Sunday, January 12, 2014

The New Year of Inequality

Welcome to another election year. Even though it's only a mid-term election, it's going to be nasty because all elections are nasty now.

The Dems have a major vulnerability in the various troubles of Obamacare, but that's not enough for an entire campaign season. It's too bad for the conservatives who thought they could run non-stop bashing Dems on Obamacare and Benghazi. Those really aren't enough for a campaign when the economy is weak and people need jobs. Somehow, when you or someone in your family needs a job, that trumps political talking points. Maybe because people do have a sense of the real priorities.

The Dems see this, or perhaps they desperately want to talk about something other than Obamacare. They decided that they're going to talk about inequality--the fact that some people are making millions in this economy while you or someone close to you struggle to find a job. The argument has a lot of potential, but also some risks, like "what can you (the Dems) do about it?"

Lies, Damned Lies, and Exaggeration

Before looking at what the Dems actually say on the issue, it's fun to look at how the GOP characterizes what the Dems really want:
  • Dems are just stoking envy, that most terrible of sins
  • This is class warfare, I tell you!
  • This is a prelude to confiscating wealth.
  • Well, maybe they won't seize wealth, but they'll end personal savings.
  • They'll nationalize healthcare, banks, the auto industry, and... No, wait, they already did. 
It never ceases to amaze me how conservatives shoot themselves in the foot with such exaggerations, and then do it again in the next election cycle too.

What do "they" really want?

So what are the Dems actually saying they'll do about inequality? To start, they want to extend unemployment benefits beyond the standard 20-some weeks. They want to maintain social programs like food stamps at the higher levels enacted as part of the stimulus. They want to enact higher minimum wages, both locally and nationally. They want to maintain healthcare for all, so you can still see a doctor even if you can't find a job. Maybe they still want universal pre-K, or perhaps that was just last year's failed social agenda item. I doubt they'll revive the half-trillion-dollar jobs program, which was 2011's failed agenda item.

The Dems aren't saying how they'll fund the programs that aren't already funded--that's a return to type for the Dems. One exception is the new progressive mayor of New York City, Bill de Blasio. He wants to fund pre-K through a minuscule tax on the wealthy of NYC. The wealthy in NYC already pay higher federal taxes, higher state income taxes, and even city income tax. Why worry about taxing them even more? After all, INEQUALITY!!!!!!  (Rhymes with BENGHAZI!!!!!!)

Sorry for all the snark. Briefly, I support an increased minimum wage, healthcare for all rather than a return to the pre-Obamacare mess, but not a national pre-K program or maintaining the bonuses to social programs given out in the stimulus. I think one year of unemployment insurance is the maximum people should receive, not year after year.

From the Party of the 1%

Somehow, a few in the GOP realized that they might have some vulnerability on the inequality issue. It is hard to dismiss it purely as envy when what people want are jobs, not to throw the rich out of their mansions and behead them. Some in the GOP thought that Romney lost the presidential race over his 47% remark--I disagree, but it doesn't help when the billionaire Koch brothers are on one side of the GOP's internal war and the Chamber of Commerce and establishment/CEOs are on the other side. The GOP could stand to appear more compassionate, both for the 2014 election and the next general election (thanks, Atlantic Wire, for pointing this out).

So this was the week that the GOP trotted out their ideas for anti-poverty initiatives. They include no minimum wage increase, a reworked Earned Income Tax Credit (questionable whether it would be better), repeal of Obamacare (because it's part of every GOP domestic proposal), turning anti-poverty programs into block grants, and more school vouchers.

What We Need More Than Anti-Poverty Plans

Neither the Dem nor the Republican proposals sound very effective to me. A wage increase puts a bit more money in workers' pockets, unless it costs you your job, but that doesn't happen often. As for block-granting anti-poverty programs like food stamps, housing subsidies, etc., I don't care strongly. None of these programs seem to help people get out of poverty, they only help them endure it.

What's really needed are a lot of jobs with decent pay, but that is what our economy has been exporting for four decades. The Dems don't have a plan to change it, neither do the Republicans, and neither do I. When wages are so much lower in other countries, no one is going to have a good plan.

I wish we could be Germany or Sweden, having a mixed economy of high-margin, high-quality goods and good-paying jobs. But I don't think we can do that. That niche may not be large enough to accommodate a nation of 300 million. So I wonder whether we're actually on our way to being a middle-income country like Brazil.

Maybe we were always bound in that direction. When factory owners encouraged lots of immigration, they weren't trying to turn them all into middle-class consumers. No, they wanted cheap labor. So we accidentally became a rich country, but we've always had a large pool of cheap labor. If there weren't enough cheap American-born workers, we managed to bring cheap workers in, legally or illegally. So being part of a pool of cheap, excess labor is more our birthright than being a rich country. Ironically, they don't teach you that in school or say it on the campaign trail.

If we really want to be a rich country, we may have to change in fundamental ways, including ending our tradition as a nation of immigrants seeking the American dream. I don't think any of our candidates will get close to that particular discussion. It's probably political suicide to say the American dream is over.



Dangerous said...

Don't take this the wrong way, MP, but you seem to not want to state the obvious. Inequality is simply the wealthy using their power and influence to capture ever more of the productivity and resources of the economy to serve their own interests.

In most of the rest of the industrialized, democratic societies in the world (e.g. Germany & Sweden) they essentially regulate to a socialist economy whereby getting wealthy is not very easy, and fabulous wealth is practically unheard of. This economic and social philosophy runs counter to everything one party in this country promotes, and the other party is afraid to promote socialism because they get slammed.

But the future is clearly socialism and that's the only way to end chronic inequality and a permanent underclass. Those other countries are willing to forego some growth and opportunity for economic security. Germany and Sweden have their problems, of course, but there are also advantages.

Speaking as someone who has done pretty well under the US system, I'm not complaining but I do sense that in the US the pendulum has swung too far toward free enterprise. We are past the time already when the benefits needs to be more broadly distributed, or else we are just left unsolved problems that those with stuff can ignore those without.

ModeratePoli said...

@dangerous, I disagree that inequality is simply exploitation by the already wealthy. That's only part of it. Another part is the less talented and less hard-working receiving less, which seems fair. We need to maintain the connection between how hard/well you worked and how much you earn. If we equalize that out of the situation, we're going to create a lot of lazy parasites and a lot of resentful people--even more than now.

I think we also have to avoid too many desperate poor people on the verge of rebelling or forming crime gangs because they have no other way to make a living.

So, I agree with your excellent point that the future will have to include some measure of socialism, just as the present does.

I'd also like to see the benefits more broadly distributed, but more through job opportunities than through welfare payments. To make our job opportunities stretch further, we'll most likely have to restrict immigration much more than we do now. That saddens me, but I can't escape that conclusion.