Tag Archives: economy

Culture War Governor

I see from the morning news that Mike Pence is promising to attack Indiana’s economic woes by focusing like a laser on “protecting marriage.” If the nexus between those things seems a bit…shall we say “attenuated”…he explains that children of intact marriages are less likely to live in poverty.

That’s true enough. The question is whether we elect a governor to address a long-standing social issue with complex causes rooted in social change–social change a Governor is unable to affect (or evidently, in Pence’s case, understand), or whether we elect a chief executive of our state to manage budgets, pave roads, maintain state parks and improve underperforming social service agencies. Those mundane tasks clearly do not interest Mr. Pence.

We all recognize that Pence’s interest in the health of the institution of marriage rests less on his belief that intact families will lead to a better Indiana economy than on his determination to keep GLBT folks from forming those families. If Pence really cared about the health of families, he wouldn’t be waging war against Planned Parenthood, opposing access to contraception, or even more adamantly opposing the Affordable Care Act.  The availability of affordable health care and family planning do have a demonstrable impact on families. Same-sex marriage just as demonstrably does not.

If Pence’s unctuous concern for the state of Hoosier marriages actually extends to the prevalence of divorce, how does he plan to insert the Governor’s office into that issue? Will he make it more difficult for the woman leaving an abusive spouse to exit that relationship? Work toward restrictive divorce policies that keep children in intact, unhappy homes?

There really are public policies that are family-friendly, that support women and children and ameliorate some of the predictable effects of single-parenting. Income supports and social services for impoverished children would make a real difference. SChip has been a godsend to thousands of them. But those aren’t policies Mike Pence has ever supported. In his case, “concern for marriage” is just a euphemism for policies that discriminate against gay people.

If Pence becomes Governor, it is going to be a long four years.

What He Said

A relatively simple statement from the President’s State of the Union speech last night deserves emphasis. After reminding Americans of the economic situation when he assumed office, when the country was bleeding jobs and reeling from the collapse of the housing bubble, Obama reported

“In the last 22 months, businesses have created more than three million jobs.  Last year, they created the most jobs since 2005.  American manufacturers are hiring again, creating jobs for the first time since the late 1990s.  Together, we’ve agreed to cut the deficit by more than $2 trillion.  And we’ve put in place new rules to hold Wall Street accountable, so a crisis like that never happens again.

The state of our Union is getting stronger.  And we’ve come too far to turn back now.  As long as I’m President, I will work with anyone in this chamber to build on this momentum.  But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place.”

Americans have a notoriously short attention span, and a wildly inflated conception of Presidential power. Republican prospects depend upon those characteristics. If the GOP is to recapture the Presidency, Americans must forget how we got into this mess, and how long it took for George W. Bush to dig the hole we find ourselves in. We also have to forget how he did it–what those “policies that brought on the economic crisis” were.

There may have been some unrecognized underlying weaknesses, but economists of all political persuasions agree that Bush inherited a healthy economy, and a shrinking national debt. It took him eight years, but Bush destabilized and weakened that economy, and dramatically increased the debt.

Let’s just look at the three most damaging policies Bush pursued. First, he refused to pay for the wars he so recklessly waged  (wars that cost several times the estimates given by then-budget director Mitch Daniels). Second, he actually reduced taxes on the wealthy–thus exacerbating the widest income gap between rich and poor since the gilded age. (Those tax breaks were justified as “job creation” measures, despite the fact that such cuts have historically failed to create jobs.) And third, he eviscerated government regulation, allowing banks and other big businesses to operate with lawless impunity in the serene belief that the market would provide all necessary discipline.

There were plenty of other policies the Bush Administration pursued that were wrong-headed and harmful– failure to address environmental issues,  cowboy unilateralism in foreign policy, an assault on civil liberties–but the “big three” did the most widespread damage and make it more difficult to address the others.

A lot of Americans who acknowledge all of this nevertheless believe that it should all be turned around by now. Why, Obama has had three years! These are the folks who must think we elect a king, rather than a President. In the real world, however, Presidential power is more constrained. The President can only do so much–and when those who control Congress refuse to cooperate, refuse even to negotiate, refuse to put the interests of the nation above the interests of their contributors, it shouldn’t come as a surprise that improvement has come slowly.

What’s surprising is that we’ve had improvement at all.

Who Should We Trust?

These may not be the times that try men’s souls, but they sure are times that confound economic policymakers.

We have one set of economists telling countries to implement austerity measures, and another group insisting that for now, stimulus is the answer. For those of us who are not trained in the “dismal science,” it’s increasingly difficult to distinguish between medicine and snake oil. Prescriptions sounding eminently reasonable to those of us unschooled in economic arcana turn out to be counter-productive in practice—case in point: research showing that so-called “right to work” legislation just depresses wages without generating the promised economic growth.

So where should we look for advice?

An October paper for the New America Foundation, by Daniel Alpert, Robert Hockett and Nouriel Roubini (not-so-affectionately dubbed “Dr. Doom” after he predicted the mortgage meltdown) proposes a way forward, and the logic seems—at least to this non-economist—pretty compelling.

The authors spend considerable space analyzing “how we got here,” and they note that digging out of the present crisis will be particularly difficult because, thanks to the entry into the world economy of “successive waves of new export-oriented economies,” and the concurrent, dramatic rise in productivity gains “rooted in new information technologies and the globalization of corporate supply chains,” the world economy now has excess supplies of labor, capital and productive capacity relative to global demand. Furthermore, the integration of new economies with competitive workforces has shifted the balance between capital and labor, resulting in income inequality as bad as—if not worse than—the gilded age.

The bottom line, as they see it: it will be difficult to sustain even current levels of consumption without improved wages and incomes, but such increases are unlikely due to the gluts of both labor and capital. In such a situation, austerity simply leads to a vicious downward cycle of weaker demand, weaker investment and more unemployment.

What to do? The authors lay out a three-part prescription: first, a “substantial” five to seven year public investment program to repair America’s crumbling infrastructure; second, a “comprehensive” debt restructuring plan; and third, global reforms to offset diminished demand in the developed world and correct the current imbalance in supply and demand.

The paper is long and quite detailed, and the descriptions of each proposal deserve to be read in their entirety, but I was particularly struck by the logic of the infrastructure recommendations.

  • Fixing infrastructure now would take advantage of a “historically unique opportunity” to put idle capital and labor to work rebuilding at an extremely low cost and with potentially high returns. Capital costs are now at historic lows, and labor is in abundant supply. It will never be less expensive to fix our decaying infrastructure than it is now.
  • The American Society of Civil Engineers estimates we need 2.2 trillion to meet even the most basic infrastructure needs. Less than half of that is currently budgeted.
  • Every billion dollars invested in infrastructure generates 23,000 well-paying jobs. Over the course of five years, such a program would create over 5.52 million jobs.
  • The CBO estimates that every dollar of infrastructure spending generates a 1.6 dollar increase in GDP.
  • Fixing our infrastructure is also essential to restoring American competitiveness. China invests 9% of GDP annually in infrastructure—we spend less than 3%. Public infrastructure investment lowers the costs of transportation, electricity and other core business expenses.

Even if these economists are overstating the case, what’s the worst that would happen if we took their advice? Our bridges might stop falling down? Pollution levels would abate? Workers with jobs might have money to spend?

 

 

 

 

I Don’t Get It

There’s a pretty robust public debate–in which I’ve engaged–about the refusal of congressional Republicans to even consider raising taxes on the wealthiest Americans. That debate has centered around the practicality and morality of their position: practically, government needs the revenue that would be raised by what would historically be considered a very minimal raise in the rate; morally, it seems truly wrong to demand yet more sacrifice from the beleaguered middle class while giving the rich a pass.

That debate is worth having, but what I don’t get is the politics of the position.

I understand that the people who fund GOP campaigns–the Kochs, the Scaifs, etc.–look favorably upon the Republican position. And I understand that money matters (far more than it should or than it used to, thanks to Citizens United). But I can’t believe that a political party can win a national election on a platform that advocates hollowing out the public purposes of government–“starving the beast” is the way Grover Norquist puts it–in order to protect the pocket-change of the powerful.

Leave aside whether the GOP position makes any economic or moral sense. I can’t imagine it making political sense. You can rename plutocrats “job creators” all you want, but it is pretty clear that they aren’t creating any jobs (at least not here in the US), and without that rather thin defensive reed to lean on, it is hard to envision any but the most ideologically rigid buying that snake-oil.

What am I missing?

DUBLIN

The difference between Vilnius and Dublin in attitudes is palpable. Although the young woman who narrated our tour in Vilnius said that Lithuania was experiencing an economic downturn, it wasn’t visible–shops and cafes were bustling, there was significant construction and restoration activity, and everyone we interacted with seemed upbeat.

In Dublin, by contrast, the shops are all plastered with sale signs, there are empty shops even on Grafton Street, the “fancy” and expensive shopping thoroughfare, and both our cab-driver yesterday and a salesclerk in Marks and Spencer’s today volunteered that Ireland is experiencing a depression. (Their terminology.)

The taxi driver also volunteered considerable anger at “the bankers” who are giving themselves bonuses after their actions bankrupted the country. People are losing everything, he said, and those who brought on the crisis are still living high. One of these days, he predicted, someone with nothing left to lose will shoot a couple of them.

Sobering realities, and not so far from those we left at home–although I haven’t heard so direct an indictment elsewhere.

Last evening we strolled around Temple Bar and ate at a traditional Irish restaurant called Gallaghers. We had Irish boxty–the Irish version of Knish, with some variation. (It has been a theory of mine that every culture has similar dishes that are simply named differently–kreplach, ravioli…).

Tomorrow we are taking a day train out into the Irish countryside, and quite early on Tuesday we head for Berlin via Birmingham, London, the Chunnel and Paris. It will be a long travel day, and I anticipate no time for blogging until we are in Berlin.