Another reason the rich love austerity

From Ha-Joon Chang:

If even the IMF doesn’t approve, why is the UK government persisting with a policy that is clearly not working? Or, for that matter, why is the same policy pushed through across Europe? A certain dead economist would have said it is because the government is “in reality instituted for the defence of the rich against the poor“. Dead right.

The dead economist is Adam Smith, and as Chang points out, there was no mystery about it in Smith’s day: only the wealthy could vote, and they ran the government for their own benefit.

When universal suffrage came, they were terrified of redistribution– or even a more equitable distribution of newly generated wealth.  They can’t directly attack democracy in the First World, so they attack “politics” instead.  When they can, they insulate wealth from politics entirely– not hard to do when ordinary voters don’t understand the stakes.  Thus we get reasonable-sounding independent central banks, balanced budget rules, IMF oversight, attacks on inflation that doesn’t exist, and ‘technocratic’ governments imposed on Italy and Greece– that is, governments that will do what the European wealthy think is best for Germany.

The irony at the moment is that there’s been a change of heart over at the IMF.  They’ve withdrawn support for austerity, and are suggesting to Britain that maybe sending the country back into recession isn’t that great an idea.  The Treasury promises to fight back.

Why do the Very Serious People love austerity?  After all, they’d themselves be richer if the economy was back on track.  I don’t think this a great mystery either.  Ideologically, it’s congenial to them– it sounds like the tough stuff leaders are supposed to say.  But best of all, the toughness is all faced by other people.  Austerity is an opportunity to beat back the claims of the middle class and the poor: cut social programs, fight attempts to reduce the dominance of  the 1%, and divert attention from how the financial industry caused the recession in the first place.

If you read Smith, it’s striking how the same preference existed two hundred years ago.  The conservatives preferred “cheap years”… i.e. recessions, when labor was pleasantly low-priced.  They’re going to do fine in bad times, and they sense that there will be less pressure on them if everyone else is feeling pinched.  As has long been noted, a system is in the most danger of revolution not when things are getting worse but when living standards are improving.

While I’m touting economics links, here’s an interesting essay from Brad DeLong on why corporations work at all.  As he points out, their structure is Soviet: they’re autocratic, huge-scale, centrally directed enterprises.  The USSR stagnated, so why don’t they?

He offers several possible reasons:

• Soviet industries could be propped up indefinitely; unprofitable corporations do slowly decline, go bankrupt, or get taken over.  So there is a mechanism for replacement, however slow.
• Huge enterprises may simply be the best organization for producing certain goods– planes, for instance: there’s a high cost if, say, you have the engine ready but not the wings.
• Stockholders will discipline an incompetent CEO.  Pause for laughter.  OK, DeLong quickly admits that the theoretical oversight is mostly a failure, but he suggests that the punishment mechanism isn’t so much the stockholders as the stock market.  A crashing stock price talks very loudly, and creates a mechanism for a hostile takeover.
• Finally, corporations are intensely useful to government, and thus are favored by taxation and economic policy.  Corporations do most of the work of tax collection (income and sales), and they’re encouraged to provide a good deal of health insurance.

(I’d also add that beating the Soviets is a pretty low bar.  They were more concerned with destroying opposition than in improving their methods.)

Undoubtedly there’s something to all of these ideas.  But I think DeLong misses some more Marxian possibilities:

• Inertia.  We now think monarchy was a terrible system, but it persisted for a thousand years.  Even if the Next Big Thing was here, competition between entire systems can go on a long, long time.  (A Martian observer might have concluded from the history of the 18th century that UK was onto something, but it would take nearly two centuries before the majority of countries adopted democracy and capitalism.)
• A better way of organizing production would be unlikely to benefit those currently in charge… who will therefore resist it tooth and claw.  Suppose the Next Big Thing is something as simple as Valve’s no-manager, vote-with-your-desk system.  Is EA going to adopt it?  Obviously not; the people who run EA would lose power and probably money, even if the employees of EA on the whole benefited.  And it’s the people who run EA who get to decide.  It’s the same problem Chang is pointing out: the entrenched interests are happy with things as they are.

Besides, what would happen if a new style of governance became available?  DeLong (the piece was written in 1995) reviews one such case:

Fifteen years ago it was fashionable to hold up the Japanese corporation as an example, to say that its managers regarded shareholders as only one stakeholder interest among many, and to say that the Japanese corporation was a superior organization and the wave of the future. Now it is fashionable to praise the American form of organization, with an active market for corporate control and with strong pressure on managers to do whatever they can to boost stock prices now.

In other words, a new system becomes a new fad, and a lot of people get rich writing bestsellers about it.  But the magic of Japan Inc. wore off abruptly when Japan plunged into recession in the early ’90s.

On the other hand, as I’ve mentioned before, the fad for highly paid CEOs was entirely successful.  In the 1960s it was accepted that American CEOs should get about 50 times the pay of their base workers.  Now it’s 500 times.  Corporations aren’t better run or more productive or more stable or more competitive; the effect has simply been to shift wealth from the 99% to the 1%.  Why did this fad succeed when the fad for Japanese-style management didn’t?  Pretty obviously, because it doesn’t require much convincing to tell executives that they should help themselves to ten times the salary.  It’s not that it was a good idea; it’s that it appealed to the people who make the decisions.

When change happens, it’s likely to come from either a new region or a new industry, and be very ignorable for years or decades or centuries.

I have a suspicion that top-down command works better for creating  vast new project– whether it’s an oil refinement industry or a spaceship or a computer or an online mega-bookstore– than it does for running an ongoing business.  Capitalism recognizes this to some extent, in that older businesses have more and more dilute ownership.  But this also means that there’s a kind of ongoing bias in favor of autarchy.  New firms, like the big web firms of the ’90s, are likely to be started by visionary hotshots, and that reinforces the elite’s notion that all corporations should be run by autarchs– even if, as happened recently at JC Penney, the hotshots come in and ruin the company.

So a more democratic corporate structure might have to wait for the next big thing that doesn’t happen to be a megaproject.  I can see it happen, for instance, if we move from the service economy to an art economy, for instance.  (Which I don’t see as unlikely: creative work is very hard to delegate to robots.)

 

Red, Blue, and Black America

Beautiful map from David Sparks which combines political identification with population density:

Or as Matt Yglesias calls it, Red America, Blue America, and Nobody Lives There America.

(A cavil: Sparks seems to believe that the US has only 48 states.)

 

Cartograms 2012

I’ve plugged Mark Newman’s maps before.  But here’s his 2012 page, filled with beautiful and informative election maps.  He’s improved the algorithm so states retain their shape better.  For presidential elections, we should be using this map (with state area tied to electoral vote) rather than the geographical one.  Our eyes can’t adjust for population density; on this map it’s immediately evident who won, and it’s not so distorted as to be ugly or hard to read.

I also like this very pretty map of counties, colored by percentage of Dem/Rep presidential votes.  In this case I like the geographical map better.  The cartogram version is more informative, in that it shows that the country is really mostly purple with blue areas– the all-red counties are very few.  But it’s much harder to read.

 

A couple more election thoughts

Got to get these down so I can go work on conlangs.

First, some wonder and congratulations over the election victory for same-sex marriage in four states.  This is a really big thing that deserves to be more than a footnote in the story of the GOP’s demographic decline.

Back when Andrew Sullivan and others started championing same-sex marriage and military service in the early ’90s, it seemed both quixotic and not radical enough.  But Sullivan’s instinct turned out to be spot on.  These certainly shouldn’t be the only things LGBT people should focus on, but they’re good things to push, because they’re about love and respect.  And they don’t trigger the zero-sum thinking that some other issues do.

Besides, there’s something mysterious and fascinating about a successful campaign to change public opinion.  I don’t think anyone knows what makes these work or not work.  Why did the movement to reduce smoking work, but not (so far) the one for healthy eating?  Why has there been a turnaround in LGBT acceptance, when opinion on economic issues has moved rightward?

(I know some of the reasons that have been offered.  Some of them are probably even true as far as they go– e.g., people definitely accept gays and lesbians more once they know some personally.  Yet that can’t be all of it… after all men all know some women personally, but there’s still enormous resistance to feminism.)

The other bit: I mentioned yesterday that Republicans, if they want to be competitive in national elections, need to make a couple of changes:

• Pick policies that aren’t just geared toward old, white, straight Christian males.
• Stop alienating everyone else.

Which is true!  But I wanted to point out that it’s not as easy as it sounds.  People like Akin, Mourdock, and Santorum weren’t making gaffes and their words weren’t being distorted.  It’s not like the “you didn’t build that” statement that the Romney campaign seized upon and twisted.  These people really believe that stuff.

Recall the primaries, which revealed a lot about the composition of the Republican coalition.  Roughly you’ve got the religious right (who liked Santorum and Gingrich), the libertarians (Paul), and the plutocrats (Romney).   There’s a lot of overlap (Paul Ryan is both economically libertarian, and ferociously anti-abortion), but these factions are distinct enough that they couldn’t agree on a single leader.

So what does it mean for the Republicans to dial back the crazy?  I’ve said a lot against the libertarians, so I’ll immediately say that they’re not the problem here.  Romney didn’t get in trouble because of how far he bent to please the Ron Paul supporters.  Quite the opposite– they were sidelined at the convention; the party is quite capable of ignoring them (except when they provide philosophical cover for plutocracy).

It basically means pushing back against the religious right.  They’re the constituency for anti-women and anti-gay rhetoric, at the least.  And the thing is, it’s almost impossible to push back against this faction.  They have the numbers and energy the party needs, plus they’ll cheerfully organize a primary challenge against anyone they consider too moderate, even at the cost of losing the seat to the Dems.

Even this picture probably overstates the daylight between the religious right and the establishment.  The best illustration of this may be Karl Rove’s temper tantrum on Fox News over the network’s analysts calling Ohio for Obama.  Rove isn’t a Tea Partier; he’s the callous, cynical insider.  But he’s part of the whole Republican culture of denial: it’s just not acceptable to state things that don’t favor the GOP message, even if they’re true, even if the whole world will see it in two hours.  With that mindset, it’s going to be impossible in the short term to make any adjustments to soften the Republican message.

The thing is, this impossiblity doesn’t make the demographic cliff go away.  In thirty years, there will probably be a successful conservative party whose issues are much more in line with the ideas of David Frum and/or Ron Paul.  Maybe all it’ll take is the current generation of radicals to die off.  But I wonder if something more dramatic will be needed, like the replacement of the Republicans with a new party.  That might be the only way to counter the organizational advantage of the religious right.

 

Post-mortem for the white GOP

Big sigh of relief.  The right’s big gamble has failed.

Their big advantage

In several simple ways this election was the GOP’s to lose.  They went in with some important advantages:

• They’d already won big in 2010.  They were enthusiastic and well organized and could draw on apocalyptic levels of misdirected rage.
• They’d prevented an economic recovery.  Unemployment is still high, people are pinched, and that’s terrible for an incumbent.
• The Democrats had 22 Senate seats to defend, the Republicans just 11.  It should have been possible to take control of both Congress and Presidency.
• Obamacare is still new, so it triggers people’s resistance to change.  Unaccountably, most of it doesn’t take effect till 2014, so most people aren’t receiving any benefit yet, which makes it easy to be against it.

Their mediocre candidate

They then proceeded to throw these advantages away.  Part of it was, of course, the fault of Mitt Romney.  It’s hard to see how anyone could look at the past couple of years and be impressed by Romney’s integrity, likeability, or commitment to either base or moderate values.  His views blow with the wind, he’s an out-of-touch vulture capitalist, and he was unable to come up with any positive reason to vote for him.  He couldn’t offer a single sensible reason why the economy would perform better under his watch, and he simply refused to provide a tax plan that added up.

On the other hand, he certainly was the best in the primary field, and his very spinelessness was appealing to moderates, who could convince themeselves, improbably, that if he won he’d peel off the Joker mask to reveal the liberal Massachusetts governor.

The demographic cliff

But the real problem was that the GOP bet everything on identity politics.  They have become the party of old, white, straight, Christian males.  Look at some of Obama’s victory margins from last night:

• Blacks: 93-6
• Latinos: 71-27
• Asians: 73-26
• Women: 55-44
• Under-30′s: 60-37
• 30-44 age group: 52-45

Those are blowout numbers, and they’re getting worse for the Republicans every election.  The nonwhite population is increasing, and the old Romney voters are dying off, replaced by overwhelmingly Democratic voters.  The conservative nightmare that it’s always 1979 has little appeal for people who weren’t even born then.

In back rooms and outlying blogs there’s going to be a murmured debate: how can the GOP win back some of these voters?  It’s not rocket science, guys; do these two things:

• Pick policies that aren’t just geared toward old, white, straight Christian males.
• Stop alienating everyone else.

If you want to see how the alienation works, read this essay by Rany Jazayerli on how the GOP threw away the Muslim vote.  In 2000, 70% of American Muslims voted for Bush; in 2004 it was 4%.  Seriously, how does a party commit suicide this way?  They may be only 2.6 million, but a few million more votes would have been useful to Mitt, and as Jazayerli explains, they were far from a natural constituency for the Democrats.

Or, you know, there’s women, they’re half the electorate, stop attacking them.  Hopefully the defeat of “legitimate rape” Akin and “will of God” Mourdock will beat some sense into the party.  Missouri and Indiana voted solidly for Romney; they should have been gimmes for the GOP, and part of a GOP takeover of the Senate.  But they threw away these seats to please the crazies (who would have voted for them anyway).

Or, you know, stop picking on gays and lesbians.  Back in the ’90s Republicans decided to make a big appeal to homophobia, passing the Defense of Marriage Act, kicking gays and lesbians out of the military, and pushing ballot measures against same-sex marriage in state after state.  It made horrible, cynical sense at the time: demonize and punish a minority in order to get the bullies’ and bigots’ votes on other issues.  It doesn’t look like a cunning strategy today; it’s another path to cultural and electoral defeat.

Last exit for Galt Gulch

What a difference a decade makes.  It was depressing to be a Democrat in 2002; Republicans had control of all three branches of government and were crowing about the “permanent Republican majority”.  And Democrats seemed too nice to fight back, avoiding all the tools of obstruction Congressional Republicans deployed against Clinton and then Obama.

But where it took fifty years to make the nation tired of the New Deal, it took five to make it tired of Bushism.

Most conservatives today live in a bubble– they only talk to Republicans, they only watch Fox News, they were sure on Monday that Romney would win in a landslide.  Still, a tempting explanation of their strategy over the last few years is that they were desperate precisely because they know about the demographic cliff.  They saw this election as their last chance to create a Randite Utopia where the rich pay little in taxes, the New Deal safety net is dismantled, and the poor and middle class are properly humbled.

Romney actually came pretty close.  But it didn’t work, and in 2016 it’s going to be even harder, and in 2020 harder yet, and…

How do they recover?

Ultimately, the only sane option for the Republicans is to follow my advice above.  Note that I don’t say that they have to be liberals.  They can keep their preference for small government and plutocracy!  But some of the issues of the 2012 campaign– the war on women, anti-gay hysteria, Latino-bashing, voter suppression, unrelenting Randism– have got to go.  You pick which.  Hell, take baby steps: backing immigration reform, for instance, would probably peel off a good number of Hispanic voters.

There’s a problem with getting more moderate, though: the moderates have all been kicked out of the party.  The GOP has been busy electing Congressmen who think that cooperating with John Boehner is a crime.  They don’t have any ideological room to maneuver.  (Which, by the way, is why the centrist hope that a President Romney would have turned out to govern as a moderate was misguided.)

There’s a sane conservativism out there; if you want it, people like David Frum and Russ Douthat will describe it for you.  But there’s no obvious path from here to there.  Frum and Douthat are outliers, despised by the base.  The only sane primary candidate, Jon Huntsman, quit early and I doubt he’s getting any apologetic phone calls today.

The usual corrective for an out-of-touch political party is a decade of losses.  It did wonders for the Democrats after Reagan (and for Labour after Thatcher).  This process should have started for the Republicans starting in 2006– only it was arrested by the fluke victory of 2010.  The electorate in a midterm election skews old and conservative, and there was the terrible economy to rile them up.  So rather than experiencing a salutary loss, the party was rewarded for its craziness.

Their other problem is that they don’t have a clear leader who can take them either leftward or rightward.  There’s no leader of the stature of Ronald Reagan who could make a reasonable deal with the opposition and sell it to the base.  Romney goes back to being a rich guy with no official position, and he’ll be roundly blamed by the faithful anyway.  The figures with centrist appeal, like Chris Christie, Michael Bloomberg, or Colin Powell, disqualified themselves by endorsing or praising Obama.  And on the crazy side, the non-Romneys mostly showed themselves as comically incompetent even at unifying the base.

Ryan will probably emerge from the election unscathed or even buffed, but the strategy of attacking the president from the House is also not looking so good right now.  It didn’t work for Gingrich in the 1990s and it didn’t work for Boehner and Ryan after 2010.

The next few months 

After the election news dies down, the news cycle is going to be dominated by scare stories about the Fiscal Cliffs of Insanity.  Don’t let them get you too excited.  What the cliff means: the Bush tax cuts expire at the end of the year.  Plus, doing one of those stupid things legislators do in order to motivate themselves to do a real budget deal, Congress agreed to a set of draconian cuts in spending.  The cuts were to both social and defense spending, in order to motivate both sides.  It failed: no real deal happened, so the stupid cuts go into effect in 2013.

So the fiscal cliff means taxes rise and spending is cut.  If you’re worried about the deficit, that’s precisely what’s needed for fiscal balance.  Some disaster!

The problem, of course, is that the deficit hawks are idiots.  An austerity program is precisely what we don’t need right now.  The economy is still underperforming, and austerity would probably trigger a new recession.

Obama sure doesn’t want a recession, and I have to doubt that the Republicans really want one either.  They know now that they’re stuck with Obama for four more years.  Maybe it would help them in 2014… but they already have the House, so what would be the point?  So there’s ample motivation to do the right thing, which is not to fall off the cliff.  Just extend current policies, at least for a couple of years.

Rather than just doing the right thing, I’m sure the GOP will make it a nailbiter.  But the roles are reversed this time: Obama doesn’t have to ask nicely for a tax increase on the rich– he’ll get it on December 31 without doing a thing.  He can play chicken this time.  So my prediction is that we’ll get a short-term deal, probably sometime in the new year.

(A long-term deal would be too much of a stretch.  The GOP rejected Simpson-Bowles; the only possible way to convince themselves to make a deal is to make it short-term, in hopes that President Ryan can undo it in 2017.  Besides, long-term deals are illusory: Congress has no way of dictating the budget ten or twenty years ahead.  Remember, we actually got our fiscal house in order under Clinton, and it just took Bush four years to destroy that work entirely.)

 

Inequality is bad: more whys

A couple more pages relevant to my page on why plutocracy sucks.

First, this fascinating NYT article about Venice, one of the first capitalist states.  The basics, in case you’re run down your free NYT quota: Venice created the biggest trade network in the medieval Mediterranean.  The trading expeditions were handled by colleganze, essentially one-off joint-stock enterprises.  They were open to anyone who had the money to invest.

Until 1315, when Venice’s upper class– its 1%– instituted a change known as La Serrata, the closing.  Desiring to preserve their privileges, they created a formal list of who was in the oligarchy and banned new additions.  The power monopoly was soon extended to economic matters; the colleganze were banned.

The result was economic decline.  By 1500 the city was smaller than it had been in 1330, and it continued to shrink.  Meanwhile other cities overtook it in economic influence.  What the 1% think is good for them is usually a lousy idea for the general population, and ultimately even for themselves.

The other article is David Stockman’s devastating takedown of Mitt Romney’s “business experience”.

Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.

That is the modus operandi of the leveraged-buyout business, and in an honest free-market economy, there wouldn’t be much scope for it because it creates little of economic value. But we have a rigged system—a regime of crony capitalism—where the tax code heavily favors debt and capital gains, and the central bank purposefully enables rampant speculation by propping up the price of financial assets and battering down the cost of leveraged finance….

In truth, LBOs are capitalism’s natural undertakers—vulture investors who feed on failing businesses. Due to bad policy, however, they have now become monsters of the financial midway that strip-mine cash from healthy businesses and recycle it mostly to the top 1 percent.

I wonder how the Randians convince themselves that Romney’s way of making money– mining companies, firing workers, leaving them highly indebted and letting them go bankrupt– is “making” rather than “taking”.

 

How socialism is thriving

My liberalism page has generated some good feedback, including interesting stuff to read.  I’ll highlight some of these, starting with this essay by James Livingston: “How the Left has Won.”  Also see this exchange between Livingston and Tim Barker in which the idea is clarified.

His basic idea: capitalism was a 400-year-long transition which had highlights (and setbacks), but no coordinating committee, no mass movement, no cabal or group behind it.  It was a messy, long, organic process, and kept going largely because it was a more efficient way of doing things.  Events had a capitalistic bias, you could say.

And, he says, socialism works the same way.  It doesn’t need a socialist party, or a revolution.  It isn’t incompatible with capitalism– it’ll be thoroughly mixed up with it just as capitalism coexisted with aristocracy.  It doesn’t disappear when socialist parties or countries have a setback.  Any socialization of a society or economy or institution is part of socialism.  (He has some provocative paragraphs on how the US Army is a bastion of socialist practice amid a capitalist landscape.)

Now, I think some of you are going to be just infuriated by the piece.  Maybe especially his targets– socialists who lament the lack of a proper socialist party in the US.  You can picture him as the smug, calm, extremely smart guy at the cocktail party where you can’t decide if he’s pulling your leg or talking bullshit or being brilliant.

But, well, people often say they want to hear new ideas, and this is what new ideas feel like.  The right mindset is that this is a really interesting way of looking at things.  I feel like my mind is expanded… I don’t know if he’s right, and I’m sure he’s wrong on some of it (psychoanalysis, ugh).  But I’m glad I read it, and I think there’s something to his broader perspective.

 

 

 

Why liberalism works

In case you don’t check the mothership anymore, I have a new page up, on the track record of liberalism vs. plutocracy. (Spoiler: the former works better.)

 

Ask Zompist: Last Century update?

I posted this link on my Facebook page, and one of my friends commented:

“This was written in 2000. In the wake of the sub-prime mortgage fiasco,
TARP, the looming collapse of the euro, staggering debt and inverted-
pyramid demographics throughout the first world, I wonder if he still stands by this analysis?”

and I thought… why not ask you?

—Dana

Sure, why not?  I assume he means the predictions at the end; as they’re intended to look up to a century in advance, not much can happen in ten years to throw them off.

Of course, the first one (that Republicans would find they like governing) looks the worst.  It’s somewhat baffling why the Repubs get crazier and crazier.  Traditional political science says that two-party winner-take-all systems produce fairly similar moderate parties, and that’s what we had for most of the 20th century.  But now the GOP goes more off the deep end every year.

The usual cure is to lose elections, but it takes several in a row. But the problem today is that the voters have short memories.  The Republicans did their best to destroy the country, and lost accordingly in ’06 and ’08.  Two years wasn’t enough to clean up their mess, but the voters gave them another chance in 2010.  Maybe this cycle will continue for awhile; but demographics are against them.  The Republicans can’t keep alienating women, blacks, Hispanics, gays, lesbians, and the young forever.

Your friend’s list is pretty miscellaneous, but let’s go over it briefly:

• Subprime mortgages: The damage done by deregulation is basically over.   We don’t have the housing bubble as a problem any more; our problem is the ongoing recession.  And half the country doesn’t want the recession to end, because omigod Obama would be reelected.
• Bush’s TARP: no one likes the idea of a bailout, but this one saved us from a depression and the taxpayers got their money back.  The alternatives would have been worse.
• The euro crisis is mostly notable for showing that the European right is just as self-destructive as the American right.  Large currency unions are a bad idea; ours only works because we have an ongoing commitment to support weaker regions.  The Europeans will either have to give it up, or actually decide to make it work (by making the same kind of commitment).  Chances are they’ll do neither by November.
• Staggering debt: nonsense.  We’re in a liquidity trap; government debt is not the problem.  And debt has been far higher (as a percentage of GNP) before.
• Aging populations: for the US, there’s no reason we should face a problem anytime soon.  Japan does, because it foolishly doesn’t allow much immigration.  We can allow as much as we like.

If you look at the daily paper, the world is always going to hell.  If you look at the history books, things have been steadily improving for two centuries.  Sometimes we rationally avoid a crisis (the Horse Poop Apocalypse one might have expected in 1900 was averted by the invention of the automobile).  Sometimes we make the worst choices, have the catastrophe, and learn our lesson.

On the other hand, since I wrote that essay, I’ve also written an sf novel whose future history assumes that in the next century we keep making the wrong decisions and cause a global collapse.  So my sanguinity has its limits.

 

 

Rich guy: Tax the rich

Here’s a fantastic speech from Nick Hanauer on income inequality.  He’s a very rich venture capitalist, and his remarks are pretty much what I’ve been pointing out for years: policies that benefit the middle class make the whole nation richer; policies that benefit the rich make only the rich richer.

Key quote:

Here’s an incredible fact.  If the typical American family still got today the same share of income they earned in 1980, they would earn about 25% more and have an astounding $13,000 more a year. Where would the economy be if that were the case?

That’s Reaganism in a nutshell: take $1.5 trillion from the middle class and hand it to the already rich.  Every year.  And Mitt Romney and Paul Ryan are champing at the bit to take even more.  (Note that Hanauer isn’t just talking about taxes; he’s also talking about the gains of productivity over the last generation, which used to benefit the whole nation and now just go to the 1%.)

The strange irony is that it isn’t even the rich, as a class, who are demanding more plutocracy.  The super-rich are much more Democratic than the merely rich.  But there’s a fraction of them who never forgave the New Deal and finally see themselves on the way to getting rid of it.  And then, full on regress toward the banana state.

At the same time, I think there’s little mystery in why the moneyed classes, the Very Serious People as Krugman calls them, aren’t really bothered by ongoing recession and high unemployment, here and in  Europe.  Partly it’s because they just don’t see it: they’re still rich, and no one they know is out of a job.  And partly, I think, it’s because rich conservatives are actually most comfortable when everyone else is pinched, and thus ungenerous and unthreatening.  Adam Smith argued against this attitude frequently, in fact– he had to mount arguments that lean years were not, in fact, good for the nation.