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.

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Environmental Change and The Campaign Season

March 5, 2019

I’d like to start this campaign season by stating one of my primary objectives. Climate change is the rare major problem that has been warning us so that we could have had plenty of time to deal with it. Now in a film titled The Human Element, which is available on podcast, photographer James Balog shows global warming in time lapse photography.

But actually knowing what is going on seems to be a liability. Gore actually knew. He looked deeply into the issue of global warming and he understood. But the public reaction was horror – at Gore. He wasn’t like us. He knew stuff. In the first debate, Bush disposed of one of Gore’s points with a sneer, just calling it “fuzzy math.” I concluded on the spot that Bush was a bully. The American public apparently concluded that they couldn’t share a beer with someone who understood math. They judged sincerity as similarity – if he’s like us he’s sincere. So, if we didn’t study stuff, the president shouldn’t either. God. Try that for your choice of doctors. People got what they deserved except that they dumped it on the rest of us too.

Obama did know what he was talking about. Some of us loved him for it. Others were turned off because a Black man presumed to tell the rest of us what was going on – even if it was a loyal and dedicated Black man trying to save the rest of us from the hell we’re wandering into.

Hillary knew what she was talking about. She spent her life preparing for public office, not going to campaign methods and finance school but studying the public issues a president has to deal with for our sake. But her dedication to serving us, the people, was her apparent undoing. The guy or gal down the block doesn’t do that. So, she must be snooty because she knows stuff and proudly spent her life learning it for us. How bad is that?

Learned Hand, one of the great judges in our history wrote that elections are very hard to know enough about. I want presidents, senators, representatives and members of the Administration who have spent the time to know what they are talking about so that we don’t all fall off the cliff together, pulling our families off that cliff with us. This isn’t about my ego. It’s about survival.

Sincerity means to me that the candidate wants to take care of us, our health, our future, all of us.  Yes, experts disagree, and I spend some of my effort doing this commentary to distinguish between experts who have it right and those whose heads are screwed on backwards. But understanding issues is essential. Beyond what we can figure out ourselves, we have to be able to talk with experts who do understand. Lawyers have to do that all the time, from working with doctors to understand injuries to working with economists to understand how much money will have been lost. Expertise matters. Even to be able to talk with and explain the experts, one has to prepare. How better than by spending the time, energy and midnight oil to get things straight?

In this presidential campaign season, I want candidates who care enough to figure things out. Most important I want candidates who understand the urgency of dealing with climate change. And who build ways of dealing with the dislocations of capitalism by building their solutions onto the opportunities created by effective solutions to climate change.

— This commentary was broadcast on WAMC Northeast Report, March 5, 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.

 

 


Capitalism gone wrong: Too many left behind in our divisive economy

September 19, 2017

My latest piece for The Hill discusses the set of unacceptable choices we’ve been stuck with: thinking only of national economic growth and ignoring the local fallout, maintaining industries that do national damage for the sake of local workers, leaving the workers to fend for themselves when industry departs their communities, or moving able workers to better jobs but leaving the rest in dying towns. Each of those choices is both morally and politically unacceptable. Liberals must find more compassionate solutions.

 


Labor Economics

February 14, 2017

The White House isn’t explaining what’s happening to jobs. I once taught labor economics, an issue close to my heart. To some extent, labor is like any other commodity and that’s the problem. Jobs go wherever business can find all the things it needs – the land, transportation, materials, markets, reliable legal relations, at the right prices. And it keeps changing.

We talk about the rust belt as if we did something wrong. Actually we had about a century-long run on the best factory jobs in the country – a ribbon through this state after New York’s government built the Erie Canal and made New York City gateway to the west, turning every city along the Hudson, Mohawk, Erie Canal, and then the great Grand Central Railway into a powerhouse. This area long dominated clothing, technology, science, heavy industry and spawned radio and television networks. Each industry provided resources for newer ones.

But New York’s advantages couldn’t be permanent. For bigger plants with newer methods, business looked for virgin land. Other governments built ports, the Interstates and St. Lawrence Canal, while the aging infrastructure of older cities led firms elsewhere. It couldn’t be permanent. Economic fundamentals inevitably dominate jawboning and presidential rhetoric.

Workers get cast aside unceremoniously. One of my law students was also a human resources specialist at GE, missing class whenever GE announced layoffs. They had long since let the weakest workers go. Now she had to fire the best and it hurt. But big corporations aren’t sentimental.

What’s a city or region supposed to do? The market doesn’t automatically find the next big thing and put it where former employees can get jobs like those they lost. The market didn’t build America automatically. Government changed British rules. Government built a banking system with resources to fund business, and smooth their cash flow – if you read or saw Hamilton, that’s what he was about, government providing what companies couldn’t. Government built ports, canals, highways, and had the railroads built. Government provided public health facilities, water, sanitation, disease control – which became crucial for business. Government invested in schools, and President Lincoln laid the foundation for the modern state university system. President Wilson sparked the country’s first broadcasting system for the war effort. Almost everything in your hands today has government fingerprints on it – the research and development in fundamental physics that led to the lasers, transistors and chips that run almost everything today.

Yes, governments make mistakes. You think private industry doesn’t? Most businesses fail. But only government can provide the fundamentals, the things that all the businesses in the country, region or route need. Only governments are motivated to look beyond individual companies and work for the region.

Governments have been investing in new forms of power. If governments in coal producing states had the sense to invest in emerging industries instead of dying ones, the coal miners might face a much better transition to good jobs than anything presidential jawboning can produce. But government cannot do it if it is afraid to fail.

Governments need to be thinking about what the emerging industries are, what resources will support growth. Not individual businesses that any group of investors could build on their own, but the underlying fundamentals that make broad development possible. And we may only know which ideas work when we try them.

If government thinks small, we all shrink.

— This commentary was broadcast on WAMC Northeast Report, February 14, 2017.


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