Tag Archives: economics

WHAT IF PAUL RYAN PROPOSED A HEALTH INFLATION TAX ON SENIORS INSTEAD?

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In honor of Paul Ryan, I have a thought experiment up on the Washington Monthly blog:

“My fellow Americans, it’s time for straight talk, tough decisions, and tight belts. Health care inflation is a prime driver of our long-term debt. That’s why I’m going to save Medicare with my Health Inflation Tax. It’s a simple solution: each senior will just have to pay a tax equal to the increase in the cost of their Medicare to the government beyond 2.7% a year. So if your individual Medicare costs us 10 percent more next year, your tax will cover three-quarters of the increased cost of your care (the other quarter is on us!). Here’s the best part: if you want lower taxes, you just need to use less healthcare. And you can be proud knowing that as your Health Inflation Tax goes up and up, Medicare’s net cost to the government will never increase by more than 2.7% again. Now let’s come together and get my Health Inflation Tax passed. No demagoguery allowed.”

How popular do you think this plan would be? Would it have gotten the same forty Senate votes Ryan’s plan did on Wednesday?

Read it here.

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STOP STEPPING ON MY BREAKTHROUGH

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Doing his best to sweet-talk electorally-ascendent liberals into hitching their wagon to the libertarian rickshaw, Brink Lindsey offers a list of shared victories in which liberals and libertarians can revel together:

an honest survey of the past half-century shows a much better match between libertarian means and progressive ends. Most obviously, many of the great libertarian breakthroughs of the era–the fall of Jim Crow, the end of censorship, the legalization of abortion, the liberalization of divorce laws, the increased protection of the rights of the accused, the reopening of immigration–were championed by the political left.

If these are victories for libertarians, then this is a better argument for why libertarians should support liberals and leftists – the people who actually won each of these victories – than for why the left should turn libertarian. But it’s worth asking whether these markers of social progress even qualify as “libertarian breakthroughs” or “libertarian ends.”

The Jim Crow regime was undone in part by the elimination of the poll tax, a nasty law which restricts access to a government function to those able to pay for it and rewards those with more money to spend on their politics with more voice in them. What about undoing those laws qualifies as libertarian? The Jim Crow regime was undone in part by anti-discrimination laws that empower government to use regulation to limit the freedom of employers to employ a workforce that looks like themselves. Inflicting government intervention on market transactions is not exactly the libertarian m.o. Neither is government-mandated busing to integrate a public school system that if libertarians had their way wouldn’t exist in the first place.

Many libertarians no doubt break with Barry Goldwater and support the Civil Rights legislation of 1964 and 1965. But their support for good progressive law doesn’t demonstrate a fundamental affinity between liberalism and libertarianism. It simply demonstrates that even its devotees sometimes reject the maxim that “the government is best which governs least” when faced with the liberty-denying consequences of the “free market” whose “relentless dynamism” Lindsey urges liberals to recognize.

Libertarians may support freedom of the press from censorship, but they’re more likely to fret over how to sell off our publically-owned airwaves than how to ensure airtime for grassroots candidates. They may support a woman’s right to choose, but I wouldn’t count on their assistance in ensuring that women have the economic means to choose abortion or childbirth, or the educational resources to make informed choices. They may support the rights of the accused to a trial, but they’re not the first to line up to be taxed to pay for decent lawyers to represent them (then there are the ones who would like to replace the criminal justice system with a system of private torts). They may support allowing more immigrants into this country, but if you expect them to face down employers who exploit the fear of deportation to suppress the right to organize, you’ve got another think coming.

And though the Cato Institute won’t be joining Rick Santorum’s crusade against no-fault divorce any time soon, there’s no need for an earnest Ayn Rand devotee to support a right to divorce at all. After all, isn’t marriage a binding contract that the parties should know better than to get into lightly? Aside from the reality that it presides over marriage in the first place, why should government have any more right to stop consenting adults from entering contracts for lifelong marriage than it does to bar contracts for human organ sales or pennies-an-hour employment?

IT’S HOW YOU PLAY THE GAME

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Last week, the New York Times reported on the move in China to better protect workers’ rights, and in so doing stem the tide of rising social inequality. And it discussed the instant blowback from American companies:

Hoping to head off some of the rules, representatives of some American companies are waging an intense lobbying campaign to persuade the Chinese government to revise or abandon the proposed law. The skirmish has pitted the American Chamber of Commerce — which represents corporations including Dell, Ford, General Electric, Microsoft and Nike — against labor activists and the All-China Federation of Trade Unions, the Communist Party’s official union organization…One provision in the proposed law reads, “Labor unions or employee representatives have the right, following bargaining conducted on an equal basis, to execute with employers collective contracts on such matters as labor compensation, working hours, rest, leave, work safety and hygiene, insurance, benefits, etc.”

This episode is an object lesson in how corporate-driven globalization works. While orthodox world systems theorists debate when we will shift from an era of American dominance to one of Chinese dominance, and the globalization gurus estimate how long it will take for “open markets” to unleash a new era of liberalism and freedom, corporate-driven globalization is lived by millions as a cudgel wielded not by a national government but by an economic clique, and wielded in the service not of human freedom but of management power.

When workers have the freedom to organize without retaliation and bargain collectively for better futures, they win better working conditions for themselves and their families, and they make it harder to treat them as infinitely flexible and fully disposable resources. That increase in the freedom and democracy of the workplace breeds understandable resistance from people who would otherwise get to call all the shots. Without global standards, global markets ease a global race to the bottom.

This is easy to lose track of in the bipartisan haze of “competition” and the elite faith that if a given nation just does enough to keep its workers cheap and contingent, it can outdo another nation’s efforts at the same. That’s a competition most everybody loses.

YES IT WILL

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Ezra Klein claims that

making Wal-Mart do better will not change [T]arget, or whoever dominate[s] the next major industry.

Of course it will.

Right now, Wal-Mart is militating against living wage employment with human rights nationally by forcing higher-wage employers out of business and inspiring competitors to ape its strategies for temporarily squeezing as much labor power as possible out of each of their employees before dumping and replacing them. Puffed up with public subsidies, Wal-Mart is the pep squad as well as the front-runner and the finish line in the race to the bottom. Transforming Wal-Mart into a progressive ally, as Ezra rightly seeks to do, would cease the damage Wal-Mart is currently doing far beyond the ever-multiplying communities which it’s entered.

And transforming Wal-Mart will send a clear signal to its competitors. Wal-Mart does business the way it does – locking employees indoors, forcing them to work off the clock, vetting them for class consciousness – because it can get away with it. When Wal-Mart changes, it will be because a broad-based coalition has used effective mobilization and pressure to show that they can’t.

The longest strike in the history of the Hotel Employees and Restaurant Employees International (HERE, now merged to become UNITE HERE) was the strike at the Las Vegas Frontier Hotel and Casino, fought against a viciously anti-union family which preferred to run their hotel into the ground rather than settling with the union. These people reprogrammed their sprinkler system in an effort to target picketers. Once they caved in 1998 (the family essentially went bankrupt and had to sell the hotel to someone else willing to settle), after a six-and-a-half year strike during which none of the 550 strikers crossed the picket line, workers at each of the neighboring hotels were able to win recognition without having to go on strike for a day.

The same principle, writ large, is at work in the campaign to transform Wal-Mart. Wal-Mart is the biggest and the baddest, and a movement which fought them and won would entirely reshape the playing field in the struggle over whether we a s a country will race to the bottom or pave the high road. Change them, and you change the country.

SIX POPULISMS

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TPMCafe’s guest stint by Thomas Frank (One Market Under God, by the way, is a masterpiece) has stirred a spirited debate about the place of populism in a progressive future. Populism is a word which has rightly come up fairly frequently in more- and less-enlightened discussions of the left’s future, but too often it seems like folks are talking past each other. Here are six of the somewhat but not entirely related themes I think are in play in the way different people discuss populism:

Progressive Economics: In broad strokes, the economic policy proposals that get labeled as populist are the ones least popular with the Washington Post editorial board and the “Washington Consensus” crowd: fair trade or no trade; downward economic redistribution; unionization. Opposition to immigration often gets grouped in here as well as part of the same package, though for obvious reasons I’d rather apply the populist label to the push for equal labor rights for immigrants.

Direct Democracy: The other set of policy proposals which usually get the populist labels are the ones which bring political decisions under more direct control of the American public. This includes taking decisions away from judges and handing them over to legislatures and taking them away from legislatures and handing them over to public referenda.

Trust in crowds: Populism is also used to describe a posture – whether held by politicians or activists – of trust in the mass public and distrust in elites. Usually, trust in the public is justified by an appeal to the wisdom of common people in identifying their own problems and synthesizing their own solutions. And distrust in elites is justified on the grounds of their inability to understand those insights or, more often, their narrow interests.

Democratic Legitimacy: Populism also describes a particular kind of appeal made by elected or unelected political leaders. Candidates for office, especially, tend to get the populist label for seizing democratic legitimacy for themselves – that is, for framing themselves as the bearers and protectors of the people’s will. The corollary to the candidate as representative of the masses is the candidate as enemy of the elites, whose hostility is easily explained by their opposition to the popular policies and popular mandate.

Prejudice: Populism is also a frequently-invoked label to describe all manner of ugly prejudice, be it directed against Blacks, Jews, homosexuals, or immigrants. In this conception, populism is the cry of some self-defined majority against unwelcome interlopers. This meaning of populism – which gives elites a lot of credit – is never far when someone’s looking to discredit one of the others.

Economic Focus: Maybe the simplest sense in which the word populism is used is to refer to a focus on economic issues (rather than a particular stance on them), to the exclusion of others.

That makes two kinds of policy approaches, two rhetorical/ philosophical postures, a question of focus, and a very bad thing (generally thrown into the mix by pundits like Joe Klein to make everything associated with the word sound ugly). Each of them, though, has a way of showing up implicitly in discussions about what is or should be populist.

What does it mean, for example, to ask whether Bill Clinton was a populist President? He often gets described that way, in large part because he ran on the economy (“It’s the Economy, Stupid”), and because his challenge to Bush benefited significantly from a sense that Clinton represented the concerns of the American people with which the President had fallen out of touch (and supermarket ray-guns). Others associate Clinton with the decline of populism in the Democratic party, and of the party in the country, pointing to his conservative stance on issues like NAFTA and the technocratic underpinnings of the “Reinventing Government” concept. I’m not going to say they’re both right (I’d say Clinton campaigned as a populist, but he didn’t govern as much of one). I will say that on those terms, it’s no surprise that those conversations don’t get farther than they do.

Thoughts?

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Good news from Britain, with headway on extending the minimum wage to 16 and 17 year olds. A victory for the minors who work hard and deserve full compensation, and for working adults whose bosses will have a harder time undercutting them by pitting them against a pool of lower-paid kids. What’s the opposition argument?

Matthew Knowles, of the British Chamber of Commerce, criticised the move, saying: “We are worried about business having their hands further tied by red tape when they should be looking after their customers.”

Damn that government red tape, standing (sometimes) in the way of sweatshop labor, child labor exploitation, indentured servitude, and other entrepeneurial pursuits.

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Looks like the Mad Cow scare has brought on much-needed regulatory reforms in the beef industry. As the Times notes:

…some large American companies that process and sell beef had already abandoned those more controversial practices, which had been a rallying point for food safety advocates since mad cow disease appeared overseas nearly two decades ago. While a schism developed in the industry, the current crisis reveals how government regulators sided with companies that adhered to those methods of operation.

This touches on a larger point, one which many have made before: There are high-road and low-road approaches between which companies choose how to make a profit. The high-road includes greater investment in human capital, quality control, investments in local community, and such. It has benefits for workers, capital, and consumers, but has a great deal of difficulty competing with low-roading firms. In earlier decades, a regulatory government and an empowered labor movement helped pave the high-road – now, both are in need of revival. But Mad Cow disease viscerally illustrates the failures of the low-road system. An argument that manufacturers who kill their customers will be punished with decreased sales, while attractive in a college Economics course, depends first on the premise that there’s an acceptable number of preventable deaths and second on the contention that consumers have accessible to them the information necessary to determine which meat is safe and which is not. It’s time to reject both.