I find myself feeling despair a lot lately. Some of it is me - aging and declining health for sure, but also unable to change in ways to confront current realities, instead clinging to old beliefs which may never have been valid and surely are not now, yet they remain as how I'd like the world to work. When I was in my mid forties and feeling some despair over a work/personnel issue, a friend of the family who worked in HR advised me - be strong. I didn't understand what that meant then and I'm still not sure I understand now, more than twenty years later. The best I've been able to come up with is to be myself when I don't feel desperate. I was a reasonably good analyst and could write my pieces in a thoughtful style that would provoke thought in my readers. That's my aim here. I will try for this with a few different snips rather than one coherent larger narrative.
Integrity versus the Repeated Prisoner's Dilemma (and the Media as Propaganda Machine)
There were two Op-Eds last weekend written by insiders about what has been happening to Republican Members of Congress. One was called How Never Trumpers Fell in Line, by Steve Israel, a Democrat who served in the House from 2001-2017. He offered up his theory of what happened, a wearing down of Representatives who knew they'd be bludgeoned in the media if they openly resisted the President. Eventually, they came into lockstep with the Trump supporters, to assure their own political survival. The other piece is called In Private, Republicans Admit They Acquitted Trump Out of Fear. It's by Sherrod Brown, a Democrat who is a current member of the Senate. The message is essentially the same as the other piece, though here it is speaking about Senators, who have a longer term in office so might be more immune from the media bludgeoning for that reason. Apparently not, and yet it seems they care a lot about their reelection possibilities. Why would anyone want to continue to serve in Congress when they have become a hostage? I don't get that, but I'm not going to pursue that question here.
Instead I'm going to make a linkage that I haven't seen others make. If you've read John Cassidy's book, How Markets Fail, you'll understand the Prisoner's Dilemma logic in a different context. The question is this. How could legitimate bankers, circa 2007-08, make loans they knew were bad, thereby exacerbating the financial crisis? The story Cassidy tells is that there were other lenders in the market who were entirely unscrupulous. They were after the quick profit. They offered high interest rates to depositors as a way of attracting funds, enabling them to make bad loans at even higher interest rates, their profit coming from the difference between the two rates. The idea was to make the volume as large as possible, in the near term. If the loans were to fail eventually, they'd be gone by then, so what did they care.
Legitimate bankers had to operate in this environment. They could stick to their lending standards, but then see their depositors lured away by the higher rates elsewhere. Or they could raise their rates to depositors to match the competition, but then had to make the bad loans that their competitors were making, so their balance sheets would remain in the black. Almost everyone opted for the second option. It was a matter of principal, not of principle. (Sorry for the bad pun. I couldn't resist.)
This gets you to wonder whether the real issue is that people with little backbone get into these positions of authority and then cave into the pressure, or if even people of high integrity would cave in (or quit) because there was no other realistic alternative. I don't know which is the better explanation. But I do have a few subsidiary questions. Can we identify people of high integrity in advance? If so, how do we do that? Does our selection process actually favor others, with less backbone, because they are willing to tell us what we want to hear?
I want to conclude this part by returning to politics and note that the Republicans have been playing the hostage taking card for some time. When the Tea Party came into prominence, they threatened incumbents up for reelection to either move to the right or face a primary challenge from the right. So these sort of threats are not new. What is new is the immediacy of the threat and the ferocity of it. Trump writes a Tweet where he is disgruntled with x. Fox News amplifies the complaint against x. Trump supporters take to social media and pummel x. My economic theory tells me that if the punishment has become more immediate and more severe then the integrity needed to withstand the onslaught has to be greater. I fear that identifying people with the right moral fiber is a losing strategy. Further, something of the same thing is happening with the Democrats, social media playing essentially the same role with them, even if there is no demagogue like Trump to initiate things.
The Strategy to Enact Actual Legislation versus Candidates Staking Out Policy Positions
The situation is asymmetric between the Democrats and the Republicans. The Democrats want to enact real and substantive legislation. That is something in common between those near the Center and those on the Left. In contrast, while the Republicans are always happy to introduce legislation with further tax cuts, and to appoint Conservative judges, apart from that they really don't want Congress to do much. Further, they understand the demographic changes that are happening nationally. The trends are against them. So their electoral strategy is to hold onto their majority (now only in the Senate), even if it requires dubious electoral practices to achieve that end.
A question that I don't see being asked is how do articulated policy positions in the campaign for President translate into actual legislation, if the person is actually elected? And what sort of majority is envisioned, in both the House and the Senate, to get that legislation through? Further, will that majority hold for long enough to get through the entire policy slate? If not, which legislation is tackled first?
The best we have to go on now is what happened during the Obama administration in 2009-10. It appears we don't have good memories about these things. TARP, which was passed before Obama came to office, was extremely unpopular with many voters, as it seemed that the government cared more about the investment bankers who caused the financial meltdown than about ordinary citizens who had to bear the consequences of it. Secretary of the Treasury Geitner, under a lot of pressure because the possibility of total meltdown seemed quite real, was no help on this front. The stimulus package was the first economically important legislation after Obama took office. While definitely a step in the right direction, as any Keynesian would tell you, a large portion of it was in the form of tax cuts, there to lure Republican support in Congress. In my view tax cuts during a recession are not nearly as effective as direct spending, in terms of generating a multiplier effect, simply because well-off people will save their tax cut rather than spend it, while others who are heavily in debt will use it to pay off their loans. Further, the Republican support didn't materialize. That was a disappointment, but not entirely surprising. As a reflection on what might happen in 2021, should a Democrat be elected President in November, it seems unlikely that there will be Republican support for the next President's agenda.
Then, of course, there was Obamacare, a very heavy lift, about a year in the making, an example of the sausage-being-made aspect of getting legislation through Congress, even if it was only on the Democrat side, with the Republicans sitting out. During the campaign in 2008, health insurance was a big issue, and there was a lot of discussion of a public option. Yet there was no public option in the actual Affordable Care Act. I have a distinct memory of watching Gary Wills on the Charlie Rose show lamenting the lack of a public option and saying he lost faith in Obama as a result. I believe that Wills was speaking for quite a lot of Obama supporters in launching his complaint. In the midterm elections of 2010, the House switched to the Republicans, and that ended the chance of fulfilling a full legislative agenda. Is something similar likely this time around?
Let me make one other point here. While the stimulus was to cover two years, a good case can be made that a massive infrastructure plan was needed to cover the longer term. My emblem issue for this is the roads around town, many of which are full of cracks and potholes. There is some replacement investment, but it doesn't keep up with the deteriorating infrastructure. Given how bad the economy was doing then, I think a reasonable argument could be made that the infrastructure plan should have preceded the Affordable Care Act. It would have had better macroeconomic consequences. And it might have prevented the disaffection that some Obama supporters felt, so other legislative measures could have been enacted with the Democrats holding onto the House.
Of course, hindsight is 20-20 and being a Monday morning quarterback is not particularly attractive. The point here is not to replay this history for its own sake, but rather to inform us about the current situation. How do we avoid making the same mistake twice? That's the question people should be be asking.
The Democrats Are a Coalition of Disparate Interests. What Holds the Coalition Together?
In my view, there needs to be a bargain between the party and the voters. In a bargain, you get something and you give up something else. If in net what you get you value more than what you give up, then you'll take the deal. I'm afraid the politics focuses only on what you will get, and doesn't talk much at all about what you'll give up. Further, the primary process exacerbates this. The candidates appeal to their segment only. This might produce a plurality during any particular primary. But it doesn't say how the party comes together after the primaries have concluded. It's pretty clear that in 2016, the party did not come together.
While there are many possible factors to consider that differentiate voters, here let's focus on just two of them - voter age and voter income. My sense is that younger voters are more to the left while older voters are more to the center. Likewise, low to moderate income voters are more to the left, high income and very rich voters are more to the center. It would be good to know how strongly voter age correlates with voter income. My guess is that the correlation is reasonably strong. Then, those on the left want significant Robin-Hood-like income redistribution. Those near the center might tolerate modest income redistribution, but will be uncomfortable with anything more than that.
Historically, voter participation rates have been low for younger voters. Yet they seem to be arguing that this time around will be different. Turnout will be very high, so they don't need to compromise. Conversely, if getting rid of Trump and having the Democrats retain control in Congress for a longer period than happened under Obama is very important now, the upscale voters should be willing to have their taxes raised a lot, yet that case is not being made to them, as near as I can tell.
There is then the fact that evangelical voters who support Trump are doing so, almost surely, under the assumption that eventually they can overturn Roe. I haven't heard Democrat candidates speak about the onslaught of Conservative judges appointed since Trump was elected, nor of the shenanigans that happened after Obama nominated Merrick Garland for the Supreme Court. Is there a plan to reverse this? Or will they accept this consequence. In other words, there are important issues that are not being talked about now among the Democrats, whether on the Left or in the Center. Do those issues matter for holding a bargain together or possibly derailing it?
Wrap Up
One of the reasons I continue to write blog posts is that I'm vexed by some issues and when I write about one of them, I can let go of it, at least for a while. I'm afraid that's not the case with our national politics. It is too omnipresent for that. Instead, all I'm trying to do here is see whether I can make arguments that frame these issues in ways other than how they are being discussed in the media. I think there is a need for that. I wonder whether anyone who reads this piece would agree.
No comments:
Post a Comment