Friday, May 4, 2018

Peeping into the future

Georges Méliès, Le Voyage dans la Lune , 1902, via Business Insider.

Shorter David Brooks, "The Future of the American Left", New York Times, 4 May 2018:
If the Democrats were smart, they would take advantage of their electoral edge to pursue an agenda devoted to redistributing wealth and ensuring economic security for all—like that of Dean Baker, enchanted with radical idealism, which I would strongly disagree with but nevertheless praise as positive, humane, and universalistic. Readers will remember how I always praise liberals when they adopt my recommendations. Unfortunately because of tribalism and identity politics they will not do this but instead offer a North American version of the Bolivarian socialism of the late Hugo Chávez, so I won't have an opportunity to praise them at all. Politicians on both sides no longer care about thinkers. This is a historical inevitability and it makes me sad.
Obviously unclear what he's trying to accomplish with this peculiar thesis. It could be a kind of Dr. William Kristol wish-fulfillment effusion, where you use the prediction format to describe your deepest and most implausible desire, in this case the hope that there's a a way for Republicans to hold on to Congress if Democrats can manage to out-crazy Trump. Or possibly a kind of bait-and-switch concern trolling, in which he employs the terrifying specter of chavismo to frighten us into the arms of Dr. Baker of the Center for Economic and Policy Research, and that's what he thinks will preserve Congress for the Republicans, kind of sneaking the Overton Window into the back yard.

He definitely wants to report that he read something, Baker's essay on "The political economy of an anti-rent-seeking equality agenda", which is the first in David Coates's collection, issued last fall, Reflections on the Future of the Left, which describes some tools for attacking rent-seeking behavior and promoting economic equality, as the title suggests—
impose a tax on financial transactions to weaken Wall Street’s power; change monetary policies to give full employment priority; shorten the workweek to tighten labor markets; and change corporate law to make it easier to cut executive pay.
Actually, according to the economist Dean Baker, the FTT isn't so much to "weaken the power" of the finance industry as to reduce its waste and volatility, and also to raise upwards of $100 billion a year to provide free tuition at all our public universities, along with some other social programs. Also, there are a number of purposes in rebalancing the aims of monetary policy from inflation-fighting to full employment, but the anti–rent-seeking purpose is to discourage rent-seeking by keeping interest rates low and setting more progressive targets for inflation (which would among other things favor desperately needed housing construction). There are also recommendations for attacks on patent and copyright monopolies and barriers (through licensing and immigration restrictions) to entry in highly paid professions, according to a draft version of Baker's paper. Most important, the paper isn't meant to convey one of those shopping lists of proposals, but a single view (which is not unrelated to my idea that the traditional class system of capitalism has already collapsed in favor of a new system based on control of the means of consumption) of what the problem is, and (contra Piketty) that a solution must attack pretax income of the wealthy rather than after-tax income:
The upward redistribution of the last four decades has for the most part not been a redistribution from labor to capital. Rather it has been a redistribution from workers at the middle and bottom to high end workers. This point is important for two reasons. It is necessary to realize who are the big gainers from the pattern of redistribution if it is to be reversed. And the big gainers were mostly corporate CEOs, hedge fund and private equity managers, and others who were able to earn very high pay. They were not people who got rich from owning stock that paid out huge returns due to rising profits. The other reason this distinction is important is that it means that the conditions of competition that limit the profit share of income remain largely in place. This means that savings from beating down the pay of high end earners are likely to be large passed on to workers in the form of lower prices, which means higher real wages. Beating down the incomes of high earners is not just a gratuitous leveling exercise; it is a way to increase the real incomes of those at the middle and the bottom of the income distribution. 
This second point is worth emphasizing since it is not immediately obvious and often missed in political debates. There is no comparable problem on the other side. An employer fully understands that her company’s profits, and in all probability the top executives’ incomes, will rise if they can find a way to reduce the pay and benefits of ordinary workers. There is no need to go through any economic analysis in this situation. The retail store that pays its workers’ less will, at least initially, have higher profits (ignoring potential impacts on productivity and turnover). On the other hand, it is not immediately apparent that lowering the pay of doctors, dentists, and other high end professionals will translate into higher real wages for workers not in these professions. Only if we recognize that conditions of competition are likely to result in these reductions in costs ending up as lower prices and not higher profits does it follow that reducing the pay of high end workers means higher wages for those at the middle and bottom.
The funny thing is that Brooks sets up Baker's program in opposition to the dystopian horror of an American chavismo, described in the following terms:
Tribalism is in the air, on the left as well as on the right. It is based on a scarcity mentality, the idea that life is a zero-sum war between us and them. It emphasizes division and conflict, not solidarity and cohesion. It draws out the authoritarian tendencies in any movement. On the right, tribalism brings us the ethnic authoritarianism of Donald Trump. On the left, it seems likely to bring us the economic authoritarianism of a North American version of Hugo Chávez.
Which is insane in two directions, in that chavista populism and its eventual failure were based on the opposite of a scarcity mentality, the conviction that Venezuela had an infinite supply of oil and the price would remain high for ever; and Baker's program is based on an explicit idea of class warfare, that we of the 90% must start taking that money back in a way that goes beyond the traditional progressive taxation. It's going to be a zero-sum game until it gets better (as it did in the 15 years after World War II when the attack was on real capitalists, not CEOs and dentists).

In other words, if the "tribalism on the left" is a view of division and conflict—
When many progressives talk about economics these days, they take the habits of mind they developed when talking about identity groups and apply them to economic groups.
—then Dean Baker exemplifies it, although that's of course backwards, the current discussion of intersectional oppression having originated in the old discussion of class oppression, not the other way around. And Brooks, once again, hasn't read the paper after all.

Driftglass sets it neatly into the context of Brooks being historically wrong about everything.

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