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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Can American Democracy Survive Trump?

June 13, 2017

Will democracy in America survive?

First remember that democracy matters. No human institutions are perfect but democracy makes it possible to remove officials without going to war. Democracy doesn’t mean anyone alone can make good things happen. Democracy reflects the collective power of people. Collectively, if the rules are followed that protect speakers, publishers, candidates and fair elections, democracy gives us the possibility – though nothing is certain – of throwing the bastards out. That’s important.

The survival of democracy depends on leaders, institutions, and the circumstances that bring out the best and worst in us. What chance do we have?

We should have been warned when Trump repeatedly expressed admiration for dictators in Russia, the Near East and Eastern Europe, when Trump invited an enemy to break into a candidate’s email and interfere in an American election, and suggested his supporters use their “Second Amendment rights” to put him into power. We should have been warned when Trump put people with strong ties to hostile powers at the top of his Administration and gave them access to American military and intelligence secrets. We should have been warned when Trump put an attorney hostile to justice in charge of the Justice Department and installed many military leaders in his government. We can’t rely on this casino mogul turned would-be strongman to preserve American democratic government.

It’s unclear whether our institutions will protect us. The Turkish military protected Turkish democracy for a century, but that tradition is now gone. Members of Trump’s party control both houses of Congress where their commitment to their party compromises their commitment to democracy. Congress seems unlikely to protect us. The Court is dominated by members of the President’s party and their treatment of the Constitution’s due process clauses has been more a threat to decent citizens than a limitation on the powers of would-be dictators.

The circumstances in which we find ourselves have ripped democracies apart across the globe. The concentration of wealth and power we have long seen and condemned abroad has become a reality here. The more that wealth and power are concentrated, the more that the wealthy and powerful circle their wagons to protect their ill-gotten gains against the rest of us, spewing nonsense about supposed trickle-down economics as if it were fact and counting on people’s gullibility. Concentration also makes people desperate, and desperation fuels the mirage of lies and makes too many of us complicit in our own subjugation.

Without reason to rely on the leaders, institutions, or circumstances, that leaves us. Can we square our shoulders and steady our minds to resist the steady babble of nonsense and not just listen to the words but watch what those in power are doing?

When you look at behavior instead of giving a pass to the mogul in the White House, you begin to notice that his actions belie his words. He has no sympathy for coal miners or others who have been shunted aside by changes in the economy but only to protect his friends’ wealth and power from us. Birnie put his finger on the problem and Trump now aggravates the concentration of wealth and power that are taking apart the lives we thought we’d built. So-called “free markets” protect the marketeers. So-called “trickle down economics” protect the concentrations from which the trickles are supposed to flow. And the flood of inconsistent tweets boggle the mind and conceal the reality.

Can we uncover the deceptions with strong minds and clear eyes while the casino mogul in the White House gambles our birthright.

— This commentary was broadcast on WAMC Northeast Report, June 13, 2017.


Trump and the Swamp

June 6, 2017

Trump promised to drain the swamp. We can agree that the swamp is the predominance of special interests over Americans of ordinary means. Bernie Sanders won many hearts and minds by refusing to take big money. Trump claimed independence from big money because he had so much. Clinton lost many votes because she accepted large speaking fees and contributions. A large populist wave by financially ordinary Americans swept the country.

People credited Trump’s promise to drain the swamp. With Trump in power, we’re entitled to look at his actions. Indeed we should.

Most Democrats long tried to take big money out of political campaigns. With some exceptions, like John McCain, Republicans worked to protect the use of money in politics. In the McCain-Feingold Act, Congress managed to compromise between their positions. But the Supreme Court, dominated by Republican appointees, invalidated restrictions on campaign contributions, and held in Citizens United, that corporations could contribute funds straight from corporate treasuries. Heard anything lately from the White House about campaign finance regulation? I didn’t think so.

Trump wants to lower the tax and regulatory burdens on the wealthiest people and companies. He claims in justification that the extra costs harm American workers. I recognize the heated debates about those claims. I’ve repeatedly explained in this commentary that putting more money in the hands of the wealthiest people and corporations is unlikely to spur investment or improve the position of American workers. It won’t help American workers because corporations can and do spend extra money everywhere, including abroad. It won’t help American workers because extra wealth can be and is spent on nonproductive goods or investments. And it won’t improve the position of American workers because there is no shortage of capital in this country, so putting more in in wealthy or corporate pockets is like pouring mud into the Mississippi.

Eliminating regulations will also put money in wealthy and corporate hands but hurts everyone else. Unions have been big proponents of safety regulations because they protect the health and safety of workers, and, we should add, of consumers and citizens.

Trump’s proposed budget also pulls up the safety net and hands the savings to corporations and the wealthy. The safety net protects people when they fall on hard times, when illness drains their bank accounts and strains their budgets, when corporate decisions leave workers struggling to find new jobs and forced to feed families on minimum wage jobs. These have direct and indirect costs for all of us. Losing a job can be temporary but it can also be a fall into a rabbit hole that sucks out everything we’ve invested in our homes, our retirement, and stresses, even breaks up our families. In 2008 those factors spread and took a lot of us down. The safety net was intended in part to help slow or stop economic downturns. 2008 overwhelmed what was left of the safety net but Trump would make it worse.

And health care decisions don’t just affect the most vulnerable. None of us want people spreading serious or medicine-resistant strains of TB, Zika, MRSA and other communicable diseases. Effective strategies against communicable disease involve keeping the diseases out of the population to the extent possible.

In Trump’s budget, the savings from all these cuts go to the 1/10 of 1%, the wealthiest of the wealthy, the very people who should be giving back rather than sucking at the public til. Trump promised to drain the swamp. But Trump IS the swamp.

— This commentary was broadcast on WAMC Northeast Report, June 6, 2017.


The Outdated Economics of Conservative Ideologues

April 26, 2016

Some of you may have been following Shankar Vedantam on NPR or the discoveries of Daniel Kahneman, the Nobel Prize winning psychologist on the Princeton faculty, and their demonstration of the irrational ways that people very naturally and ordinarily reach decisions. Indeed, for quite a long time it’s been apparent that rational decision making often demands too much of people. As Cornell’s Vicki Bogan said in a talk in Albany, the rational choice model of economics assumes that people:

  • Think like Albert Einstein
  • Can store as much memory as IBM’s Big Blue
  • Can exercise the will power of Mahatma Gandhi
  • … [and] make unbiased forecasts

Nobel Prizes have been awarded to psychologists and economists who have been studying human decision making, showing that people literally can’t do what conservative economic theory expects them to. The rational man doesn’t exist, and for that reason, markets often don’t protect us. For both businessmen and consumers, rational choice is often impossible; it’s just too hard. Sometimes things aren’t currently knowable. Sometimes they’re beyond the capacity of individuals, even if institutions can figure it out.

A trip to the grocery store helps make the point clear. Even though much of the information exists, I can’t know enough about all the ingredients of the goods I buy, and their impact on my body, and still take the time to do my work and have a life to live. I have to trust someone or something else. But consumer ignorance shapes what businessmen have to do to survive. Those who cater only to the most informed, cater to small markets and often go under.

One consequence is that the market doesn’t protect us. That’s why workers’ compensation was started many decades ago – workers couldn’t figure out the odds of injury and didn’t have the ability to protect themselves as cheaply and effectively as informed employers could. Government stepped in to move that burden of knowing and choosing from the employee to the employer.

Those are examples. The broader impact of what is now called behavioral economics is that the economic theory of market ideologues is thoroughly discredited nonsense. It doesn’t work. A couple of decades ago there was a big debate about the efficient market theory which claimed that the market had it right even though individuals could be wrong. But they couldn’t tell me whether the market had it right the day before or the day after the crash. In other words it was nonsense on stilts.

That’s one of the reasons the public, all of us, have to get out of the glare of the outdated economics coming from conservative ideologues. It’s one of the reasons why it has been so important that Elizabeth Warren and Bernie Sanders have moved the Democratic Party to the left. That shift also clears the way for Hilary Clinton to return to the roots of the modern Democratic Party in the Great Depression, in Roosevelt’s New Deal, in being a party with heart.

Hilary and Bernie both have a lot to offer, but just as big a key to progress will be the Senate and the House of Representatives, which have blocked Obama’s efforts to push this country toward better, more caring solutions at every turn.

— This commentary was broadcast on WAMC Northeast Report, April 26, 2016.


It’s Government’s Job to Make Work Available

April 19, 2016

Bernie and Hilary argue about trade pacts. We know trade pacts cost some jobs and open up others. That’s not a satisfying trade-off if your skill is suddenly unmarketable and you’ve become unemployed or underemployed. An effective response is crucial.

But protecting specific jobs will ultimately hold America back, diminish our competitiveness, and damage our ability to develop in new directions. Government should not protect specific, unsustainable jobs or avoid trade pacts that promote economic progress, national security or other international objectives.

But – and it’s a very important but – government should make sure that we can all work to support ourselves and our families. That’s why Republican insistence on scaling back Obama’s stimulus package in 2009 and then blocking more investment in infrastructure was very much the wrong move. It shirked our responsibility to each other and made moving forward politically more difficult.

The way government can make jobs available is to hire people to do what we should be doing and building. Once people are working, business and investors will take advantage of the extra income flowing and build their businesses and inventory to satisfy the demand.

But businesses don’t invest in order to create demand. Individual businesses can’t assume their investments will change the economic picture significantly, certainly not enough to repay their investments. Individual businesses can’t assume that they will reap the benefits of having created more jobs – people spend their paychecks in many places only a fraction of which will come back to the company.

That’s just one of the reasons pouring more money into the hands of what Republicans like to call job-creators is worthless, like a Rube Goldberg invention in its totally confused complexity. Business invests to meet demand or to create a product they think will sell – they don’t invest just because they have money. And since in fact they have lots of money on hand, many have been engaging in various forms of financial manipulation, buying back stock, sending money abroad, anything but job-creating investment or investments here.

That means that both Bernie and Hilary are hitting the nail of economic doldrums for the many people who can’t find decent jobs right on the head. It’s a problem that needs government to work for us.

Putting people to work solves many problems at once. Putting people to work supplies the person-power to re-build, update and renovate infrastructure. Putting people to work, pushes the wage scale for the best of reasons – not just a legal minimum wage pegged to an arbitrary number, marketplace pressure for employees raises the payscale. Putting people to work improves the business outlook. And infrastructure improvements improves the feasibility of successful investment for everyone – not just the favored projects of a few but improved access for all of us means that people with a good idea will have the opportunity to get the resources they need and access to the customers they want.

Of course whether government can pay for doing the right thing depends on whether government can actually impose taxes on the people and companies who have money. Arguing about protecting the so-called job-creators bv reducing their taxes is actually a way of starving government so that those so-called job creators can squeeze workers who are uprotected because government can’t afford to do anything about it. A successful modern economy requires a government with the resources to play its part.

— This commentary was broadcast on WAMC Northeast Report, April 19, 2016.

 


Hillary

September 22, 2015

We were delighted when Kermit Hall, a friend since the early 80s, became president of the University at Albany. A week before he died, we had breakfast with Kermit at the President’s house. So I went to the memorial service at the University with a heavy heart. There was a woman standing in the crowd I didn’t recognize. She was just standing around quietly. My ability to recognize faces is poor, good enough for most things but it often fails me. She eventually made her way to the makeshift outdoor stage that had been organized for the memorial. Once the memorial got under way, she was introduced – as Senator Clinton. I don’t remember her reading anything. What I heard was a warm, heartfelt eulogy of my friend, a eulogy that flowed easily from her, filled with memories of their work together to strengthen the University in New York.

I know Hillary has a heart. I know she is a warm person with strong feelings. And I do not care in the least whether she would want to have a drink with me. I don’t care whether a president is spontaneous or funny when you get to know them.

I admired FDR enormously, not because of his dog, but his good sense. Thank heavens that he knew German well enough to understand how dangerous Hitler was before anyone else in America. I admired his wife and regret the pain it caused her that some women were sufficiently devoted to do anything for the president, but in the scheme of things, I have no ill feelings toward FDR for it. What mattered most was that he put his energies into turning this country around in the middle of the Great Depression, and preparing this country for what he knew was the inevitable battle with Hitler. He was the man we needed and thank the Lord for him. To heck with who his drinking buddies were.

I don’t want Hillary to be spontaneous so I could imagine enjoying her company or she mine. I want her to be thoughtful. I don’t want her to take us into foolish wars on wild hunches, or to come out with whatever thoughts she has in the moment. We don’t need a president whose calculations are as bankrupt as some of the companies he ran into bankruptcy. A president needs the mental equipment to calculate carefully. And a candidate needs to position herself or himself to win, lest we find ourselves with one of the clowns on the other side who compete for the privilege of exercising their free speech in the most vicious ways, arguing we should deprive friends and neighbors of their citizenship, breaking up families, and throwing as many people as possible behind bars in a collective orgy of prejudice.  That may be spontaneous but it’s also small-minded and stupid.

Bernie Sanders and Elizabeth Warren have long had my admiration and I support the message they have been taking to America. I want them to give Hillary cover to move leftward without losing the public in the process. But I think Democrats have been misevaluating Hillary. She has many of the qualities we need. She surprised many in both parties by just how good a senator she turned out to be. Democrats need to appreciate her toughness, experience and ability to navigate the challenges that confront presidents, not her ability to handle a stein of beer.

— This commentary was broadcast on WAMC Northeast Report, September 22, 2015.

 


Bernie

June 9, 2015

I have been an admirer of Senator Elizabeth Warren for many years, ever since she spoke here at Albany Law School some time back in the 90s. But I respected her decision not to enter the primaries to contest the nomination of Hillary Clinton. Obviously I never had to decide whether I would choose to vote for Warren or Clinton, but I came to the conclusion long ago that the candidates I liked best had no real chance of winning. So I have tried to keep my picks within the realm of the people I thought could win.

But Bernie Sanders is forcing me to rethink what to do. Simply put, the Democrats have lost much of the constituency for real, liberal, politics, politics for Americans with average incomes, politics for people who are being given the shaft by business as usual. Those folk have been part of the constituency of the Democratic Party for years. But many of them have been staying home and not voting. Or deserting.

The Occupy movement showed that there is still some life in that constituency. And it showed that American politics and Democratic Party politics can be rejuvenated. Except that it collapsed – not for lack of support but because it was never organized for the long haul.

Bernie gives hope to those of us who care about giving people real opportunity and a fair shake. He gives us a symbol we can rally around. Putting it in the political process is very different from opening a tent on Wall Street. Bernie is trolling for votes. His success will measure the possibility of returning to an America that is fair to all.

Years ago a congressman by the name of William Fitz Ryan represented a liberal district in Manhattan. His brother served on the Board of Directors of the program I worked for and commented that for Congressman Ryan, pushing Congress from the left, created opportunities for his fellow legislators to shift the battleground.

I think Bernie is in that tradition. If he can arouse the mass of us who care about each other’s fate, and arouse the many whose lives are crushed by the disinterest and hostility of those who have power and money, then Bernie can shift American politics from the rut it’s been rattling around in for several decades.

In that way, Bernie is more than a candidate. He represents a cause. He can be the beginning of a movement and an organization. The crucial thing we have to do is to take advantage of his candidacy, win, lose or draw, and build on it toward a stronger, fairer politics, and a stronger America, whose future is not limited to what may be good for a few big donors but is premised on the ways that investing in our country and its people can make a stronger, wealthier, more successful America for all of us.

Go Bernie. And may the rest of us come along, to push the campaign cart, organize for a long push, and celebrate a greater America.


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