Again, Krugman Has the Answer

Despite my excuses about not blogging much during the campaign (and especially the last 6 weeks or so of it), I was, of course, thinking about All the Things™; I just didn’t have time (or mental space) to write my thinkings down. What I did have time for, occasionally, was posting articles and columns to my Facebook timeline... and one of the people I most often shared that way was Paul Krugman, who often seemed to crystallize the things most on my own mind. Again, today, he's come to my philosophical aid.

One of the things I’ve been thinking about has been my growing frustration with the fact that it has become so common — right, left, or center — to discuss economic policy in terms, first and foremost, of what will work. This is, I think, a category error: Economic policy should serve the needs of society, and our society is not some sterile engineering project whose only purpose is to function well in a mechanical sense. Instead, society is a moral imperative: We join together to collectively guarantee each other’s rights, and for our mutual defense and support… including material support.

As such, the first goal of economic policy ought to be to help realize the moral imperative to which our very society is devoted… which is to say, the first goal of economic policy ought to be economic justice. The “engineering project” part — making things actually work — is crucial, of course, but it is secondary to, and in the service of, that first goal.

Too often, though, the “solutions” to our economic challenges offered, even by ostensibly progressive voices, have been entirely focused on making the numbers work, and not focused much at all on the human justice issues behind the numbers. You know, that “Life, Liberty, and the pursuit of Happiness” stuff? The part about “establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity…”? Does it really honor those founding principles to slash our collective spending on the social support mechanisms for a minimally dignified, happy human life? To stop helping our neighbors who are poor or homeless or unemployed or sick or hungry? To force our parents and grandparents to stay on the job well into their allegedly golden years, and then force them to become part-time financial managers and insurance analysts once they are retired, in lieu of taking care of them in a secure, life-affirming way?

No, our first obligation is to craft a society that truly honors those founding principles, and that puts in place a sturdy floor to resist downward pressure on human dignity and material wellbeing. Only then should we begin to worry about how to pay for it. If we’re honest, and truly keep this moral imperative first among our priorities rather than venerating the individual success of those among us who are already the most fortunate, we will find that we really can afford it. As Paul Krugman reminds us, “economic justice and economic growth aren’t incompatible.” We seem to have forgotten that, Krugman notes, but he points out that…

America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.

I believe he’s right: We can do it again. I hope enough of us believe it to make it so.

Way Better

As we steam through convention season, we've been hearing the question "are you better off than you were 4 years ago" almost incessantly, and frankly, it's pissing me off. Of course, we are better off than we were in late 2008 — anyone who says otherwise is suffering from an epic case of situational amnesia — but the question as posed has embedded in it two assumptions that I cannot abide:

First is the assumption that comparing two points on the "graph" of history is meaningful to making a choice between two sets of policy options. Instead, I think what's important is to compare the same point on two parallel graphs: That of what actually did happen, and that of what would have happened if we'd made different choices.

We know the choices President Obama made, and we know that Mitt Romney would have made different choices... because he's told us so. In late 2008, our economy was in freefall, and as candidate, president-elect, and then the newly inaugurated president, Barack Obama supported and/or took steps to stop the headlong slide... steps that Mitt Romney and his party have condemned.

So it's as if we were an out-of-control downhill skier, careening toward a collision with the trees, but we've regained control, skidded to a safe stop, and started laboriously sidestepping back up the hill. The right question to ask is not whether we're higher on the hill than when we lost control: Maybe we are, and maybe we aren't, but the question that matters is where would we be if we hadn't taken the steps we did? If we'd tried some different method to miss the trees.

Many of us, of course, are still hurting: We've lost a job, or a home, or a life's savings. But as a society, we are collectively better off than we were in those crazy, out-of-control days of 2008-2009... and I'm absolutely certain that we're better off than we would've been without TARP and the Recovery Act and the auto bailout and Dodd-Frank and the payroll tax holiday and the extension of unemployment benefits and... well, you get the idea.

And while we're talking about "as a society" and "collectively," let me get to the second thing that pisses me off about this question:

Why do we assume that "better off" can only be measured in financial terms, and only in terms of individual wellbeing?

I was lucky, more or less, in the financial downturn: I lost a couple years of raises, but I didn't lose my job, and my pay is higher now than in 2008; we lost essentially 3 years of appreciation in our 401k, but it's recovered, and the account balance is higher than in 2008; we lost some of the equity in our home, but we didn't lose our home, and we've never been "upside-down" in our mortgage... so you tell me whether I'm "better off" in strictly material terms.

But strictly material terms aren't all that matters to me. I'm better off than I was 4 years ago because of the Lily Ledbetter Fair Pay Act. I'm better off because more of my neighbors enjoy the access to quality healthcare my family already enjoyed. I'm better off because same-sex couples can marry in my state, and because LGBT folk can serve openly in my country's military. Hard times come and go, but whether we're better or worse off materially, financially, at any given moment, we are all better off when we're working to build a fairer, more humane, more mutually supportive society.

I'm convinced that that's what Barack Obama has been leading us to do over the last 4 years, and I'm convinced that's how he will lead us for the next 4 years. So yes, dammit, I'm better off.

Way better.

That's Not Whining...

Here’s an article that I think is not wrong, but misses the point rather badly. That is, Kimberly Stiens is certainly correct in pointing out that a single college-graduate 20-something earning more than $30 thousand per year (with healthcare and paid vacation) doing work they care about probably shouldn’t be whining about how poor they are… especially not while they’re knocking back their second $8 cocktail in a trendy DC bar. And we should all be mindful that literally billions of people around the world would not only trade places with almost any American, but would walk across broken glass to do so. Most of us in the U.S. — including even most of the least fortunate among us — are vastly better off than huge percentages of our fellow humans, and we should be grateful for that.

But does that mean that worries about the middle class are misplaced, as Stiens suggests? That we should all join her in being “sick of hearing about the trials and tribulations of the middle class”? I don’t think so, for a number of reasons.

First, I think it’s a bit of a strawman. I haven’t been spending a lot of time clubbing with ambitious, privileged recent graduates in DC — maybe my daughter, who has just started as a George Washington University graduate student will be able to provide me some field intel on the question — but in terms of the political discourse around the plight of the middle class, what I’ve been hearing was really not been primarily privileged youths whining that they’re not even more privileged. Instead, the discussion has been about the increasingly great number of people who are falling out of that privileged group, and the increasingly fewer numbers of college graduates who can count on joining it. Stiens’ own article admits that the middle class is shrinking, and points out that she was far more confident about her future when she enrolled in college (in 2004) than she was four years later when she graduated. Those are important facts, and they’re not rendered less important by the fact that some young adults can still afford to go out drinking. We ignore the shrinking of the middle class, and a whole generation’s loss of confidence in its future, at our peril.

Second, I think Stiens is a bit naïve about how deep or durable her privilege is. She’s young, and presumably healthy, and as yet has (as far as we can tell from the essay) no spouse/partner, children, elderly parents, etc., depending upon her to provide some or all of their support: When she happily announces that her job provides healthcare coverage, she doesn’t mention how good it is, nor what her share of the premium is, nor what her share of the premium will be once she needs to change her coverage to “Employee + Spouse” or “Employee + Family.”

There’s no doubt that having employer-subsidized health insurance is a privilege, compared to those living in poverty, but she may be surprised, when the time comes, to learn how much less of a privilege it is for her than it was for her parents’ generation. She might also be surprised to learn how many of her putative socioeconomic peers — people who are otherwise middle class — are uninsured or underinsured. I also note that her listing of employer-provided benefits includes paid vacation in addition to health insurance, but not paid sick time or a pension plan. Perhaps she just didn’t mention the former, because it seems to go without saying (except that for too many, it really doesn’t), but I’m guessing she doesn’t have a pension plan: Most new hires don’t, these days. If they’re lucky, they get some sort of tax-deferred savings plan (401k or equivalent), to which the employer maybe contributes a little bit, but for most working people under about 50, the traditional defined-benefit pension is giving way to market-based accounts that carry no guarantee of retirement income, or to nothing at all. To a single 25 year old, it probably doesn’t seem like a big deal, but the middle class has not only shrunk, it’s also gotten less secure — shall we say, thinner — in ways that will matter to Stiens someday, even if she can’t see it yet.

Does that mean she should join her whiny acquaintances and start complaining? Of course not. She’s not wrong to think she’s privileged. I’m privileged, too. But the fact that some of us — perhaps many of us — are still living what can only fairly be called a good life doesn’t mean the shrinking, thinning middle class isn’t a social problem, and a harbinger of even greater problems looming before us. It's a problem not only for the middle class itself; it's also a problem for all the segments of our economy that depend on a thriving middle class that feels secure enough to spend its "disposable" income... including those who really are poor, and whose minimum-wage jobs depend on a thriving consumer economy.

It’s a problem that arises from public policy, and one that can only be solved through public policy, and talking about it isn't "whining"; it's citizenship.

Podcast Timewarp: A Brainless Defense of Inequality

I have a job that keeps me at a keyboard for most of most of my days, and I've developed the habit of listening to podcasts while I work to help keep me sane through my daily toil¹. There are a number of time-sensitive things I make a point of listening to right away (e.g., The Best of Mike and Mike in the Morning would hardly be worth listening to days or weeks after the fact), but generally I have more stuff in the queue than I can keep up with, so occasionally I find myself listening to the podcast of a radio show weeks after it was broadcast, long after the opportunity to respond on the website comments thread, or by calling in, has passed. That's my Podcast Timewarp, and when the spirit moves me, I'm going to bring my untimely responses here to the Spleen for venting.

Today I listened to an hour of On Point Radio titled "The 1 Percent Speaks," featuring Ed Conard, former Bain Capital executive and author of Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong. I haven't read Conard's book, and much of the back and forth between Conard and fellow guest Timothy Noah of The New Republic was economic wonkery that's beyond my ken... but the gist of Conard's argument seems to be that huge inequality in the distribution of wealth is not only inevitable but actually desirable, because, he says, it's necessary to create the incentives individuals require before they're willing to take risks and generate the innovation that makes our economy so much better than those of other industrialized nations.

Huh, really?

Along the way to this stunning conclusion, he calls out the entrepreneurial darlings of Information Age innovation: Apple, Microsoft, Intel, Google, Facebook... and specifically name-checks Apple founder Steve Jobs several times. Apparently we need historically high levels of wage inequality if we're going to have any more Steve Jobses.

Well, that's bullshit.

It's particular bullshit as regards the actual Steve Jobs. I'm known to my friends as a bit of an Apple fanboy (not that most of them would use that term, since they share my enthusiasm), so it's not surprising that I read Walter Isaacson's massive biography of Jobs (well, listened to it, to be precise) pretty much as soon as I could get my hands on it. The picture that emerges from Jobs' story is one of a complex, strange, somewhat dark, often sad, and remorselessly brilliant man, driven by diverse personal imperatives. What does not emerge is the image of a person who would've become a lawyer or a shoe salesman instead if he'd thought he'd die with only $4 or $5 billion, instead of the $8 billion he actually made. Jobs emphatically did care about money, in a variety of ways and for a variety of reasons, but there seems to be no evidence that he cared about ludicrous wealth for its own sake, nor that he would have cared about the difference between merely ludicrous wealth and stupidly ludicrous wealth.

Keep in mind that Jobs and Steve Wozniak started Apple in the mid 1970s, when tax rates on the highest earners were much higher than anything being suggested by even the most progressive thinkers today, and when the gap between rich and poor was vastly smaller than it is today. If fixing wealth inequality were really going to cost us the next Steve Jobs, we never would've had the first one!

But there's one more problem with Conard's thesis, and it's this:

That's Jobs' parents' house, and that garage is the one in which Apple Computer famously began, rather as Hewlett-Packard had begun a generation earlier. Look familiar? It's a fairly typical modest middle class home. Other pioneers of the computer age — Gordon Moore and Robert Noyce of Intel, Bill Gates, Sergey Brin and Larry Page of Google, Larry Ellison of Oracle, Mark Zuckerberg — came from more or less privileged backgrounds, but all of them were, broadly speaking, of the middle class. None of them started with enormous wealth, and none of them was poor, either.

My hypothesis is that it's not the lure of great wealth that fosters risk-taking and innovation, but instead the key is a broad, flourishing middle class. The very poor can't take these kinds of risks: They don't have the resources to make the ante, and for many of them mere survival takes all their energy. The already-very-wealthy have too much to lose, and no need to take risks. But middle class families —whether blue/pink collar workers like Jobs' (adoptive) parents or professionals and academics like the parents of some of the others — can provide enough support for their kids' dreams to grow, while not presenting wealth (and its attendant responsibilities) that cannot be risked.

Jobs had disposable income to indulge a modestly expensive hobby, access (as a teen) to employment that could support expanding that hobby, and a secure family home in which to turn that hobby into a groundbreaking business. This is fundamentally a tale of middle class success.

The problem, both for Conard's thesis and for our country, is that the increasingly top-heavy distribution of our wealth is destroying our middle class. Conard and his fellow travelers on the right seem to think progressives want to destroy the rich and eliminate any hope of upward mobility for the next generation of Steve Jobses, but that's not what we want: We don't want to pull down the upper class; we just want to throw a lifesaver to the rapidly dwindling middle class, which really is the home of innovative risk-takers.

What do I know, you might ask? How do I know what "we" want? Well, because Rachel Maddow and Mother Jones told me so. One of the serendipitous joys of Podcast Timewarp is that it allows me to marry up a month-old radio show with an infographic Maddow featured on her show just a couple days ago:

It shows that, when asked what they think the wealth distribution ought to be (the bottom row of the graph), Americans are perfectly content to let the rich continue to be rich, with the top 20 percent retaining more than 35 percent of the wealth. In the ought-to-be distribution, the top earners are still at the top and the bottom earners are still at the bottom. And the middle are still in the middle. It's just that there's a fairer, more humane spread between top and bottom, and a lot more people in that creative, productive middle.

I guess Ed Conard thinks this goal would be a bad thing. But that's bullshit.
___
¹ OK, so what I do hardly counts as toil by any rational standard; allow me a tiny bit of poetic license?