Notes on a Theory…

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Posts Tagged ‘James Kenneth Galbraith

The State of the Union is Ambivalent (2013)

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Last year Elias Isquith asked me to contribute a piece to a forum he did on the State of the Union speech. There was some dispute between the contributors over how they read the speech which was my jumping off point. I’m posting it again before this year’s speech because most of what I had to say is still applicable, even if some of the details have changed.

Obama 2010 SOTU

Pete Souza [Public domain], via Wikimedia Commons

The fact that people have such different readings of this speech isn’t that surprising. It reads to me like it was designed to do just that – let each of us hear what we want to hear.  Our normal way of understanding the SOTU is outward.  We tend to think of the president seeking to persuade the opposition or independents.  But there are two ways we might think of ‘us’ as the target.  First, speeches can be used to mobilize one’s own supporters to action. Second, they can be used to demobilize one’s own team. But ultimately, the impact depends on how we react.  We can use the good things that were mentioned as a resource, in making demands.  Or we can assume that the White House has the issue in hand and therefore we can stand down – at least until we get marching orders.  The latter is a losing proposition, regardless of your thoughts about the president’s own motives. I cringe at the barrage of emails about supporting the president’s agenda. We should have our own agenda, and pressure him to support us.

Of course, we all know that the president faces a hostile Republican majority in the House, and an obstructionist Republican minority in the Senate which, as a result of Harry Reid’s unwillingness to undo the filibuster, has a great deal of power.  Because of the sequester, there will likely be fiscal legislation, and because of Republicans’ fear over losing the Latino vote in perpetuity, immigration legislation will at least get a hearing.

So I thought I’d focus more on some other things, including those the White House has more control over.

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Written by David Kaib

January 27, 2014 at 11:13 am

The Grand Bargain, Pressuring Democrats and the Future of Labor

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Greg Sargent has the story on how some of the largest unions, which also are among those who are closest to the White House and most inclined towards emphasizing supporting the Democrats as their central strategy, ‘have the President’s back’ when it comes to taxes and social insurance.

Along those lines, I’m told that SEIU, AFSCME, and the National Education Association are putting together a major push, including TV ads, to pressure Congress to adopt a fiscal cliff approach that doesn’t do any harm to Medicare, Medicaid, and Social Security — and includes higher taxes from the wealthy. If necessary, the campaign might target Dems who stray from these principles.

“We believe this election was a crystal clear expression by working people in this country that the rich need to pay their fair share,” SEIU president Mary Kay Henry told me in an interview. “The new majority needs to continue to hold everyone accountable — Democrats and Republicans — by making sure we back the president’s vision for the country.”

So if it’s necessary, these unions might pressure Democrats.  Let that sink in for a moment.  (Glenn Greenwald  gives a good indication of what will likely happen given past history.  Step one is that liberals declare that they won’t accept any cuts.  It’s never good when he’s insufficiently pessimistic.)  The phrase ‘doesn’t do any harm’ concerns me quite a bit as well.  A better one would be ‘absolutely no benefit cuts.’  That’s the people’s vision, something I’d say is far more important than the president’s vision.

I saw Sargent’s story passed around this past week, and most people seemed to take it to mean these unions were ready to play hardball with recalcitrant Democrats.  No doubt this is what they would like people to believe. But that isn’t what the story says.

Interestingly enough, these were some of the same unions that took out loans in the waning days of the campaign to add to the large sums of money they had already spent to support Senate Democratic candidates.  The Democrats did maintain ‘control’ of the Senate, and even extended their majority.  But unless they jettison the indefensible and unconstitutional filibuster, it’s not clear how valuable a few extra seats are.

Whether Democrats will return the favor, leaving aside whether they are capable of doing so, is another matter.  As Mike Elk put it,

But while labor spent heavily to re-elect Barack Obama, it’s not clear that Obama will return the favor. From failing to pass labor’s key priority, the Employee Free Choice Act (which would have made it easier for workers to organize), to freezing the pay of federal workers, to signing free trade treaties with South Korea, Colombia, and Panama (and now in the process of negotiating the largest free trade treaty ever, the Trans Pacific Partnership, which involves most of the nations on the Pacific Rim), Obama has hardly been labor’s strongest champion. Indeed, rumors are swirling around Washington that Obama might use his second term to strike a “Grand Bargain” in which he would agree to cut Social Security in order to raise taxes and reduce the deficit.

The last sentence is hard to square with Sargent’s story.  The reality is that the White House, along with key Democrats, have been making noise about a Grand Bargain since before Obama took office.  A number of Democrats have been incoherent and shifting – appearing to take stands that would halt this nonsense and then backing away.  Digby has been all over this story from the beginning.  Regardless of the reasons for this, it makes organizing opposition difficult, in a way that taking a clear position would not.  Indeed, Democrats in office as well as commentators have often not been clear on the difference between cutting costs, which is both necessary and popular, with benefits cuts, which are neither.  That said, as Corey Robin pointed out, on election night Obama “claimed that reducing the debt and the deficit—elsewhere they call that austerity—will be a top priority of his second administration.”

It’s also worth noting to that this list of Elk’s is not simply about failing to enact legislation, but includes active efforts by the White House to enact anti-worker policies.  And he doesn’t even mention the most important positive step to support working people the White House could take, yet has failed to – fair contracting.  Among other things, it could actually help to reverse the decline in union density by providing protections for workers in areas not covered by federal labor laws.

This problem is not limited to certain unions.  It can also be found in many liberal constituency groups, like the AARP.  They often share this perspective–that unqualified support for Democrats in both elections and policy will cultivate insider connections, under the belief that this is the most effective route to power.  But if you’re unwilling to challenge those you are negotiating with, how is there any power?  While some believe that Social Security remains the third rail of politics, in part because of the power of the AARP, I think that’s no longer true.  Throughout the election, the AARP ran commercials about the potential for changes in these programs.  You might have thought their opening position was to oppose any and all cuts.  Instead, the commercials insisted that retirees deserved the facts, deserved clear answers about what was going to be done.  Another version said that you’re earned your say, that politicians should listen to retirees, without specifying what exactly they were saying.  These are fairly low bars, and aren’t even close to being met.  But the AARP remains fairly quiet.  And they are not alone.

Part of the problem here is that the whole premise of the policy problem, accepted as unquestionably true by elites, is complete and utter nonsense.  Jamie Galbraith explains what is going on.

That the looming debt and deficit crisis is fake is something that, by now, even the most dim member of Congress must know.  The combination of hysterical rhetoric, small armies of lobbyists and pundits, and the proliferation of billionaire-backed front groups with names like the “Committee for a Responsible Federal Budget” is not a novelty in Washington. It happens whenever Big Money wants something badly enough.

Big Money has been gunning for Social Security, Medicare and Medicaid for decades – since the beginning of Social Security in 1935. The motives are partly financial: As one scholar once put it to me, the payroll tax is the “Mississippi of cash flows.” Anything that diverts part of it into private funds and insurance premiums is a meal ticket for the elite of the predator state.

And the campaign is also partly political. The fact is, Social Security, Medicare and Medicaid are the main way ordinary Americans connect to their federal government, except in wars and disasters.  They have made a vast change in family life, unburdening the young of their parents and ensuring that every working person contributes whether they have parents, dependents, survivors or disabled of their own to look after. These programs do this work seamlessly, for next to nothing; their managers earn civil service salaries and the checks arrive on time. For the private competition, this is intolerable; the model is a threat to free markets and must be destroyed.

The media’s constant drum beating on this issue reminds me of the push for war in Iraq.  All pretense of objectivity and neutrality is out the window as they relentlessly push for a policy lacking public support but enjoying broad elite support.

We’re heading in exactly the wrong direction.  We should be expanding Social Security and Medicare, not cutting them.  And if unions were interested in garnering more public support, in demonstrating that they will fight for everyone not only their members, taking a strong stand–one that was maintained throughout the process–against any and all cuts would be a great place to start.  Either way, for those of us who care deeply about the idea of social insurance, it’s not enough to get periodic reassurances that someone might not allow cuts to happen or plans to fight them. We have to push all the players to take clear, unambiguous stands.  That means getting aggressive with those who are supposed to be allies.

Written by David Kaib

November 11, 2012 at 1:51 pm

Economic Myths and Other Possible Worlds

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Harold Meyerson has a really good piece on “The Failures of Shareholder Capitalism.” I like this for a number of reasons, including that the idea that having socialized ownership (by numerous individuals or more often, institutions) isn’t really the same as 1) the way the economic system was ordered when the economy was far healthier, i.e. in the 50s and 60s, or 2) as the idea of capitalism, which focuses more on individual ownership. (Ok, that bit about stock holding as a form of socialism is my gloss, but it’s a good point whether it gets that label or not).

The whole thing is great but this is especially important.

Still, the myth of shareholder power, and especially individual shareholder power, is continually attested to by corporate managers and their apologists because it legitimates the current system of corporate governance and the division of corporate riches. CEOs don’t acknowledge that the system is rigged in their favor. But the rise of shareholder capitalism — the doctrine that has dominated corporate conduct since the early ’80s, as corporations’ raison d’etre has been reduced to maximizing shareholder value — has been a boon to top executives. They have been able to tie their compensation packages to rising share value (and untie it when share value falls).

The transformation of the shareholder from an individual with a long-term interest in the company to an institutional short-timer with myriad other investments raises a deeper question about corporate governance: Why is it that shareholders, at least theoretically, are entrusted with electing corporate boards? Why aren’t more long-term stakeholders with a genuine interest in the company’s success — say, their employees — also represented on corporate boards, as they are required to be in Germany? German corporations are thriving, even though (or more likely, because) their CEOs are paid radically less than ours and their workers command a higher share of gross domestic product than ours.

I’ve long thought we do ourselves a disservice by simply adopting terms developed long ago to describe very different economies that today serve mostly to legitimate the rule of the powerful and which are not generally taken very seriously by their proponents.  (James Galbraith makes this point is his excellent book The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.)  The legal realists* did this once before in the lead up to and wake of the Great Depression.  In the aftermath of the Great Recession, brought on by a second resurgence of market fundamentalism, we need to recover that past and extend it.

*Agnostic Liberal had a good post the other day discussing this that’s also worth a read.

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