notion that the program fails to serve childless families is equivalent to saying the problem with a car is that it isn’t a bus. This program is no more natalist than dependent exemptions in the individual income tax. I doubt that anybody thinks policies to arrest climate change are only of interest to environmentalists.

Reducing the decision to have (or care for) children to a consumption decision or a matter of individual taste is just weird. People are going to have kids, and kids need care. (The program is neutral with respect to birthing children or adopting them.) There is something to be said about limits to support for children, in terms of numbers. Last time I looked, most families with children in poverty averaged fewer than three children.

One angle that cuts against the cultural conservative rap, evidently inspired by the fact that Matt’s wife Liz makes people giddy, is the program makes no allowance for home schooling.

In general, this proposal opens a fertile field for debate. It should be considered along with Liz Warren’s new child care proposal.