There have been many pieces as of late in the New York Times about the Democratic Party moving to the Left. Is it good or bad? Is it really happening? What will the consequences be?
This has been cooking for some time. To establishment types, Bernie Sanders' showing in the 2016 Democratic Presidential Primaries must have been something of an eye opener. Nonetheless, the recent defeat of Joseph Crowley by Alexandria Ocasio-Cortez seems to have have set off alarm bells. If you believe the stories in the news, this outcome wasn't anticipated at all. There are two possible interpretations of this result. The first is that Crowley, an entrenched politician, lost sight of his own constituency. Instead, he was captured by the special interests and the higher ups in the Democratic Party. This story makes Crowley seem quite similar to Eric Cantor, so it emphasizes that a many term incumbent became out of touch with the voters. The second explanation focused on the fact that Ms. Ocasio-Cortez is an avowed Democratic Socialist, just like Bernie Sanders. In the current environment, as least in her district, those views are more closely aligned to what the voters want, as it includes them in the political conversation. No doubt there is some overlap between these explanations. They are not mutually exclusive.
I was delighted with this outcome, expressing my pleasure in the daily rhyme I post to Twitter. It is wonderful to have a young and charismatic candidate who can generate excitement among the voters and encourage them to feel that good things are possible. For far too long our politics have ignored the economics of inequality and its pernicious social consequences. (Readers at the U of I can get access to this piece through the Library via a database from EBSCOhost. Scroll down a little on this page to find the appropriate entry.) Note that this piece was published in September 2016, before Trump became President. The pessimism expressed in the piece might need to be amplified, in light of more recent events.
It does seem that Democratic Socialism addresses the issues of income inequality squarely, which probably explains why Bernie Sanders proved to be such a popular candidate. His supporters sensed this too. In this interview with Noam Chomsky, who supported Bernie Sanders but who said he'd vote for Clinton over Trump, in case she got the nomination, Chomsky remarks about Socialism as a label but then refers to Sanders as a New Deal Democrat. If that is an accurate depiction, it reflects how much rightward our society as a whole has moved.
Indeed, a couple of years ago I found this piece on how Facebook regards your political preferences. (Trying it just now, I couldn't find my ranking. They may have removed this "feature.") I checked mine out then and it said I was very liberal. I really don't think my political views have changed much over the years. Circumstances have changed much more dramatically. I view myself as moderately liberal, a Keynesian on macroeconomics, while on microeconomics I prefer to look at the situation on a market by market basis, rather than pick a one-size-fits-all approach. I will illustrate below.
Competitive markets work well when there are a lot of players, none of which has too large a market share. Markets that are highly concentrated work less well. In the early 1990s the big buzzwords in economics were network externalities. Technically this means a user gets more benefit from a product or a service when other users are in the same product or service. The old style argument for why monopoly occurred was economies of scale. That argument didn't go away, but with the move to computers and being online, economies of network started to seem the much more powerful force. Further, as became evident in The Microsoft Case, an incumbent that was a monopolist in one market would parlay that advantage for the competition in emerging markets, thwarting the competition which didn't have the deep pockets to endure a sustained price war. This leads to a vicious cycle where the incumbents seek economic rents and industry gets ever more concentrated because the incumbents capture the new markets as well as maintaining monopoly in their old markets.
This is unlike the story Schumpeter envisioned when he described "creative destruction." In the Schumpeterian approach laissez-faire is fine because the incumbent's advantage is temporary. New entrants then discipline the incumbent, and perhaps one takes over entirely. In the new story, however, laissez-faire is a disaster for income inequality. There needs to be a counterforce to rein in the rent seeking and to keep the profits from being expatriated. I am not sure that American antitrust law is sufficient for this. Unlike when those laws came into existence, the incumbent companies are now all multinationals, operating around the globe. Global trade agreements need to be seen in this light. They should not be just about opening foreign markets for U.S. based firms to enter.
This market power in the product market translates into market power in the input markets. (Instead of monopoly, a single seller, we talk about monopsony, a single buyer.) Monopsony in the labor market means lower wages for employees. Thomas Edsall's most recent column makes just this point. It also revives a rather old dual labor market theory, which seems increasingly relevant. For those employees with the right sort of human capital, think of the computer programmers who write the code at the big IT companies, they are paid a pretty penny. Other workers who provide more commodity-like labor services, janitors may be the quintessential example, don't earn a wage premium at all, even if their work is necessary. Indeed, in the current environment those workers are not employees. They work under contract for a services company. That sort of work doesn't pay well and offers no job security.
If the work happens near to where the product or service is sold, these imbalances can be remedied, in part, either by raising the minimum wage or by having the workers unionize and bargain for better wages. However, when the work can happen anywhere, and do note that these big multinationals have global supply chains already in place, then attempts to raise the wage locally that are not matched by increases in productivity will migrate the jobs elsewhere, in the union setting to a right-to-work state, in the increased minimum wage situation by off-shoring the jobs. Thus, to remedy the ills of inequality in this case it is necessary to engage directly in income redistribution.
The income redistribution can be in kind, as subsidies for certain goods and services, health care and education come to mind, or as direct income transfers, such as with Social Security. There are then two dimensions to consider. First, who is worthy to receive the income redistribution? Second, how intensive should the income redistribution be? If you believe that hardly anyone is worthy and that for others the income redistribution should be nil, that makes you Conservative/Libertarian in your views. Such people tend to believe in the just-world hypothesis - life is fair as is. Perhaps they will grant an exception to a veteran who experienced a severe and disabling injury in combat or to a child who has a rare and potentially fatal disease. Otherwise, their approach is - no handouts. At the opposite extreme, you believe that everyone is worthy and that there should be income equality after the redistribution has occurred. This makes you either a saint or a communist. The rest of us are somewhere in the middle, with our politics described by how close we are to one extreme or the other.
I want to note that even Ms. Ocasio-Cortez refers to her natural constituency as working people. From this I infer that working people are worthy in her eyes, while those who are able in body and mind but who are out of work and not seeking employment are not worthy.
I will observe that in my own teaching, I hold similar views. A student who comes to class regularly and shows some effort in doing the assigned homework is worthy in my eyes. Such students frequently don't seek help when they are struggling, because there is shame in that. I find myself reaching out to them in some way to help get them through my class. Students who frequently skip class, in contrast, I put into a different category. I am irritated by their indifference to showing up and I show that irritation when communicating with them, in response to a query they make. I want to note that this is an imperfect way to differentiate students, as I learned a few years ago when I discovered that a student of mine had Crohn's disease. I would have been entirely unsympathetic at the time except for the fact that my best friend's son was suffering from a similar ailment. He had to spend much time in the hospital for treatment and had to drop out of college for a while as a consequence. I ended up with my student cutting him some slack so he could deal with his situation as best as he could. More generally, there can be mitigating circumstances with the student that the instructor is simply unaware of. How should the instructor account for that in determining who is worthy? Alas, I am not sure how to answer that question.
Recently I read a piece by Bertrand Russell from 1932, which challenges the notion that people who work are worthy. The notion is a holdover from the Puritan work ethic, which developed when society was largely agrarian, well before the industrial revolution took place. At that time labor was scarce and everyone worked hard. The only possible exception was the landed gentry. Bertrand Russell was commenting during the Great Depression, where production capabilities were much better, but where distribution still depended on working or not. He talks about moving to a 4-hour work day, so the spoils can be shared more evenly. Nowadays, with the increasing possibility that work can be automated, this linkage between working and being worthy is even more tenuous. Yet I fear it is ingrained with us in how we were raised. This notion requires further examination so we can come up with something more sensible that fits current circumstances better. Noting that, I want to push on because I don't yet have an answer as to what that something more sensible should be.
There is no doubt that regarding their positions Bernie Sanders would be regarded as to the left of Hillary Clinton. And I find myself closer to Sanders position-wise. Yet I voted for Clinton in the primaries. I thought she was the better candidate. Trying to reconcile that apparent contradiction is why I'm writing this piece. The reconciliation, which will be given in the next section, no doubt requires some wishful thinking, perhaps a lot of wishful thinking. Yet I think it a worthwhile exercise to go through. As I view my pieces as think alouds, the real purpose of the piece is not to offer up a solution as a nice package wrapped in a bow, but instead to encourage others to think it through for themselves. That exercise needs to be done before the internecine politics within the Democratic Party can be resolved amicably, if indeed it can.
Let me conclude this section with a few reasons why I found Bernie Sanders less than a completely satisfying candidate. He is very strong on identifying benefits for working people, each which he tends to deliver as a sound bite. So the proposal is typically under specified. The price tag, in particular is not considered. As an opening bid in a negotiation to produce legislation, that is fine. But as the end result it is problematic.
For example, consider the proposal to make college free. There is no doubt that student loan debt is a real problem, one that requires a substantive solution. Back when I was applying for college, the New York City system colleges were free, while the SUNY system colleges did require students to pay tuition, and then there were private universities that required much greater tuition. While I don't have the data on this, I believe that many of my high school classmates in Bayside attended Queens College, which was part of the New York City system. I'm guessing that they lived at home while they attended college, to keep down the costs of room and board. Fast forward to now and Governor Cuomo has embraced the Sanders proposal. Students from families below a certain income threshold can attend for free; presumably their tuition is paid for by the state. But how does this work in practice? Do low income students still not attend the residential campuses because they can't cover the room and board costs? Do the universities receive the full amount of tuition they would have received or did the state commit to pay less? If so, what will happen to the quality of instruction given lower tuition revenues?
Now let me make a little leap, which I'm prone to do in my reasoning. K-12 has been free for quite some time. Yet we know that public school quality varies substantially. Public schools in rich neighborhoods tend to be high quality. Conversely, public schools in poor neighborhoods tend to be low quality. There is a strong racial component to this. If you read Jonathan Kozol's The Shame of the Nation you'll learn we have apartheid schools in the poor neighborhoods. It is 64 years since the Brown v. Board of Education decision. Yet de facto we are still in a Plessy v. Ferguson world. Recognizing that, might we simply reproduce that outcome at the college level if we make college free? Alternatively, might the funds be better spent on K-12 and improving the quality there?
There is a lot of complexity here. Making soundbite policy proposals in the presence of such complexity is not a good thing, in my view. It may excite a lot of voters, who can chant those soundbites for themselves. But it is a kind of fool's gold. Hillary Clinton's proposals were not nearly as aggressive, but they were more thought out and did have a price tag that came with them. I respected her preference to deliver proposals that way and thought she got unfairly blamed by association with Bill Clinton for his indiscretions, which surely came as no pleasure to her. I also thought that she got pummeled by the Republican attack machine, not just in the recent campaign, but all the way back to the early 1990s. She may have adopted a shell of protection as a result and that makes her appear less candid in public speaking. Yet I didn't think it would influence her decision making on policy issues. I reckon her a nerd, like me. Her reasoning through the analysis would drive the decisions. This is why I voted for her.
* * * * *
Here is the plan to unify the Left and the Center. I will cast this as a bargain between ordinary working people and upscale voters. As it is now, both types believe the system doesn't work for everyone. The ordinary working people get discouraged by this. The various social ills have been documented. More important for this plan is their voting behavior. Anthony Downs taught us about the Paradox of Voting. Voting takes time and effort, getting to the polls, waiting in line to vote, and beforehand learning about the candidates and developing a preference for the preferred candidate. So the costs are evident to the voter. The benefits are less evident, especially when there are many voters so there is a likelihood that one individual vote won't matter in determining the outcome. This is all the more the case when it is believed that it doesn't matter which candidate wins, because the system is broken. The paradox is that some people do vote when the cost-benefit calculation would predict that they will not vote.
As it turns out in practice, income is a predictor of voter participation. Low income people tend to vote at a lower rate. Participation increases with income. Let me explain why this matters.
The Democrats are at a disadvantage electorally for two different reasons. Democratic voters tend to be concentrated in the cities. Republican voters tend to reside in rural areas. For both control of the Senate and for winning the Electoral College, this gives an advantage to the Republicans. The other reason pertains to gerrymandering Congressional districts. When Democrats win a House race, they win by a wide margin. When Republicans win, the races are often closer. Without the gerrymandering the Democrats would have more seats in the House.
Heretofore, most political strategists would argue that the election is won by making the right sort of appeal to independents, those who do vote regularly. They are the swing voters who will decide the election. That is not the argument being made here.
Instead, the Democratic strategy should be to significantly expand voter participation rates among ordinary working people. Let us note that 40 years ago labor unions performed that function in many places and the party machine did it in other places, such as Chicago when the first Mayor Daley was in office. This function needs to be restored and indeed expanded. Democrats can overcome the Republicans inherent advantage if they are quite successful with this approach. This is one side of the bargain.
Now let's consider upscale voters. They too recognize that the system doesn't work, but they have become proficient, perhaps even expert, at gaming the system for their own advantage, even if this is to the detriment of others. They have been raised under the principle - vote your pocketbook. In this they have been coopted by the Republicans who always want to cut their taxes. They completely disagree with Republicans on the various identity issues. But on bread and butter matters, what has mattered to them is the bottom line. And looking at after-tax income, they've done well under Republican administrations by this measure. So while they understand that income inequality is a problem, they have kept their heads in the sand in regards to doing anything to fix the problem. Changing this is the other side of the bargain.
We will consider this bargain twice. Once in the near term, then again in the long run. As I've written quite a lot about the motivation for the long run, I will simply cite a couple of these pieces and note that it is fundamentally an ethical matter. It is all about social responsibility or, if you prefer, it's about embracing JFK's famous line, "Ask what you can do for your country." You don't hear many politicians challenge their own constituencies this way. That needs to change. Much of my wishful thinking is that indeed will happen as people come to realize the necessity of doing so. One piece of mine that articulates the requisite principles in some depth is entitled A New Progressivism? Love of country is the bedrock on which the JFK ideal is built. That must be restored. Doing so will require the lion's share of the heavy lifting. The other piece, which pertains as much to our ordinary social interactions as it does to our national politics, is called How well does my dad's morality hold up? I was raised to "be a mensch." My dad had quite colorful language for those who weren't. If people treat others as human beings in their normal interactions, and we include upscale voters in that, then they should come to recognize that with the way things are now voting their pocketbook is a mistake. They need to vote for a system that can work for everyone.
What about the near term motivation for upscale voters. I think it is quite different, entirely tactical in nature, and is based on revulsion with our current government. The Republicans fight like hell to secure electoral advantage and then deliver government that is incompetent and nonsensical. Upscale Democrats want to win now. They want a government they can respect and one that is liberal on the identity issues. They want an end to playing political football with Supreme Court nominees. And they are willing to pay (in higher taxes) to achieve those ends.
That's the basic idea. Now let's amplify on it some. The recent history of our national politics is that the Democrats controlling the Presidency and both houses of Congress has happened in two-year stints, the first two years of the Bill Clinton Presidency and again the first two years of the Barack Obama Presidency. Otherwise, when Democrats have controlled the Presidency there has been divided government. Back in 1994 the Republican won back the House with the Contract for America. Then in 2010 something similar happened with the rise of the Tea Party. There was quite a lot of enthusiasm among young voters in 2008, when Obama was then a candidate. That cooled substantially for a variety of reasons. The economy was in crisis and the urgency seemed to be to protect the financial system from utter failure, rather than to help ordinary people who were out of work and perhaps in underwater mortgages. Obamacare passed, but the Public Option was abandoned and some viewed that as a betrayal. Further Obama campaigned in 2008 on being above the petty politics, but the Republicans played the obstruction game where they could and the President looked foolish at times for not subsequently playing hardball himself.
To rectify the ills of income inequality will take a sustained effort over a decade or longer. The bargain I'm talking about must sustain for the duration. That will take quite some doing. It can't be done in just one election cycle. So part of this is about having to sustain the bargain over time.
Another point to consider is whether the Left will embrace the bargain. The alternative, it would seem, would be to ignore the upscale voters entirely. If they can get the voter participation rates up high enough they won't need the upscale voters to sanction what they are doing. They can raise taxes on the upscale voters because they will control the government. Then they won't need to be part of any messy compromises. Surely that will be a tempting path to follow.
At issue is whether the Left can overcome the Paradox of Voting with their own core constituency by going it alone. Of course, I can't do those calculations for them in a way that will be convincing. They must do it themselves. But I wonder if those who supported Bernie Sanders back in 2016, especially those who then were lukewarm to Hillary Clinton, possibly not voting in that election as a consequence, feel some regret for their decisions now. With the experience of the Trump Presidency so demoralizing, and thus with a sense of urgency that we shouldn't repeat the mistake in 2020, perhaps these people have reconsidered their own decision making. It is sometimes comforting to be The True Believer, who doesn't compromise come hell or high water. But after a sustained period of disappointment, does one still cling to the old ideals? I really don't know how these conflicting motives will play out. My hope is that those in leadership roles on the Left will see this bargain as an opportunity worth pursuing.
Then there is getting down to the nitty-gritty. How much will taxes be raised on upscale voters? What programs aimed at ordinary working people will be implemented when their price tags have been carefully worked out? Will the coalition hold when people see the actual numbers? Or will unrealistic expectations on each side doom the bargain? I don't know the answer to this but I want to note one thing here that should be addressed.
The way legislation is done now, each bill is taken up sequentially, with its own budget and spending provisions. What is really needed for the purposes of bargaining, however, is to take up the collection of bills that will be proposed and deliberated upon, so one can see their consequence in aggregate. The bargain has to be about that aggregate, rather than be done on a one-at-a-time basis. Some years ago I wrote a paper called How to Save the Economy and the Democratic Party - A Proposal. At the time I didn't anticipate the Bernie Sanders candidacy, and I thought infrastructure investment, job creation in construction work, and an emphasis on doing something substantial to make America Green, would be the basis. Surely there is some overlap between that agenda and seriously addressing the ills of income inequality. But they are not one and the same thing. I recognize that. However, developing a full economic plan and coming up with a process for doing so is the way to convince the public that the system works. That needs to be the focus.
* * * * *
I want to close by trying to connect the second half of the essay to the first. Though I've watched The West Wing TV show (multiple times) I am largely ignorant of how a real get out the vote campaign can work and what it will take to get such a campaign to counter the intensive efforts by Republicans at voter suppression. Likewise, I am ignorant about what it will take for a politician to compromise on prior held views or change them entirely and yet do so with utter conviction. (While I wasn't going to vote for Mitt Romney back in 2012, no matter what, that he came out against Obamacare even though he had done essentially the same thing earlier as governor of Massachussets seemed expedient and entirely disingenuous to me. He wanted to be President and and would say anything to achieve that end. That's the sort of politics that can't work in this case.)
I have a fantasy of what would work. Alexandria Ocasio-Cortez is campaigning with Tim Kaine and they are each making an address to an audience of Democratic voters in a large auditorium. This is not a Presidential campaign stop, but rather an event to rally the base. Alexandria talks first. Her speech is aimed at upscale voters. She tells them about their need to embrace higher taxes and explains why steep increases are necessary. The uber rich surely will also pay quite a lot more, but if the focus is only on them the effort to raise taxes will fail. That there are so many good spirited upscale voters who willingly embrace the tax increase makes it possible to impose. Then she turns to talking about underlying motivations for doing so. Perhaps it is penance for the years of neglect of ordinary working people. Perhaps it is waking up to the fact that they've been played by the Republicans. And perhaps it is simply that they can see the train leaving the station and they want to be on it.
Then Tim takes the podium. He talks about how the market is failing ordinary working people, who need help. This help must be provided by the government. We need to elect representatives who understand this as job one. Then he tells them about their job, to educate themselves about such candidates and by all means to vote, in the primaries and in the general election. He talks about voting as an expression of social responsibility. Then he talks about legal ways to counter the Republican voter suppression efforts.
After this Alexandria approaches the podium where Tim is already standing and she gives him a big hug. Then they raise their arms in celebration.
Wishful thinking for sure, but what I'd like to see happen.
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