Debating the Economics of Decline

Thomas Edsall, a professor of journalism at Columbia University and author of The Age of Austerity, has an interesting discussion in the New York Times “Opinionator” section today in which he compares two prominent theses about American decline.

The first thesis is articulated and defended by prominent conservatives such as Charles Murray and David Brooks. The basic claim made by Murray among others is that the radical cultural shifts of the 1960’s led to the destruction of basic social norms that had governed public life in America in the post-war era of prosperity, including “self-restraint, responsibility, family, faith and country.”

Some of the evidence for the decline of “conventionally defined moral standards” include the following indicators:  “The percentage of children born to unwed mothers has grown from 20 percent in 1984, when Murray published his seminal work, Losing Ground, to 41 percent in 2011; the rate among black women has gone from 59 percent to 72 percent, among white women from 12 percent to 29 percent and among Hispanic women 25 percent to 53 percent.”

Alan Krueger, who is Chairman of President Obama’s Council of Economic Advisors, defends the second thesis that America’s decline can primarily be traced to rampant corporate greed unleashed by deregulation of the economy in the 1980’s. Consider this selection from his recent speech to graduates at Oberlin College:

In considering reasons for the growing wage gap between the top and everyone else, economists have tended to shy away from considerations of fairness and instead focus on market forces, mainly technological change and globalization. But given the compelling evidence that considerations of fairness matter for wage setting, I would argue that we need to devote more attention to the erosion of the norms, institutions and practices that maintain fairness in the job market. We also need to focus on the policies that can lead to more widely shared – and stronger – economic growth. It is natural to expect that market forces such as globalization would weaken norms and institutions that support fairness in wage setting. Yet I would argue that the erosion of the institutions and practices that support fairness has gone beyond market forces.

Although there are important cultural factors to consider in the first thesis, particularly the entry of women as a class into the workforce and the decline of racial segregation, what is compelling about the latter thesis is the economic evidence. In a nutshell, Krueger points to several trends that are alarming:

First, corporate profits as a percentage of GDP have risen exponentially along with executive compensation. If that’s the case, he asks, they why hasn’t a percentage of that record profiteering led to an increase in real wages. If corporations are doing so well, the thought is that workers ought to receive some share of the benefits they helped to create. But this hasn’t happened.

The second trend is that real wages have not kept up with rising output. One reason why corporate profits are so high is that workers are more productive, a trend that has accelerate in the last 20 years due to technological innovations, as well as social media and communication improvements. While rising output has improved profits, real wages have declined.

Finally, the growth of income inequality is telling. Professor Emmanuel Saez, a Berkeley economist, released a study in January showing that the first 2 years of recover after 2008, “average family income grew by a modest 1.7 percent, ‘but the gains were very uneven. Top 1 percent incomes grew by 11.2 percent while bottom 99 percent incomes shrunk by 0.4 percent.’” This means, in effect, that the rich are getting richer and the poor are getting poorer, and this signals more than anything that America’s decline is primarily rooted in economic and political factors rather than the moral and cultural factors cited by conservatives.

House passes anemic STOCK Act, corruption is business as usual

 

Last week, Congress passed a much-weakened version of the STOCK Act banning insider trading by its members and their staffers. The law was significantly weakened by failing to place curbs on “political intelligence,” as well as failing to provide new clean-government rules for oversight of the financial dealings of Congressional members.

The legislation makes clear that lawmakers and key staffers are bound by the insider trading laws, but members of Congress are already bound by the laws of the United States so it is unclear what the purpose of this legislation is—except perhaps to promulgate convoluted language so they may continue to practice questionable financial dealings without much oversight. For example, the House version of the bill bars lawmakers from participating in IPOs, but whether this provision will remain in the conference version of the bill, which is reconciled between the Senate and House, remains to be seen.

Further proof that the law is anemic and intended to protect corruption in Congress can be found in two provisions that were cut at the last minute. One provision found in the Senate version requiring members and staffers who collect and trade so-called political intelligence—information from government that can move markets and stock prices—to register just like lobbyists was eliminated by House Republicans. Their version of the bill also cut a provision that cracks down on officials who are guilty of taking actions on the job to benefit themselves financially.

The STOCK Act represents an attempt by House Republicans to take the teeth out of the Senate version of the bill, and thereby preserve the political and financial corruption that have become hallmarks of Congress. The revisions even led Republican sponsors of the Senate version to criticize members of their own party. Sen. Chuck Grassley (R-Iowa) called the changes “astonishing and extremely disappointing.”

From “gridlock” to “disaster politics”

The word “gridlock” is commonly used to describe politics as usual in Washington. It signals not only an inability to compromise, but also an inability to govern. Democrats and Republicans alike are equally to blame for this gridlock, and sometimes this is good and sometimes this is bad. Sometimes it is good when an opposition party stands in the way of bad legislation or policy demanded by the majority party, and sometimes it is bad when a majority party cannot get good legislation passed because the opposition is intransigent. The accumulative effect of this mixed process is political turnover. When a majority party either supports bad ideas or cannot come up with any good ones, the electorate votes a majority party out of office and allows the opposition party to govern.

Given enough party rancor and time, gridlock has become the norm of governance here. Although American politics is clearly at this point, we are not the only democratic nation, by any means, to experience deep divisions leading to almost complete lack of governance. Belgium, Italy, Japan, Greece, Spain and many other countries have also experienced, are experiencing, the same climate of politics everywhere. Fear, uncertainty, worn out ideas, lack of civility and tolerance, and other generally shameful behaviors. Anthony Weiner’s of the world unite! You have nothing to lose but your shame!

Today, the U.S. government faces a possible shut down, while the agency in charge of its emergency preparedness (for both natural disasters and terrorism) faces possible insolvency because political gridlock has become a tool for forcing political turnovers. The issue is not complicated. Although U.S. debt is unsustainable and must be dealt with over the long term, this important goal is not achieved in the short term by the opposition party cutting federal spending to areas such as FEMA. Indeed, this is the only play we are seeing from the Republican Party, who’s apparent strategy for bold-thinking governance, is to enforce a debt limit by bleeding the government dry. The mantra to “cut spending!” and “don’t raise taxes!” literally does not make sense because it spells “disaster politics” in capital letters.

Cutting spending that is vital to the upkeep of a well-run government, and essential to protect the security and property interests of its citizens, while forbidding tax reform is a platform that moves America beyond gridlock and into some weird new dimension. The new dimension that is quickly becoming apparent is that lots of people out there, whether knowingly or not, want America to fail. They clearly want a government to fail, and right-wing conspiracies about Obama’s citizenship notwithstanding, this puts them in the position of wanting us all to fail. This is the message of the opposition party, and it is asking America to be put back in charge of gigantic mess that it primarily, though by no means exclusively, created.

The time for gridlock is over. If America wants to avoid disaster politics, it would do well to steer clear of an opposition party who wants government to fail. ::KPS::

Reagan and historical revisionism

Reagan Without Revisionism?

This weekend is the 100th birthday of President Ronald Reagan with many events scheduled throughout the country. In particular, the Ronald Reagan Presidential Library here in Simi, CA is having a centennial celebration, focusing on the Gipper’s accomplishments without, of course, acknowledging his failures.

NPR is featuring a great story today about the growing, largely unbalanced myth of President Reagan’s legacy, mostly fueled by the right-wing, anti-tax historical revisionism of Grover Norquist and others.

US evangelicals push anti-gay agenda abroad

The New York Times has been following a story over the last two years about the presence of US evangelical missionary groups in Uganda. A Times article published in January 2010 claimed missionaries gave public lectures in the capital of Kampala, promoting an anti-gay agenda.

“For three days, according to participants and audio recordings, thousands of Ugandans, including police officers, teachers and national politicians, listened raptly to the Americans, who were presented as experts on homosexuality. The visitors discussed how to make gay people straight, how gay men often sodomized teenage boys and how ‘the gay movement is an evil institution” whose goal is “to defeat the marriage-based society and replace it with a culture of sexual promiscuity.'”

Now the Times is reporting that David Kato, the country’s most prominent gay rights spokesperson has been beaten to death with a hammer in his Kampala home, signaling that the anti-gay seeds US missionaries have sewn here have taken root.

Listen to audio recordings of the anti-gay propaganda of US evangelicals being spread in Uganda, which was posted in the January 2010 Times article. Disgusting beliefs and actions from people who profess to follow the love of the Gospels. The right-wing organizations  sponsoring this missionary activity should be heavily scrutinized by both US officials and civil rights organizations such as the Anti-Defamation League, and their activities should be disrupted by protest that draw public attention to their evil ways.