Paying for the Virus

March 31, 2020

In his discussion of the financial consequences of the pandemic to New York, Gov. Cuomo has not mentioned that New York isn’t permitted to borrow the money it needs. The reason is a New York State constitutional prohibition. Many states prohibit borrowing except for capital expenses. When states were permitted to borrow for current expenses, they ran up large debts and the practice needed to be stopped. So, many state constitutions barred the practice. New York requires a law to be submitted to the voters for specific purposes. The Governor does not have the time to satisfy New York’s constitutional rules. For the moment, he’s stuck.

The same prohibition does not apply to the federal government. Economists understand that fiscal stimulus is an important tool for dealing with economic downturns. But clearly the feds have misused it, giving large tax cuts to the wealthiest people and corporations, cuts not used in any way to stimulate the economy but that did significantly increase the national debt. That was the kind of misbehavior that led states to take the power away.

This, however, is an example of a time where deficit spending is completely appropriate. Dealing with the virus is expensive. The feds have provided some relief though politics has affected who got what. But there is an additional problem – with a large part of the workforce ordered to stay home and businesses shuttered, there is a very large downturn in tax payments flowing to government. The federal government can borrow to fill that gap and it can provide relief to the states. But most states can’t help themselves. The result, as usual, is that this becomes another way for Republicans to force everyone to cut what they spend on services – in this case, because the big budget item is education, the feds are forcing states like New York to cut funding on schools. Whoopie – isn’t that great planning for the future.

The Federal Reserve is trying to stimulate the economy but chairman Powell has been very clear that the Fed cannot solve our problems because the financial system is not the main problem, not even close. There are supply side, demand side and income problems. The Federal Reserve’s tools provide little help on the income side. It’s a little too simple to say that the Federal Reserve has no fiscal powers because it can lend to the federal government, but it can’t force the federal government to borrow, or to put that in its budget. So unless Congress and the Administration decide that there is a need to help the states meet the costs of running their school systems and other necessary services, the states are stuck doing what Republicans always want them to do – cut their services to the people. If they do that, then rich folk won’t have to bribe their kids ways into college because only the rich will have kids sufficiently educated to go to college, and all the disparities in America will get even bigger.

Grabbing all the goodies for fewer and fewer people seems to be the dream of those who finance Republican campaigns, but I can’t see why any of the rest of us would accept it – unless Trump pulls the wool so far over people’s eyes that the people don’t understand that he and his Republican friends are using the epidemic to make most of us even worse off than we were before.

This commentary was scheduled for broadcast by WAMC Northeast Report, on March 31, 2020.


The “Nanny” State

February 23, 2020

Republicans complain endlessly about “The ‘Nanny’ State”. Do anything good for the people – that’s “The ‘Nanny’ State.” Can’t we do anything for ourselves? What happened to self-reliance?

Actually self-reliance doesn’t work by itself. We call it self-reliance when young people put themselves through college, but jobs have to be available and pay enough for young people to put themselves through. The college has to be there, affordable, with the support needed to to provide great educations. I remember hearing Marty Silverman, one of Albany Law’s major benefactors, describe putting himself through law school on the profits of a small gas station. That says a great deal about the relative cost of a law school education. I started law school in 1962 with a full $1600 scholarship. In today’s dollars it would have been about $14,000. Try that now. My father, by the way, was a high school teacher; mother had just died.

Based on his appreciation of knowledge workers, Peter Drucker, a leading business mind of the twentieth century, saw that our leading industries are where our best and brightest graduates had gone twenty-year earlier. Those graduates created the strength of the industries they entered.

The US built the world’s envy of an education system – everyone wants to study here – though, ironically, we are now letting that educational system atrophy. Power and economic success followed the creation of our educational system. When Kermit Hall was President of the University at Albany he addressed a breakfast crowd downtown at Whiteman, Osterman and Hanna. There were two messages he wanted to get across. One was that he had been to China and studied their university system. He wanted us to know that they were building great new universities with prodigious speed and scale. The other was that corporations that are based on technology, intellectual-property or other special skills locate where they can get the best and brightest to work for them.

That has nothing to do with a nanny state. It is about making excellent investments in workforce development. The same is true of the success of the rest of the so-called Brick countries – Brazil, Russia, India and China; and the Asian Tigers – Hong Kong, Singapore, South Korea, and Taiwan. The newer so-called Mint countries – Mexico, Indonesia, Nigeria, and Turkey – are trying the same strategy, though international politics and civil wars hold some of them back.

By contrast, Republicans continue to feed us outmoded thinking, outmoded economics, outmoded ideas about how to strengthen our communities, our industries, our education and our people. They deserve an F.

Deriding the nanny state for investing in its people isn’t even efficient in the short run, forcing business to compete for staff on the world market and outsource their work to places where it can be done by the world’s best and brightest. That, by the way, used to be us. And it could be again. But it’s not magic. It’s based on investments in people, not handouts to corporations. Give people what they need to succeed and the values we inculcate into them will have a chance to shine. Deny them the basics and whistle our future into the wind.

—This commentary was scheduled for broadcast on WAMC Northeast Report, February 25, 2020.


Too Liberal?

February 10, 2020

People claim Elizabeth and Bernie are too liberal, that their projects would beggar the country, so we can’t select them.

There must be something wrong with programs that have existed in Europe for decades. There must be something wrong and beyond our resources, with liberal programs, even though many corporate leaders support them.

Health care? The money is obviously there. People have been buying insurance forever. Employers have been paying for it for decades. And what they wouldn’t buy, the public has been paying for through emergency rooms. Let me explain the real difference. If employers pay their share through the tax system, they won’t have to worry about so-called employee benefits every time they hire someone. Even though corporations would pay about the same, the shift from a payroll expense to a public program would take the cost out of the calculus whenever business thinks about hiring someone. Or thinks about giving people a real job instead of a gig. Public programs help the economy flow. Many corporations understand that. Competition can be built in with a public option, for example. And small business would function much more easily. But false conservatives, playing on the fears of the public, don’t want to admit that they’re behind the logical eight ball.

Business could rarely get going if they had to build their own physical and social services. In fact business always wants the public to give them whatever they need. They don’t even want to build ballparks on their own dimes! But if they had to find and get water to their businesses and workers, or build their own electrical systems off the grid, or cut and pave their own roads, it would cost more and few could get started. They’d be stuck next to waterfalls like the old mills. But that’s what the fear mongers call socialism. And if they had to build all the physical and social infrastructure they need, they’d spend as little as possible and sacrifice the health of their employees. I’m not making that up – it’s the history of company towns that virtually enslaved employees, paying them in what was called company scrip. Complain and you lost your job, your home, and went into the world penniless, homeless and likely without your family as well.

Social investments protect our jobs and our freedom. Americans who know their history know that’s the world that President Franklin Roosevelt rescued us from with the New Deal by the end of the great depression. Some rich folk hated him for it because it gave most of us a chance at decent lives instead of slavery to corporate masters. Now that corporations are finding ways to take it back through the gig economy, outsourcing and union busting, we need to recreate the New Deal that gave us Social Security, unemployment insurance, the right to organize and that eventually led to Medicare. Far from being unsustainable, Americans had their best years since Roosevelt and the New Deal. And corporations too know that they can live with it because public programs give them the flexibility they want to add employees without the added expense of so-called benefits.

Too liberal? Don’t make me laugh through my tears at the ruin of the American worker.

— This commentary is scheduled for broadcast by WAMC Northeast Report, on February 11, 2020.


Globalization and Democracy

August 27, 2019

Amy Chua wrote World on Fire two decades ago, arguing that globalism and democracy would collide by bringing out ethnic and religious resentments around the globe. She identified animosities country by country that would explode when times got tough.

Many of us connected economic and democratic health. In hard times people look for scapegoats and blame each other. I’ve gotten jobs from and lost them to people of other races and genders. That’s normal and goes both ways but I did fine and don’t need to blame anyone. Many who don’t feel as well are looking for reasons.

Chua’s analysis isn’t destiny. Unions in Hawaii realized workers would do better if they were united. Hawaii developed a lovely multi-cultural society as a result. But Yugoslavia came apart in rough times. I fear the European Union and the United States can come apart if we engage in an orgy of blame.

Franklin Roosevelt focused on creating jobs in the 1930s and World War II finally pulled us out of the Great Depression. John Maynard Keynes explained that, when an economy is in the doldrums, spending and investment, by government, industry or consumers, pulls the economy out most effectively. Democrats have worked with his ideas ever since and the overall, national, economy has done well with Democrats in power, particularly when Democrats had a strong labor union base focused on workers.

But capitalism is built on creative destruction. Miners’ desires notwithstanding, other industries have been replacing coal for most of the twentieth century because coal dust and soot blanketed cities, killed plants and got into people’s lungs. The process accelerated recently as more sources of heat and power became available. It’s a benefit that capitalism allows shifts like that but also a problem that capitalism makes workers pay the greatest price for such change. Macroeconomic, Keynesian thinking helps but it doesn’t solve the harms to specific groups of workers who’ve lost out through no fault of their own. More is needed.

Republicans view the economy differently, particularly since Ronald Reagan became President, focusing on supply side economics which stresses putting more resources in the hands of companies, entrepreneurs or so-called job creators. Unfortunately, supply side economics leads Republicans to ignore what business does with money, hoping that enough will be used to create jobs at home. But business also uses their money to outsource to foreign countries, buy stock back, build monopolies and the like, which don’t help American workers. Business helps American workers when they find demand for what American workers produce. That’s not automatic.

So supply side economics leads Republicans away from strategies that would actually help workers and aggravates hard economic times that tend to push workers to fight among themselves for the available jobs. Under most conditions, supply-side economics is a smokescreen for policies that make things worse. Staying away from anything related to supply-side economics is much better for workers, brotherhood and labor unity. But the alternative Keynesian economics isn’t enough.  There is a gap with respect to finding work for areas which have lost their main industries.

To save our democracy, it’s crucial to get across what actually will help American workers and what won’t. That’s why the argument over government projects, like rebuilding infrastructure, is so important.


Corruption Overwhelming America

August 20, 2019

This commentary was drafted in anger when I learned that pig farmers are refusing to allow inspections to look for the microbes that are killing people. Upton Sinclair’s The Jungle exposed the filth of the meat-packing industry in 1906 and led directly to the Pure Food and Drug Act and the creation of the FDA, the Food and Drug Administration. Now they want to undo a century of relatively clean food by claiming regulation is bad – yes, particularly bad for filth in the food industry.

This country’s reputation for honesty and responsibility long gave us a huge market edge. American institutions check on errors and misbehavior. That drove our legal and corporate culture. Now we’re inviting the world to ditch its confidence in us, and inviting each other to be cynical about business and political claims, threatening our economic power and democratic system.

Everyone has a reason why you can’t check on them. China is more honest about their meat than our pig farmers. Police refuse to allow information to be made public about their behavior because the people might realize who is trustworthy and who isn’t. The President denies Congress’ authority to get information from him. Even George Washington turned papers over. Trump is the first President since Richard Nixon to refuse Congress his tax information, lest the American people get an honest look at his economic behavior, bankruptcies and unreliability.

Republicans lump everything under the title of regulation and, making no distinction, claim all regulation is bad. Regulation is a problem because they might have to take responsibility for the poisons they want to emit, the toxins and dangerous bugs in the food they want to sell us, and the financial shenanigans they use to fleece us of our money. No one has the right to poison or injure anyone else. That’s irresponsible at best, legally tortious and probably criminal.

The so-called Supreme Court authorizes corporations to force us into arbitration with arbitrators the corporations choose so that the arbitrators are only beholden to the corporations, and anyway, they have no power to cure corporate misbehavior. Heaven forbid corporations should have to own up for their sins. Why should they – no one else does.

We have fussed about the bribery rampant in other countries because it prevents law from working to produce decent and proper behavior that justifies reliance. Preventing investigations is almost as bad. We’re now allowing corporate and political America to behave like the Mafia where there is only accountability for hurting each other – the purpose of the organization is to fleece the public, impose protection rackets, and, where people object, kill. In this complex world it is increasingly difficult to protect yourself from dishonest business.

But the President does it – shouldn’t we follow his example? He failed to fire Mueller but he fires everyone else who might insist on honesty and accountability. Now he’s now moving federal agencies halfway across the country to encourage the staff to quit rather than relocate. What a step forward.

There’s a stench in the White House but who’s left to complain? Too many corporate officers can no longer be watched because Trump destroyed the civil service. Who’s to complain about what they do?

 


No Time for Moderates

May 27, 2019

We’re suffering a worldwide attack on tolerance, the brotherhood and sisterhood of all peoples, and the principles of democracy and equality that make it possible to share the country and much of the globe in peace. The results, from Brexit to White Nationalism, the resurgence of Nazism in Europe, intolerance in India and China and ethnic warfare over the scraps of economic failure endanger us all. America, founded on tolerance, equality and democracy, should be leading the world out of this dangerous morass instead of smoothing the path to hell.

Commentators have long seen and feared the separation of national politics from the needs of the great mass of working people. Both national parties partook of that separation. Republicans revere Reagan but he crippled the unions, the organizations of working men and women. And claiming that government is the problem, not the solution, Reagan crippled efforts to address their problems. Democrats followed national economic trends without paying enough attention to the dislocations among working people. That combination made white working people feel left out, instead of uniting us in pursuit of a better world for everybody.

That’s recent history. Much further back, Alexis de Tocqueville, famous French nobleman, toured the U.S. in the 1830s and had the genius to see far into this country’s future. Tocqueville told us that democracy required widespread economic well-being.  The very first paragraph of the U.S. Constitution talks about the “general welfare” but many poo-poo it as merely precatory language, not authorizing government to take care of the people. Those who poo-poo that language think the Constitution is merely about freedom from government rather than the creation of a government capable of providing for the people. Their misreading of history is perverse and dangerous.

Seymour Martin Lipset, one of the twentieth century’s great political scientists, pointed to the world-wide connection between democracy and economic welfare. Germany, which had been a great economic power, lost its illustrious and democratic Weimar Constitution after going through economic hell between the world wars.

President Franklin Delano Roosevelt told America that he was saving capitalism by protecting the great mass of Americans from the ways capitalism went awry. The big shots of industry couldn’t understand that their behavior wasn’t sacrosanct. They couldn’t understand that capitalism too has to operate by standards of ethics and principles of sharing. Roosevelt was the architect of American economic success for the next half century precisely because he put in place the rules by which it could operate for the benefit of the entire country, not merely the captains of industry and finance. We have forgotten and dishonored Roosevelt’s legacy of making government serve the people. He rescued this country from the Great Depression, “promote[d] the general Welfare,” as the Constitution provided, and set the country on a sound economic keel, a legacy that would honor any leader.  Fools now sneeze at his accomplishment so they can promote something new – poverty for all.

There’ve been plenty of warnings. Now we have a chance. It’s not enough to beat Trump. We need a victory for the principle that everyone counts and everyone needs to be protected. It doesn’t matter whether it’s called “socialism” or something else. The idea that it’s a bad idea to take care of each other has got to go – permanently – and all the conservative nonsense about the damage of helping each other. Either we care for each other or we will suffer a war of all against all regardless of what you call it – fascism, communism, totalitarianism – the results won’t be good for anyone except the oligarchs.

Forget “moderate” Democrats. If “radical” describes the philosophy of taking care of each other, we need it NOW. Bless all the people with the decency and humanity to care about their neighbors, fellow citizens and fellow human beings. The blessed are those who care.

– This commentary was broadcast on WAMC Northeast Report, May 28, 2019.


Our love affair with capitalism

February 25, 2019

Bernie reopened a national debate about capitalism and socialism. I think we need to understand that no economic system carried to the limit produces justice. We’ve been most successful using mixed systems to gain the advantages and smooth the problems created by both capitalism and socialism.

Actually socialism is hiding in plain sight: the post office, libraries, public schools, the water supply, fire and police protection, highways, roads and streets. We buy our capitalist cell phones on an internet system that government created for military and academic use before turning it over to private systems.

Capitalism has a fraught relationship with workers. It can and often does enlarge the total economy, the whole pie. But it doesn’t distribute that pie among the workers. It distributes the pie to those who make the decisions, and they keep what they can for themselves.

Workers and farmers have every right to be dissatisfied with the impact of capitalism on their lives. Capitalism makes farm prices unpredictable. I’m convinced the programs could be tweaked for the benefit of both the environment and of family farmers, but government programs nevertheless make prices for farm produce sufficiently predictable for farmers to stay in business.

The crumbling safety net leaves workers at the whim of other people’s investment decisions. The disruptions capitalism causes are well illustrated by the argument over the Amazon plant in Queens. There were several appropriate solutions, but the problems were clear – capitalism was preparing to push people out and their fate depended on government. Unemployment insurance and the social safety net were never enough or well attuned to the needs of families who work for others for their living. And the social safety net has been weakened considerably in the last decades along with weakening the legal position of unions. So, government has a job to do.

That doesn’t mean that we should abandon capitalism, but it does mean that capitalism is not the answer to every problem, and it’s not a sufficient answer to our economic problems. Nor are incentives for decision makers adequate answers. Capitalism is well described by the board game Monopoly. It’s so familiar, I wonder if you realized it was created to teach people what capitalism does. As its name implies, the effective object of capitalism is monopoly. Even though the holders of that monopoly change in real-world capitalism as we experience it, ordinary folks are constantly squeezed out. If our objective is the welfare of the people, capitalism is not a sufficient answer. We cannot and must not be ideological purists. Our country has been most successful when we have implemented a mixed system – capitalism as an essential disruptor, and public planning to smooth the impact for workers and communities.

There is a huge difference between saying that capitalism is valuable and the conclusion that socialism is useless, and vice versa. The truth is that both are useful, and we have to be ready, willing and able to reap the advantages of both without losing sight of their limitations.

It was my pleasure, years ago, to meet Robert A. Dahl, one of the intellectual giants of our era. He and Charles E. Lindblom teamed up to prepare a wonderful book, Politics, Economics and Welfare, to show us the different advantages of public and private action. Those of you who frequently listen to my commentary know that I often try to break the ideological mindset that only private action solves problems.

So, I’m looking for candidates this year whose answers are not ideological knee jerks for one system or the other, but who are pragmatically open to the best solutions from whatever source. Bernie is certainly right that some socialist solutions are necessary and important. Some candidates are staying clear of the word but nevertheless get the point. Any candidate who doesn’t get that point deserves a reeducation at public expense beginning with kindergarten where they might finally learn to share.

—  This commentary is scheduled for broadcast on WAMC Northeast Report, February 26, 2019.

 

 


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