Raising Wages is the Best Economic Tool

The New York Times editorial, “Let’s Talk About Wages,” urges us to focus on raising wages as the engine of economic growth. That puts money where it can help and is a heck of a lot smarter than conservative insistence that tax cuts make us all better which is a totally misguided rip-off. The Times editorial is very well put and deserves to be read and shared widely. https://www.nytimes.com/2020/11/28/opinion/wages-economic-growth.html?searchResultPosition=1

A version of this article appears in print on Nov. 29, 2020, Section SR, Page 8 of the New York edition with the headline: Let’s Talk About Higher Wages.

How Can We Protect American Workers

Trump’s power, and his policies on jobs, immigrants, religious and ethnic hatreds and the Alt-wrong are all related.

Scholars of intolerance tell us that threat breeds hate. I suspect that all we can say about why immigrants and Muslims are really good people only makes those who feel threatened feel more threatened, because instead of talking about their needs we’re praising someone else.

So I want to talk about the needs of Americans who feel threatened economically and what can be done regarding their economic losses, recognizing that the disfunction in American politics is partly due to the desperation of workers who’ve lost once good jobs.

Protecting American workers is crucial both because people suffer when they can’t find good jobs, and because desperate or threatened people take dangerous risks at the polls and elsewhere. We must protect workers both for their sakes and for ours; it’s much the same thing.

It’s our job because government fiscal, tax, programmatic and other policy decisions daily determine how many jobs there are. Some people can make their own opportunities, but, to be fair, most good, decent, hard-working people can’t.

What can we do about it? Sometimes it helps just to set out the options. Here are the choices I can see:

FDR created unemployment compensation and Nixon proposed a negative income tax – safety-net approaches based on direct income transfers. Many object, including those who benefit from handouts, tax loopholes, deductions, farm price supports, subsidies etc. – the tax code and the budget are replete with them. But direct financial transfers are one possibility.

A second approach is to pay for jobs indirectly through trade policies. All three presidential candidates talked about that. I understand the fear of foreign competition even though there are reasons to look for other solutions for American workers: limiting foreign imports hides the cost in the price of things we buy, and isolates the American economy from developments elsewhere. It also might not work; actual hiring decisions would rest on other people’s decisions. But we can’t overcome the fear if we can’t commit to other steps, and all the talk about the risk to Social Security fans that fear.

A third approach, the conservative free market approach, is not really a solution for the working person at all – it simply puts the monkey on workers’ backs to find jobs or starve.

A fourth approach is to create new jobs by government action – fiscal stimulus, infrastructure development, and investment in science and education, all of which call for construction, maintenance and technical jobs. That’s what Obama called for but Congress drastically whittled his effort down.

Why can’t government be employer of last resort? That would automatically support a minimum wage, create better communities, and make life better for all of us. It’s not the free lunch some people worry about; it’s a job. What’s so terrible about giving people what Tom Paxton called “a job of work to do”? There’s plenty to do if we were willing to invest in our people, our workers, our infrastructure, and our environment. Sometimes spending a little can make the community more attractive and the economy zing while providing a decent income to people who need a job.

Some countries use all of those methods and have quite robust economies.

Those are the alternatives I can see: the free marketeers’ defining it away as the workers’ problem, the safety net approach of income transfers, paying indirectly through trade policies or subsidies for the appearance of helping workers, or creating jobs through fiscal stimulus or hiring people to do needed work. My preference is to put people to work – that way protecting others is good for us all. One way or the other, standing up for each other is essential.

— This commentary was broadcast on WAMC Northeast Report, March 7, 2017.

Postmortem

I feel like I’m in mourning. The presidency has been taken by a con man and we all deserve better – those he’s duped as well as the rest of us.

• Trump was “elected” by an “electoral college” system designed in the 18^th century to protect slaveowners by augmenting their votes with 3/5 of their slaves.
• He was “elected” by a Court unwilling to protect the voting rights of all American citizens.
• As in 2000, when Al Gore won the popular vote but George Bush became President, the 2016 popular vote went to Mrs. Clinton. President Bush proceeded to make colossal mistakes in foreign affairs for which this country will spend a century paying.
• Trump was elected with the votes of people who had suffered financially over the past two decades – but they voted for the very people who refused to lift a finger to provide jobs, people who don’t believe government should do anything, including good and important things, and for whom blocking anything Obama wanted to do was more important than helping fellow Americans. With Republicans benefitting from that cynical and deceitful strategy they are back in control of Congress. Good luck to the coal miners, autoworkers, steelworkers and others – they’ll need it.
• We will now have a dirty old man in the White House as a “role model” for the worst behavior toward women.
• And his rhetoric threatens to take apart the signal achievement of America – our mutual respect across faith, national origins, class, race, and counting – an achievement central to the status and future of the very people who voted for hate.

I am worried, crestfallen and embarrassed. What is there to do?

First, I have become a supporter of Supreme Court term limits. Rehnquist spent 34 years at the Court, Stevens 35, Scalia 30 and Thomas has been there 25. Erwin Chemerinsky, widely respected dean at the University of California at Irvine School of Law wrote:

The idea is that each justice would be appointed for an 18-year, non-renewable term. A vacancy thus would occur every two years. Vacancies that occur through resignation or death would be filled by appointing someone to serve the unfinished part of the term.

That way the Court would not be dominated by political decisions made decades ago.

Second, I would not confirm any new justice until there is agreement to reverse the decision that allowed states to monkey with their election rules to disenfranchise voters, and until there is agreement to adopt one of the mathematical rules that precisely measure gerrymandering, the level of favoritism to either party – known as symmetry or wasted voters. Some will object that those decisions are for the justices. Nonsense – the appointments clause is the political check and those decisions put the justices’ prejudices ahead of self-government and assured Republican victories, roles no judge should be playing. Those decisions were partisan, self-serving and should be ruled unconstitutional.

Third, we need to get across to people that refusing to vote because there is someone else we like better is a very bad choice because it has very bad consequences. In a democracy, to live and work together we have to be willing to compromise. It’s part of the deal.

Finally, we need to organize. 2018 is two years away and Congress will be at stake again. True patriots don’t give up.

— This commentary was broadcast on WAMC Northeast Report, Nov. 15, 2016.

Universalism vs. the What-About-Mes

This primary season has made plain Americans’ dissatisfaction with American politics – dissatisfaction because someone else seems to be getting all the goodies and concern. The right wing thinks the poor are the government’s favorites. The left wing sees its wages and taxes mostly benefitting the super wealthy. Both Sanders and Trump mined the political backlash from special interest politics. Trump’s apparent nomination increases the urgency for both parties to respond to this problem.

And for anyone who wants to argue that impoverished or minority Americans are being short changed, one runs a minefield of envy, and the “what-about-mes.” The same weighs down discussion of the advantages of international trade agreements. If we don’t all share, the biggest issue is me. Similarly, for too many people the environment never seems to be about themselves but someone else, people on islands, lowlands, the next generations, but not themselves. That makes all our problems tougher to deal with.

When he wanted to establish a program for the elderly and the injured, the genius of President Franklin Roosevelt was to make it seem universal. Social security insurance applied to all kinds of people and most kinds of jobs.[1] We pay into the system long before we know whether and how much we’ll need. Many get social security who would be excluded by any need based program. But that’s the point. There is no stigma to social security. FDR did it as an insurance program; most of us contribute and collect. Roosevelt wanted to make it simple – you did your social security business at the post office. And when some politicians wanted to tamper with it for ideological reasons, they found that social security was a third rail of politics. FDR had hit that nail on the head.

Now, however, simple, universal programs like medical insurance have become a political football, and the very possibility of the government pursuing the general welfare is under attack from the not-with-my-money crowd. But because it is under attack, because we cannot count on government even to pull us out of a recession that would involve spending tax dollars, no matter how good the investment, the very possibility of economic changes are much more threatening than they should be.

Investment in infrastructure should be an investment in the general welfare, full of benefits for everyone, putting people to work building it, making jobs and businesses easier to reach, and creating benefits for all of us, from clean water and more reliable utilities to better education and internet services. The best way to protect people from unemployment is to provide jobs that provide benefits for the public. Infrastructure can pay dividends, in jobs and services that make everyone better off, and that only government can build.

Unfortunately politicians prefer big showy projects, dramatic new bridges and buildings rather than maintenance, repair and cost effective options. They prefer projects targeted for their contributors, Or they prefer to get on their soapboxes and try to get us to tear down the very government that made this country a great one. The cost of political behavior that breeds distrust of American government is enormous. Good government, self-government was the signal contribution of America to the world and we are allowing our political infrastructure to crumble along with the water, utility, transportation and electrical infrastructure.

It’s not just who we tax; it’s also what we do. Government matters; it does things for the public that no one else will take care of. We need good government, fair government, government for all of us, but government – strong, effective government – and the confidence that comes from doing it right.

— This commentary was broadcast on WAMC Northeast Report, May 10, 2016.

[1] On the original exclusions, see Larry DeWitt, The Decision to Exclude Agricultural and Domestic Workers from the 1935 Social Security Act, Social Security Bulletin, Vol. 70, No. 4, 2010, https://www.ssa.gov/policy/docs/ssb/v70n4/v70n4p49.html, but he is less convincing regarding motivation. For summaries of current exemptions, see Intuit Inc. (U.S.) at https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/Who-Is-Exempt-from-Paying-Social-Security-Tax-/INF19965.html or http://www.investopedia.com/ask/answers/013015/who-exempt-paying-social-security-taxes.asp.

How America Would Handle Greece

What are the lessons from the Greek crisis? Their economy had major problems. People with plenty of money weren’t bothering to pay taxes. And the Greek government provided benefits beyond its means and beyond the pace of investment to maintain. So the EU was certainly correct that Greece had problems that Greece has to deal with. But that’s not the whole story. Greece needed multiple remedies, to cure its mistakes but also to stimulate its economy.

Think about what we do in America. Periodically states are bankrupt or depressed. We don’t offer secession or a sale to Mexico. We didn’t ignore problems in Appalachia, Arkansas and other struggling states. Within states, we don’t ignore depressed areas. Sometimes we put communities in receivership, but that’s not our only tool. Although Tea Party Republicans don’t want to recognize it, we do have another American strategy – we invest. The Cuomo Administration is investing in areas around colleges and universities, spread throughout the state. We’ve had business empowerment zones. Military bases have been used for economic purposes. And we build infrastructure or housing or convention centers. Some investments are unwise wishful thinking. But the instinct is shared, American, and, used intelligently, it works. Conservatives don’t like to admit the Keynesian economics behind it, but they use these techniques wherever they are in control. They just call it good business.

States are barred by the Constitution from printing money. If Greece exited the Eurozone, it could issue currency or pay its employees with i.o.u.s for use as currency. Either way a devalued currency could make Greek goods and services worth buying.

Greece’s finance minister accurately explained that austerity deepens recession. The EU has responded with the same economic strategies that had been discredited before the Great Depression of the ‘30s. If the economy shrinks in response to austerity, nothing is left to pay debts, much less to invest. For an economy in trouble austerity alone is the wrong prescription at the wrong time for the wrong disease. It works only if the desired outcome is to kill the patient. Unfortunately, the EU hasn’t used other tools needed to deal with the recession.

The lesson here is the contrast. Cutting expenses cannot be the only tool. Investment works. Infrastructure, science and educational investments work. Congressional conservatives are too skittish about investing in America. They need to do what their own state governors do – invest in economic development. There is plenty of room in the U.S. for investment that will contribute to the American economy. Intelligent public investment can yield multiple rewards: the immediate reward of assisting people get back on their feet, the return of some of that money as taxes, and the longer term rewards of facilitating business. That is the virtuous cycle that every good economy needs.

Neither taxes nor tax cuts automatically yield economic benefits. Cutting business taxes will probably not raise the chances of business investment if they are already sitting on money. Cutting personal taxes won’t put us on the road to recovery to the extent that consumers buy abroad. The devil is in the details. But the visceral objection to all investment by government because it is government needs to give way to a more intelligent discussion of the investment we need and the investment that will pay dividends for years.

— This commentary was broadcast on WAMC Northeast Report, July 14, 2015.

Romney-Ryan Rickshaws

Both candidates say they want to pull us out of the recession and put people back to work – to create jobs. Jobs, jobs, jobs, the election seems to be about jobs.

President Obama is straightforward

Response to rhetoric from the Republican Convention

I have no illusion that what I say today will register over the important news that will be coming out of the Democratic Convention in North Carolina. But I want to respond to the Republican Convention and the party line the Republicans have been repeating.

Romney at the Convention told his people that “President Obama promised to begin to slow the rise of the oceans and heal the planet. MY promise…is to help you and your family.” In other words Romney made fun of the single largest threat to the American way of life, coming in hurricanes, droughts, floods and the spread of serious diseases, suggesting if we didn’t already know it that the basic Republican position on the seriousness of the environmental threat is denial and ignorance.

But the basic Republican attack on Obama is that his policies have failed the economy.

Romney’s Choice: Paul Ryan for Vice President

Mitt Romney ended the suspense with the choice of Paul Ryan for Vice-President. And what did we get? Nothing! The Ryan budget for dealing with our problems is zero – no taxes, no expenses, no government. No regulation, no protection, no help, no investment. We’re in a recession and what do we get to pull out of it – nothing, zero, nada.

Can we Learn from the Euro Zone?

Sometimes it’s easier to see the problems abroad than it is at home. And that may be true of the Euro zone. As we all know, there have been a series of agreements bailing out Greece on the condition that Greece make very large cuts in its own budget. And it hasn’t worked. Why not? Shouldn’t cutting back have rejuvenated the Greek economy?