Friday, January 6, 2012
Where are the Ideas?
Where are we in history? We've rolled out Republican ideals, toyed with Libertarianism, breezed through Marxism, tussled with Anarcho-Sindacalism, accepted the victory of Capitalism.
Today formerly Communist and Socialist economies are marching forward with their own varieties of Capitalism, about to beat the West at its own game and sweep the broken pieces under the rug.
But economic systems - the ways humans choose to organize themselves in community - never stop evolving. So what is the next wave?
Clearly in the West it isn't about the struggle of the Worker anymore. It is, more likely, about the widening of the rich-poor gap, the 1 percent versus the 99 percent.
Our finance-weighted capitalism, if left to its own devices, uncurbed, widens that gap.
Possible future scenarios range from a magical, never-ending supply side growth trend with happy trickle-down effects that appease the poorest even as the gap is widening, to a day of reckoning when all the debt is called in and dominoeing defaults freeze credit, liquidity, and life as we know it. Or we could see growing frustration, revolution, an Occupy movement engulfing everything. Or globalization accelerating to a gallop and newer parts of the world sucking financial wealth like a vacuum far away to distant lands.
In the US the debate is very much focused on large government versus small government.
It is somewhat misguided, in the same way purely theoretical ideologies like Marxism or Libertarianism have been misguided: human nature always comes into it and ruins everything.
Thus a society with big government will inevitably become unwieldy and corrupt, while too little government provokes injustice and fails to address societal issues that cannot be addressed at the level of the individual.
Any group forming a community must have rules, as well as the tools to make sure those rules are respected. Beyond that, there is a crucial role for government: it should pursue the long-term benefits of the society as a whole, benefits such as clean air, education, or infrastructure.
Society as a whole can wear different hats. It can be the Consumer. In a country where the Consumer is king, the government might decide that legislation should aim to make a wide choice of products available with prices competing downward. But in certain cases this can have dangerous consequences, such as the lack of a single standard for cellphones across America, or the electricity blackouts in California. It could mean risking product safety, or allowing for abusive child labour.
Another hat is the Taxpayer. The government can decide the Taxpayer is king and needs his taxes cut no matter what. Or the government can focus on Constituencies. Lobbies. Interest Groups. One versus the others in a vicious power game involving votes and money.
Or society can wear the hat of Future Generations. This would be the wisest way for a government to approach society (though practically impossible within our current political systems). It would mean cleaning up air pollution to save on future health costs. It would mean investing in technological innovation. It would mean lots of training programs and support for entrepreneurial initiative. And it would mean spending money wisely, working together, creating value for all.
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This moment stands in such stark contrast to the Clinton / Blair moment 15 years ago when the "middle way" seemed to be the best for everyone. We didn't get it right and now we're all the way back to nobody knows anything.
ReplyDeleteThe most alarming thing in the US is the way the Republican rhetoric (and the way they're voting) seems to reject Keynesianism altogether and to embrace Hooverism. In the US in 2008, there was a sense that we have a chance to do something very different, because we had a systemic failure. Rahm Emanuel famously said, a crisis is a terrible thing to waste. But the conservatives have managed to crap all over the reforms that have been attempted, hampering the ability to write good law and then threatening the repeal the progress that was made. I think Obamacare adn Dodd-Frank may be helpful, but they were both less than they could have been. They can't repeal the loans that rescued the auto industry, thank God. I guess what I'm saying is there are two levels of hopelessness. The solutions are tough to devise. But it's tough to implement wise solutions too, when so many of our leaders are con men and frauds.
Still, we do need solutions, ideas as you say. Here are some of mine.
When high levels of productivity cause high corporate profits and declining wages, the buying power of the middle class suffers, causing financial stress, hurting aggregate demand, and therefore reducing economic growth. The appropriate policy response is to use a progressive income tax, or a corporation tax, to provide services to the middle class, services that will free up some disposable income. This will lead to economic growth, optimism, population growth, improved standards of living.
Alernative ways to raise revenue are with excise taxes on things we want people to do less of, with the prime example being burning fossil fuiels in the US. It's ridiculous how low the gas tax is in the US. The American use of land and cars is poisonous. i would be in favor of raising the 20 cent per gallon gas tax tenfold.
A lot of government spending in the US comes in the form of dollars to people with particular needs to pay for particular things. This includes Pell grants, medicare, section 8 housing. The clever, good, thing about this is it helps the primary recipient, but it also helps the people he transacts with. The colleges love Pell grants. Their customers have more money to spend. Medicare creates customers for doctors and hospitals. Overall a good thing I guess in that jobs are created, fortunes are made. But here's the problem. Suppose you need medical care and don't have medicare. It's pretty expensive. Same with going to college. Those markets are distorted by the programs and people are put into a situation where they need to contort their lives around so they can pay for healthcare and education. (That's why i hate it when corporate executives are called "greedy." Sending 3 girls to Vassar probably costs $1 million. How can a hard-working respectable white collar professional with a family not be greedy?)
A better way to fund these items when possible is to have them provided by the government for free or cheaply to all comers. This will lower the price for these important items and put a little loose change in the pockets of middle class people, whose budgets have been squeezed by declining wages.
Politically, the best way to start to implement this philosophy is with small non-threatening free programs, and build on them if they are popular. I think it's important that you don't means-test recipients. You want the voters to believe they're getting something out of the deal.
Free adult education.
Free vaccinations.
Free daycare.
Free annual physicals.
If these programs prove popular, free education and healthcare might follow.
Thank you, Steed, for your very interesting, European sounding ideas. Since I live in Europe I'm not sure: does being in favor of government providing services such as healthcare and education make you a "socialist"?
ReplyDeleteI don't think I'm a socialist. I would think the majority of Democrats are in favor of free healthcare at this point, and few of them would describe themselves as socialists. I think the European and Candadian experience informs the American conversation. What we used to call "socialized medicine" is seen by many people as the best way out of a system that just doesn't work very well.
ReplyDeleteAlso, the arguments I make above pertain to particular services, healthcare and education, that a. many people think should be provided or subsidized by the government, and b. already are. I am attempting to improve on the economic mechanisms used to provide them rather than making the case that they should be provided for.
The introduction of the term "socialist" into the recent conversation in American politics probably stems from the conservatives' view that if the government provides one service what's to stop it from providing another, then another? I don't know. Maybe I'm being naive, but I don't think that trajectory is what I, other Democrats, or most proponents of these policies, have in mind. We just wish that everyone in our society be reasonably healthy and well-educated, are interested in finding efficient ways to get there, and willing to help pay the bill. In fact, I think these kinds of services constitute an investment in our society and therefore pay for themselves, even in the narrowest economic sense, as our economic growth will benefit. I'm an enlightened capitalist.