Equality vs. group equality

Paul Krugman wrote that the defeat of Bernie Sanders in the Democratic primaries shows the fallacy of trying to appeal to a majority of Americans on the issue of inequality.

History shows that Americans don’t care about individual inequality; he wrote; what we care about is “horizontal” inquality—disparities between racial, ethnic and other groups.   Politicians need to realize this in order to be successful.

Paul Krugman

Defining oneself at least in part by membership in a group is part of human nature.  Even if you try to step away from such definitions, other people won’t.  A rueful old line from my own heritage says that if you should happen to forget that you’re Jewish, someone will remind you: a truth reconfirmed by the upsurge in vocal anti-Semitism unleashed by the Trump phenomenon.

So group identity is an unavoidable part of politics, especially in America with its history of slavery and its ethnic diversity.  Racial and ethnic minorities know that very well, which is one reason they overwhelmingly supported Hillary Clinton, who gets it, over Mr. Sanders, with his exclusive focus on individual inequality.   And politicians know it too.

Indeed, the road to Trumpism began with ideological conservatives cynically exploiting America’s racial divisions.

Source: Paul Krugman – The New York Times

Adolph Reed explained the problem with this kind of thinking in an interview on the Benjamin Dixon show.

Adolph Reed

We have a national politics now that has for 20 years at least, longer, given us two choices. And one of them is a party that’s committed to Wall Street and to neoliberalism and is deeply and earnestly committed to a notion of diversity and multiculturalism, and a party that’s committed to Wall Street and neoliberalism, and is deeply opposed to multiculturalism and diversity.

So, if we have to choose between those two, obviously for most of us who are committed to the ideals of justice and equality, the one that’s committed to multiculturalism and diversity is less bad than the one that’s opposed to them. 

But the deeper problem is that they’re both actively committed to maintaining and intensifying economic inequality, and … that ideal of a just society is one in which one percent of the population can control ninety percent of the stuff, but it would be just if twelve percent of the one percent were black, fourteen percent Latino, and half of them were women, and whatever percentage were gay, and what that means, then, is that most Black people, and most Latinos, and most white people, and most Asian Americans would would be stuck holding like the end of the stick with the stuff on it that I assume I can’t call by its right name.

Source: Adolph Reed | naked capitalism

Can economic growth overtake rising inequality?

Via emptywheel.

The French economist Thomas Piketty has a strong and obvious argument as to why the rich usually get richer and the rest of us not.

Via U.S. Economic Snapshot.

He points out that so long as the return on assets—of whatever kind—is at a higher rate than the rate of economic growth, wealth and income will flow to owners of capital, not to wage-earners.

If you see gross inequality as a problem, there are two possible solutions:

1.  Raise the top tax brackets to reduce the share of the capitalists.
2.  Increase the rate of economic growth to increase the share of the workers.

An economist named Gerald Friedman concluded that Bernie Sanders’ economic policy would produce 5.3 percent annual economic growth.  Other economists say that is over-optimistic to the point of being crazy.  But even if Friedman is right, it would still be less than the historic rate of return on capital.

If Piketty is right, it means economic growth alone will not stem the growth of economic inequality.  It will be necessary to reduce return on capital, not to zero, but to a rate less than the rate of economic growth.

One way to do this is to raise upper-bracket taxes to 1950s levels.  Regulation of interest rates and subprime lending would help.  Prosecution of financial fraud and enforcement of antitrust laws might have an effect.

Historically, as Piketty noted in Capital in the 21st Century, there have been other ways in which concentrations of wealth have been destroyed.  They have been destroyed by means of wars, revolutions and devastating economic depressions.

Debating the TPP: links to the pros and cons

I’m strongly against the proposed Trans Pacific Partnership agreement and the fast track proposal for approving it, based on what I know of both.

I write this even though I admit I don’t know what will be in the TPP when it is finally submitted to Congress.  I could be wrong in everything I say.   I don’t think I will be, in fact I’m pretty sure I won’t be, but in this post, I link to arguments in favor as well as those opposed so you can judge both sides of the question.

I link.  You decide.

Paul Krugman makes a case for the Democrats

Paul Krugman, whom I respect, thinks that Americans will have a real choice in 2016 between the Republicans, who represent the wealthy, and the Democrats, who represent the public interest.

I think he’s right about the Republicans, but I’m not so sure about the Democrats.  Here’s what he wrote:

Paul Krugman

As we head into 2016, each party is quite unified on major policy issues — and these unified positions are very far from each other.

The huge, substantive gulf between the parties will be reflected in the policy positions of whomever they nominate, and will almost surely be reflected in the actual policies adopted by whoever wins.

For example, any Democrat would, if elected, seek to maintain the basic U.S. social insurance programs — Social Security, Medicare, and Medicaid — in essentially their current form, while also preserving and extending the Affordable Care Act.

Any Republican would seek to destroy Obamacare, make deep cuts in Medicaid, and probably try to convert Medicare into a voucher system.

Paul Krugman’s defense of President Obama

I started reading Paul Krugman’s column in the New York Times during the Bush-Cheney administration, and quickly came to respect him for his incisive and fearless criticism of the administration’s policies.  He didn’t have any insider knowledge—just a willingness to look at the facts and state the obvious.

I don’t read his column regularly any more—partly because the New York Times has gone behind a pay wall and I’m not a subscriber.

Paul Krugman

Recently he wrote a long article entitled In Defense of Obama for Rolling Stone magazine, which, to me, is an example of how progressives have come to think of peace and prosperity as unattainable ideals.

I think it is worth discussing in some detail, but I first want to mention the way Krugman framed his argument.  He wrote that “the left” did not get all it wanted, like somebody going to a restaurant and not finding everything they like on the menu.

For me, it is not a question of the degree to which you satisfy the desires of “the left” and “the right”.  It is a question of whether the USA can halt its descent into authoritarianism, militarism and oligarchy before it is too late.  Obama, in my opinion, has not done this.  In my opinion, he has not even tried.

I know this language sounds exaggerated.  I don’t think it is and, if you follow this web log, you will see the reasons why I think so.

§§§

Now, Krugman on health insurance reform and the Affordable Care Act.

We won’t have the full data on 2014 until next year’s census report, but multiple independent surveys show a sharp drop in the number of Americans without health insurance, probably around 10 million, a number certain to grow greatly over the next two years as more people realize that the program is available and penalties for failure to sign up increase.

It’s true that the Affordable Care Act will still leave millions of people in America uninsured. For one thing, it was never intended to cover undocumented immigrants, who are counted in standard measures of the uninsured. Furthermore, millions of low-income Americans will slip into the loophole [Chief Justice John] Roberts created: They were supposed to be covered by a federally funded expansion of Medicaid, but some states are blocking that expansion out of sheer spite. 

Finally, unlike Social Security and Medicare, for which almost everyone is automatically eligible, Obamacare requires beneficiaries to prove their eligibility for Medicaid or choose and then pay for a subsidized private plan. Inevitably, some people will fall through the cracks.

Still, Obamacare means a huge improvement in the quality of life for tens of millions of Americans – not just better care, but greater financial security.  And even those who were already insured have gained both security and freedom, because they now have a guarantee of coverage if they lose or change jobs.

What about the costs?  Here, too, the news is better than anyone expected. In 2014, premiums on the insurance policies offered through the Obamacare exchanges were well below those originally projected by the Congressional Budget Office, and the available data indicates a mix of modest increases and actual reductions for 2015 – which is very good in a sector where premiums normally increase five percent or more each year.  More broadly, overall health spending has slowed substantially, with the cost-control features of the ACA probably deserving some of the credit.  [snip]

The politics of defunding Obamacare (2)

Click on The GOP’s Self-Defeating ‘Defunding’ Strategy for Karl Rove’s article in the Wall Street Journal.

Paul vs. Paul on banking and debt

Last week Bloomberg News hosted this interesting debate between libertarian Rep. Ron Paul of Texas, currently seeking the Republican nomination for President, and liberal Paul Krugman, the Nobel Prize-winning economist and New York Times columnist, on central banking, deficit spending and inflation.  You could watch two important public figures, both independent thinkers who are beholden to nobody, debate what they honestly think about an important public issue.  That is something I fear will be a rarity in this Presidential election year.

Ron Paul wants to phase out the Federal Reserve System.   He correctly pointed out that without the existence of a semi-government agency with authority to buy government bonds and create money, it would be very difficult and maybe impossible for the government to finance either the current endless wars or the welfare state, which he is equally against.

The problem is that without a Federal Reserve, decisions about interest rates and money supply would be made not by an impersonal mechanism, but by powerful individuals such as J. Pierpont Morgan, who would not be accountable to the public.  Or you would have a chaotic system, like that which existed in the United States during the decades leading up to the Civil War, when wave of bank failures were frequent, and depositors lost their money.   Ron Paul would like to go back to that era or, alternatively, to return to the gold standard.  The problem is that impersonal mechanisms are just as fallible as individual people.   There is no magic of the market, or magic anything else–just a choice among imperfect systems.

While Ron Paul focused on deficit spending, debt and inflation, Paul Krugman focused on employment and economic growth.  I think Krugman had the right priority.  The U.S. government dealt with the enormous debt left over from World War Two, not by paying down the debt but by generating strong economic growth so that the debt became proportionately less in relation to the overall economy.

Krugman is a Keynesian, which means that while he favors a balanced budget and tight money in normal times, he thinks that deficit spending and easy money are warranted in a serious recession, as a means of getting money into circulation so that people will start spending and investing again.   The problem with that is that it doesn’t seem to be working.  I think the reason is that the current recession is more than part of the normal economic cycle.  It is a crisis resulting from decades of running the U.S. economy on debt rather than production.  When people have more money in their pockets, they don’t necessarily spend it, they use it to pay off their mortgages, installment loans and credit card balances.  And the big banks, as Ron Paul said, are content to borrow money from the Federal Reserve at 1 percent interest and lend it back to the government at 3 percent interest.   That does nothing to help the real economy.

I don’t believe in spending money for the sake of getting money into circulation, but I think the government should refrain from cutting back on basic services and that this is a good time to invest in infrastructure repairs, scientific research, job training and other measures to maintain our country’s productivity.  Ron Paul said, perhaps in jest, that it would have been better for the Federal Reserve to give relief to mortgage-holders (perhaps by refinancing their loans?) than to relieve the banks.  Certaintly this would have done more for economic recovery.

Click on Economics Throw-Down! Krugman vs. Ron Paul on Bloomberg TV — Helicopters, Gold and More for highlights.

Click on David Henderson on Paul vs. Paul for a conservative economist’s summary of the debate.

Click on Ron Paul Flunks History for comment on David Frum’s Daily Beast web log.

Click on Ron Paul vs. Paul Krugman: the Bloody Aftermath for discussion of the issues by Reason magazine’s Brian Doherty.

Click on Krugman Says Fed ‘Reckless’ to Allow High Jobless Rate for a Bloomberg News followup to the debate.

Hat tip to Joshua Chacon.

“Hey, Paul Krugman”

Click on The Conscience of a Liberal for Paul Krugman’s web log.

The learned helplessness of the Democrats

Martin Seligman is the psychologist who coined the phrase “learned helplessness.”  It is based on work he did with dogs as a young graduate student in 1964.  In the experiment, the dogs were trained to associate a musical tone with mild electric shock.  They would then be given a chance to learn they could escape the shock if they could jump over a small barrier, and then the psychologists would see if they responded the same way to the musical tone without the shock.  Seligman described the result in his book Learned Optimism:

Martin Seligman

These dogs … had just lain down whimpering.  They hadn’t even tried to get away from the shocks. … Accidentally, during some part of the experiment, the dogs must have been trained to be helpless.  That’s why they had given up. … During Pavlovian conditioning, they felt the shocks go on and off, regardless of whether they struggled or jumped or barked or did nothing at all.  They had concluded, or “learned,” that nothing they did mattered. So why try? ……

It would take the next ten years of my life to prove to the scientific community that what afflicted those dogs was helplessness, and that helplessness could be learned, and therefore unlearned.

Democratic liberal leaders manifest learned helplessness.  Since 1980, they have  become so accustomed to defeat that they think in terms not of how to win, but of what terms they can get from their opponents.

Most of us liberals think that a single-payer health insurance plan or, at the very least, a public option would be the best way to provide universal health care while controlling costs.  But it is unpopular, so the Democratic liberal leaders settle for the Affordable Care Act, which hardly anyone understands or defends.

We are indignant that the abuse of cloture by Republicans means that a 60-vote Senate majority is needed for any significant action.  But President Obama and Senate Majority Leader Harry Reid don’t even make an issue of it, so the majority of Americans are not informed that this is even a problem.

We favor the card-check system to enable unions to organize without intimidation, but there is opposition, so this is not even proposed.  The “cramdown” plan, to allow federal bankruptcy judges to deal with mortgage foreclosures, is not on the agenda.  Likewise any serious proposal to break up the “too big to fail” banks.  Likewise any serious proposal to keep Americans at work by maintaining essential public services and rebuilding deteriorating infrastructure.

No doubt some of these things are unpopular.  They always will be unpopular if Americans never hear any arguments in favor.

Republican “movement conservatives” are not like this.  They stick by their agenda, even when they pay a political price.  Each time they propose privatizing Social Security or voucherizing Medicare, they fall in the public opinion polls, but they also make a dent in the consensus, and increase the chances of getting their way the next time around.

Democratic leaders, in contrast, weaken their case every time they accept debate on Republican conservative terms.  President Obama has already lost when he accepts the premise that dealing with Medicare deficits projected for 20 years from now is more important than the current unemployment crisis.

Martin Seligman in his experiments found that there were some dogs who did not learn to be helpless.  They kept trying, no matter what.  Liberals need to learn the same dogged determination.