Inequality – Page 9 – The Wrongologist

Can a Main Stream Party Win Millennial Voters?

Millennials seem to be on the fringe of the political action in 2016. A new survey “The Millennial Economy” by Ernst & Young (E&Y) shows that they are also on the fringe economically, and that they distrust many American institutions.

That may explain why they are disaffected with the current Presidential race. A mid-June survey of 1,200 18-34 year olds was conducted online and via cell phone buy E&Y. It has a margin of error of ± 2.83%. E&Y found that coming of age during an historic economic downturn has severely impacted Millennials:

30% of respondents live with their parents, and it’s 40% if they are still single.
Nearly one-third believe their local community is still in a recession.

Millennial stress levels are high:

78% of Millennials are worried about having good-paying job opportunities.
74% are worried they won’t be able to pay their healthcare bills if they get sick.
79% are worried they will not have enough money to live on when they retire.

Millennials are the most educated generation in US history, but they are not convinced of the cost/benefit of higher education. Instead of education opening doors, many Millennials feel that student debt has boxed them in. The WSJ reported that among college-educated Millennials, 81% had at least one source of long-term debt, while The Atlantic reports that real wages have fallen for Millennials (and only Millennials) in the past five years, even as education costs have skyrocketed.

E&Y surveyed Millennials’ views of the establishment. They find that Millennials have very little confidence in many of our established institutions, but they are patriotic and supportive of a leading role for the US in the world. This chart is from the study:

millennial-view-of-institutions-png

Millennial men have greater confidence in US institutions than women, with 34% of men expressing confidence in the institutions polled compared to only 25% of women. Overall, Millennials:

Had the least confidence in the News Media (73%) closely followed by the Federal Government, Governors, and Corporate America (72%).
Had the most confidence in the Military (55%), followed by Colleges and Universities (51%) and Professional Sports (32%).

Millennial men remain more optimistic than Millennial women, although the clear majority of both genders think the country is headed in the wrong direction:

Men are nearly twice as likely to believe that the country is headed in the right direction (33%) as women (17%).
Hispanic men and black women are the most optimistic group within each gender, with 41% of the former and 27% of the latter believing the country is headed in the right direction.

So the $64 question is: How to win the vote of Millennials? E&Y says that economic uncertainty greatly influences Millennials’ political priorities. They found that Millennials are looking to politicians to alleviate their financial insecurity:

64% of Millennials believe public education should be a top priority for federal tax dollars, a consensus that crosses party lines.
Social Security and Medicare were their second priority (46%), while National Security was third at 45%.
47% of Millennials identify as independents.

Finally, as a crib sheet for debate prep, E&Y have this checklist for Millennial hot-button issues:

millennial-vote-checklist

Politicians always play to a checklist. Trump mentioned every battle ground state in the last debate, but fell in the polls. And playing generational politics can result in the candidate seeming completely inauthentic. That has been Hillary Clinton’s problem with Millennials. Al Gore tried it with Social Security in 2000 vs. GW Bush, and it did not work.

Polls show Clinton running far behind where she would hope to be with Millennials. She is winning just under half of Millennial votes, while Obama got over 60% in both of his campaigns.

As we have said, Hillary is not Bernie, and doesn’t stand for what Bernie stood for. So while millennials loved him for it, Hillary will not do as well with them.

Wrongo is concerned about how many young people are considering voting for Gary Johnson. Johnson’s libertarian views are far worse for their interests than anything Hillary stands for.

Johnson certainly would never support the government doing anything with student debt. Yet apparently, many young people will be voting for him, with no apparent concern about how it might help elect Donald Trump.

Perhaps Millennials and the rest of us need to have a busload of faith to get by between here and Election Day in order to survive. Here is Lou Reed live on Letterman in 1989 with “Busload of Faith”:

https://www.youtube.com/watch?v=qNZm89wLaBw

True to Lou, he sang about a busload of faith, minus the bus, and minus the faith.

Those who view the Wrongologist in email can see the video here.

Sample Lyrics:

You can’t depend on your family
you can’t depend on your friends
You can’t depend on a beginning
you can’t depend on an end

You can’t depend on intelligence
ooohhh, you can’t depend on God
You can only depend on one thing
you need a busload of faith to get by

Who Moved My Cheese?

Some may remember the book by this name by Spencer Johnson, published in 1998. The underlying message of the book is “Don’t waste time fighting against change: accept that bad stuff will happen to you for no good reason and just keep moving”.

This outdated and simplistic message remains the message of the Democratic Party to the White Working Class (WWC). Donald Trump’s message is different. He offers them nothing but a dream, to limit immigrants working in the US and to cut off the US market from China. And since the WWC knows that more of the same isn’t going to work, they’re voting for Trump.

It is useful to remember that since our “Most Favored Nation” trade deal with China in 1979, we have lost 35% of all manufacturing jobs in this country.

The WWC thinks that the Democrats have not been able to do anything to help them keep their jobs. The reasons for failure can be at least equally shared by the Parties, but since Dems have said for years that they are the party of the working class, they are getting the greater share of the blame for 35 years of no results.

There are two issues that dominate the discussion: Illegal immigration and transition assistance when jobs are lost. Regarding Immigration:

The WWC knows that Dems need the political support of the Hispanic community, and that requires Dems to show sympathy with illegal immigration.
The WWC believes that illegal immigration has put downward pressure on job opportunities and wages in the trades, in restaurant and hotel work, and in service sectors where immigrants may be overly represented.
That’s why Trump’s stance on immigration is so popular with the WWC. They probably know in their hearts that kicking all the Mexican workers out, or building a wall is ridiculous. But the Democrat’s position on immigration is diffuse, and is viewed as “soft” on illegals by the WWC.

Despite anything the Dems say about retraining or “transition assistance”, the WWC knows that someone on job transition assistance can’t earn enough to support a family. Other problems:

Identifying the fields/industries that workers can train in that will produce stable, living wage employment is an inexact science. So, demand for retrained workers is often less than the supply for any given job type.
Businesses have been very successful at shifting the burden (and cost) of training displaced workers from themselves to society. This is helped along by a corporate critique that public and not-for-profit private schools are failing to maintain standards, and they can’t churn out sufficient grads with qualifications that meet the corporations’ highly specific requirements.
Hence the continuing financial opportunities for for-profit technical schools and for-profit universities, (can you say Trump University?)

And Ford Motor Co. just gave Trump a big wet kiss:

Ford Motor Co. says it’s moving all of its US small car production to Mexico…The company is building a new $1.6 billion assembly plant in San Luis Potosi, Mexico. It will make small cars there starting in 2018.

What can the Pant Suit say about this that would go beyond what the Pant Load will certainly say? And if she did, would WWC people believe her?

On the macro level, our current capitalism has turned to technology to produce much of what is needed with far less human labor input than ever before. That leaves job growth (and job opportunity) in only the low-skilled, low-paid “service” jobs; or in highly advanced, specialized jobs requiring very advanced training/skills/talent.

This means that the dogma of Endless Economic Growth, which we have accepted since the Industrial Revolution, is dead. Along with killing that, we need to kill off the current organizing principle of our economic system, where humans exist solely to fulfill the needs of businesses.

Work helps us find our place in society. It is something that we see as having an inherent value, something that fills a basic human need, similar to food and shelter. But our current economic system no longer recognizes that, and our economy provides little opportunity for fulfilling that basic need for a large portion of American citizens, including many in the WWC.

The idea of government deploying under-utilized labor to build and repair our infrastructure, or to re-tool our country to reduce carbon emissions would be a step that might return the WWC to jobs and a place in society. It would cost a ton.

But the idea that the government would create demand is too socialist for most politicians to accept, despite the fact that the rest of the tools just haven’t worked in 35+ years.

Tell me again why Bernie Sanders was a terrible choice.

Capitalism, It’s Not You, It’s Me

There is a meme that has gone global since the early days of the Occupy movement. Here it is as a wall graffiti from Greece that uses the same meme we first saw in NYC in 2011:

Capitalism Lotek

Just kidding capitalism, it really is you.

The artist is a Greek who styles himself as Lotek. The name Lotek is derived from the short story (and later, a film) by William Gibson called Johnny Mnemonic. The story is set in 2021, in a world ruled by corporations. An anti-authoritarian gang that are called Lo-Teks, fight the power. They are in fact not low tech at all, but are high tech hackers. Sound familiar?

Greece is surely a place at war with neoliberalism and free market capitalism. So is it also time for us to reconsider capitalism?

Consider this from Mark Blyth in Foreign Affairs:

An inherent tension exists between capitalism and democratic politics since capitalism allocates resources through markets, whereas democracy allocates power through voting.

The compromises both systems have struck with each other over recent history shapes our contemporary political and economic world. Blyth observes:

In the three decades that followed World War II, democracy set the rules, taming markets with the establishment of protective labor laws, restrictive financial regulations, and expanded welfare systems.
Starting in the 1970s, a globalized, deregulated capitalism, unconstrained by national borders, began to push back.

And today, capital markets and capitalists are setting the rules, and democratic governments follow them.

Some background: Cutting taxes in the 1980s caused government revenues to fall. Deficits widened, and interest rates rose as those deficits became harder to finance. At the same time, conservative governments, especially in the UK and the US, dismantled the regulations that had reined in the excesses of the financial service industry since the 1940s.

The financial industry began to grow unchecked, and as it expanded, investors sought safe assets that were highly liquid and provided good returns: the debt of developed countries.

This allowed governments to plug their deficits and spend more, all without raising taxes.

But the shift to financing the state through debt came at a cost. Since WW II, taxes on labor and capital had provided the foundation of postwar state spending. But, as governments began to rely more on debt, the tax-based states of the postwar era became the debt-based states of today.

This transformation had profound political consequences. The increase in government debt has allowed capitalists to override the preferences of citizens:

Bond-market investors can now exercise an effective veto on policies they don’t like by demanding higher interest rates when they replace old debt with new debt.
Investors can use courts to override the ability of states to default on their debts, as happened recently in Argentina
They can shut down an entire country’s payment system if that country votes against the interests of creditors, as happened in Greece in 2015.
Citizens United dictates who runs for office in the US, and in many cases, who wins.

Now that the financial industry has become more powerful than the people, should we blindly follow capitalism’s meme as the only way forward?

Free-market rhetoric hides the dependence of corporate profits on conditions provided for, and guaranteed by, governments. For example:

Our financial institutions insist that they should be free of meddlesome regulations while they depend on continuing access to cheap credit from the Federal Reserve.
Our pharmaceutical firms have resisted any government limits on their price-setting ability at the same time that they rely on government grants of monopolies through our patent system.

To use a sporting metaphor, it’s as if the best football team purchased not only the best coaches and facilities, but also bought the referees and the journalists as well. Those responsible for judging economic competition have lost all authority, which leaves the dream of ‘meritocracy’ or a ‘level playing field’ in tatters.

In our country, the divide between the business oligarchs, the political class and “the people” increasingly appears unbridgeable, marked by hostility and deep distrust. When people are told for a generation that government mustn’t make decisions that interfere with free markets, it is inevitable that people will lose faith in democratic governance, and in government’s capacity to help them solve their problems.

Capitalism in its current form no longer works for the people. We have seen a reaction in the start of movements by Occupy, by Bernie, and by others in Europe.

Remember that the greatest prosperity in living memory in the US came during the brief social democratic moment, in the 1950s and 1960s, when the constraints on business were the greatest.

More democracy and more economic justice are the necessary foundations for the path to a more prosperous, and sustainable economy.

A reformed capitalism must be a part of what emerges from that fight.

The Pant Suit vs. The Pant Load – Budget Edition

Now that both presidential conventions are history, the real discussion about the merits of the candidates and their programs begins. The first question to answer is: What are the costs of the promises made to America by Donald Trump and Hillary Clinton?

Both candidates have made political promises that, if implemented, have both costs and benefits to the nation. While the analysis of benefits may be difficult to assess, the costs are not.

The Committee for a Responsible Budget (CRB) has issued a report, “Promises and Price Tags: A Fiscal Guide to the 2016 Election” that estimates how our national debt would rise under the programs of both presidential aspirants. It shows that gross debt held by the public would rise from about $19 trillion today to $23.9 trillion by 2026 under Hillary Clinton’s plan and to $35.2 trillion under Donald Trump’s plan.

They based the estimates on the public positions taken by each campaign as of June 24, 2016. They also generated a low, central, and high cost estimate of the fiscal implications of Trump’s and Clinton’s proposals.

We need to stop and say that our gross debt will rise no matter who is elected, since under existing law, gross debt is projected to rise from about $19 trillion today to about $29.1 trillion by 2026, about a 50% increase. With that in mind, here is CRB’s summary of the impacts of both candidate’s plans on the national debt:

Debt Under Candidates Proposals

Donald Trump has expressed concern about the dangers of our current $19 trillion debt. Yet his plan would increase that number significantly. Under CRB’s central estimate of Trump’s plan, gross debt would more than double from $19 trillion today to $39.5 trillion by 2026.

The increase in gross debt under Clinton’s plan would be smaller but still significant. Under the central estimate of Clinton’s plan, gross debt would rise by more than 50%, from $19 trillion today to $29.6 trillion by 2026, in line with the current law. So, her promise to pay for new spending seems to be true.

Digging a little deeper, here is CRB’s breakdown of both candidates’ plans by revenue, costs and spending. Most of Hillary Clinton’s increased costs come from spending in non-health, non-retirement programs:

She would spend $350 billion more on college education, $300 billion more on infrastructure, another $300 billion on paid family leave, and nearly $500 billion on a variety of other initiatives.
Clinton would also make several health-related changes that would cost about $150 billion.
To offset these costs, Clinton proposes a variety of tax increases – mostly on higher earners and businesses – totaling $1.25 trillion.

The largest share of Trump’s deficit impact comes from his proposed individual and business tax reforms, which would reduce revenue by about $9.25 trillion:

His plan to reform the veteran’s affairs system and increase veterans’ access to private doctors would cost about $500 billion.
And his plans to repeal and replace the Affordable Care Act and reduce illegal immigration would cost about $50 billion each.

So, what happens to the total amount of our national debt?

Donald Trump wants to dramatically reduce taxes for most Americans while maintaining spending relatively near its current levels. As a result, under CRB’s central estimate, he would add $11.5 trillion to the debt through 2026.

Hillary Clinton wants to increase both spending and taxes, adding about $250 billion to the debt over 10 years under CRB’s central estimate. Under their low cost estimate, Clinton’s plan would reduce 10-year deficits by $150 billion.

Increases in debt are not always a bad thing, particularly in times of economic slack, if the debt accumulation is driven by stimulative fiscal policy. But a 40 percentage point of debt to GDP increase, from 87% of GDP to 127% of GDP, seems unlikely to give us a positive outcome.

But, if we elect The Pant Load, that’s what we will get. Trump said to the WaPo in May:

I am the king of debt. I do love debt. I love debt. I love playing with it.

This should worry you. Trump went on to say:

Look, I have borrowed, knowing that you can pay back with discounts. And I have done very well…I would borrow, knowing that if the economy crashed, you could make a deal, and if the economy was good, it was good, so, therefore, you can’t lose.

So, Trump would stiff the nation’s creditors. Haven’t we had enough of Republican mis-leadership on the nation’s finances?

Haven’t we had enough of Republican tax cuts for the most comfortable among us at a cost to the least comfortable among us?

Remember that it was the GOP-led Congress that threatened not to raise the debt ceiling in 2011. That led to the Standard & Poors rating agency’s lowering of the US credit rating.

Think carefully about what Trump’s glib plans imply for America.

Our Thin-Skinned Blue Line

When we see each other as enemies, we are the Middle East, and we can no longer work together for the common good. Consider what happened last week at a Minnesota WNBA basketball game:

Four off-duty Minneapolis police officers working the Minnesota Lynx game at Target Center on Saturday night walked off the job after the players held a news conference denouncing racial profiling, then wore Black Lives Matter pregame warm-up jerseys.

Lt. Bob Kroll, president of the Minneapolis Police Federation, the union that represents rank-and-file officers, praised the officers walk out:

I commend them for it… If [the WNBA players] are going to keep their stance, all officers may refuse to work there.

What is lost in the police union grandstanding was that the Lynx jerseys in question read “Change starts with us, justice and accountability” and on the back had Philando Castile’s and Alton Sterling’s names along with “Black Lives Matter” and the Dallas Police Department shield. How is that seen as anti-cop? This highlights how thin-skinned police forces around the US are whenever criticism emerges about bad policing.

But what can be done?

The most recent report from the Bureau of Justice Statistics quadrennial “Census of State and Local Law Enforcement Agencies, 2008” shows that there are 17,985 state and local law enforcement agencies with at least one full-time officer or the part-time equivalent in the US. All of them are managed by local, county or state governments, and the majority of police are members of a local union. Wrongo is not anti-union, but the social identity of being in law enforcement cultivates a code of unduly protecting members, hiding evidence, and blindly supporting the position of other officers simply because of their collective identity. The “Blue Wall of Silence” around cops is the excuse to cover up bad behavior in the face of investigation.

Creating an equivalency between #BlackLivesMatter and #BlueLivesMatter is wrong. Consider this thought from Jonathan Russell, Professor and Chaplain at the USC Center for Religion and Civic Culture: (emphasis by the Wrongologist)

A black life is a life under the threat of social death, a social life constituted by precarity and the potential of imminent death…Blue lives have no analogous history, no precarious location from which their collective lives need recovery…Blue lives are not…living under conditions similar to black life. It is the history of black lives not mattering that gives meaning to the hashtag. Blue lives have no such analogous history.

Russell goes on to say:

Blue lives have always mattered, present and past. Their experience of social space is (for the most part) one of…deferential treatment… It is profoundly misrepresentative and disrespectful to develop an analogous hashtag, as if blue lives have an analogous experience of social life in America as black lives have. This hashtag is wrong in so much as it connotes that the lives of law enforcement officers have failed to matter sufficiently in the broader public consciousness.

For the umbrage-takers out there, relax. Wrongo isn’t saying that cops don’t deserve respect, they do. He thinks that cops have a tough job, and that we must mourn any cop killed on the job. But, we can’t be blind to the power of this confrontation between #Blue and #Black to tear us apart.

Here is ginandtacos: (emphasis by the Wrongologist)

I keep holding out hope that we will learn something from this, that police can say to themselves “All those Dallas officers wanted was to do their job and go home alive at the end of the day” and have some moment of inspired transference wherein they realize that every black person they pull over in a traffic stop wants the same...

July 4, 2016

Independence Day 2016. And 240 years later, where are we?

COW Our Sad Fourth

Our founders were willing to die for an idea. They wanted home rule, not a local dictatorship run by a representative of an English King. There were spirited debates around the ideas that founded our Republic, and there were those who worked hard to keep the rule of the King in place.

So are the contentious debates of today just more of the same? Here is a small taste of Sebastian Junger’s new book, “Tribe”: (pg. 124)

Today’s veterans often come home to find that, although they’re willing to die for their country, they’re not sure how to live in it.

He goes on:

It’s hard to know how to live for a country that regularly tears itself apart along every possible ethnic and demographic boundary.

On the front lines, GI’s know their buddies are different in all sorts of ways, but they set aside their differences and form units that transcend differences, often heroically. Yet, in 2016 America, on a different set of front lines, our politicians amplify differences, going so far as to regularly accuse rivals of deliberately trying to harm their country.

Our society is at war with itself. Depending on their ideology, people speak with complete contempt about the rich, the poor, the educated, or the foreign-born. They express the same contempt for the president, and again, depending on their ideology, the entire US government.

That’s a level of contempt we have usually reserved for enemies in a time of war. But now, we apply it to our fellow citizens. Contempt is particularly toxic because it implies that the attacker has a position of moral superiority, and through that, has the agency to attack another.

So, on our most patriotic day, put down that hot dog, and ask the question: How do we unify a secure, wealthy country that is now playing a zero-sum political game?

Time to wake up, America! And to help with that, let’s dance around the room with a little rockabilly by Elvis Presley. Elvis was treated with contempt by some in the 1950s, but it was mostly silent, and by the Silent Generation, who thought they were protecting their kids from rock & roll.

Take a listen to “Good Rockin Tonight”, and remember Scotty Moore, the original guitarist for Elvis, who died last Tuesday. He was not just our last living link to the King (assuming the King is really dead), he was the force behind Elvis’s early singles. Scotty is in the Rock & Roll Hall of Fame.

His reverb-drenched rockabilly guitar was the driver in the originally drummer-less trio of Elvis, Scotty and bassist Bill Black:

COW Elvis and Scotty

Rolling Stone ranks Scotty Moore No. 29 on its list of the 100 greatest guitarists of all time, saying “The playing was so forceful that it’s easy to forget there was no drummer.”

Keith Richards has said:

Everyone else wanted to be Elvis. I wanted to be Scotty.

Here are Elvis, Scotty and Bill on “Good Rockin Tonight”:

Hillary Should Grab Populism and Run With It

The biggest change in our politics in the past 20 years is the rise of populism on the left and right. The populists believe that we are led by a selfish elite that cannot—or will not—deal with the problems of ordinary working people, and there is ample evidence that they are correct.

Trump and Clinton say they will bring back jobs that corporations have shipped offshore. They make China the scapegoat for lost economic opportunity, while the real causes are automation and the triumph of the spreadsheet in corporate strategy.

Those jobs are never coming back, and a candidate who says they can negotiate with foreign governments to bring jobs back demonstrates either their naiveté about the true cause of job loss, or a simple desire to BS the American public.

Voters can see through that.

Economic and cultural insecurity are the bedrock causes for populists. Unemployment and stagnant wages hurts working-class whites, while cultural issues are a top issue for older white Americans. The first group sees their jobs threatened by automation and globalization. They join with older whites in seeing immigrants as scroungers who work for less, grab benefits and if you believe Trump, commit crimes.

Both groups also believe that American society is being undermined by diversity and foreign-born citizens.

This is the battle line of the 2016 presidential election. The mediocre economy that has been with us for nearly 20 years has caused real harm. We remain a wealthy country, but certain groups now see their opportunity slipping away. Slow growth, or no economic growth, means only a few elites will do well, and most voters see the self-serving political class as siding with the elites.

So can a candidate unify an electorate that now plays a zero-sum political game?

The Pant Load has the better position in this game, since he can exploit pre-existing fears that are based in fact.
The Pant Suit must carefully calibrate her message, but she cannot be a “maintain the status-quo” candidate and win.

Clinton would do well to consider what William Berkson said in the WaMo:

If there is one national goal that Americans can agree on, it is opportunity for all.

Berkson makes the point that since President Reagan, Republicans have advocated a simple theory of how to grow the economy: The more you reduce government involvement in the economy and the more efficient markets become, the more the economy grows.

Sorry, but the simplistic theory of free market economics has been drowned in a tsunami of fact in the past 35 years. Berkson says:

Both Democratic administrations since Reagan—that of Bill Clinton and Barack Obama—have raised taxes, and under them, the economy grew more rapidly than under the tax-cutters Reagan and George W. Bush.

This opens a path for the Pant Suit. In order to win, she must assure voters that she will deliver more and better jobs. Family income must go up. But how to achieve this?

By advocating a policy of economic opportunity through public investment in infrastructure. It fulfills the promise of opportunity for all, a populist message that has proven to work throughout America’s past. And it allows Clinton to hammer the GOP Congress and Paul Ryan about the lack of any track record for laissez-faire policies, since they have never worked, not even once, as a miracle cure for jobs and income inequality. This would be an open return to Keynesian economics. Here is Eduardo Porter in the NYT:

The Keynesian era ended when Thatcher and Reagan rode onto the scene with a version of capitalism based on tax cuts, privatization and deregulation that helped revive their engines of growth but led the workers of the world to the deeply frustrating, increasingly unequal economy of today.

And led to the low growth economy that drives today’s populist anger.

How to fund that infrastructure expense? More revenue. For the last 40 years, Democrats have been unwilling to counter the conservative argument that higher taxes are a redistribution of wealth between classes. Clinton should argue that current tax policy is really a transfer of resources from tomorrow’s generation to today’s. This is a strong populist message.

Younger Millennials understand this clearly. They already believe Social Security will not be there when they need it. She can win them over if she makes a case for new jobs and new revenues.

When conservatives say that it is unfair for people in their highest earning years to pay more taxes on that income, Clinton can point out that this is a past-due bill that they need to pay just as their elders paid higher taxes that supported the current earners when they were starting out. It was that investment in public resources such as public education and infrastructure, and in research, technology and industry that enabled today’s peak earners to get where they are.

While the strategy opens Clinton to criticism from Grover Norquist and the right about fiscal irresponsibility, it pits Trump against the Tea Party and the GOP. He would need to choose between being a populist or a doctrinaire fiscal conservative. Either way, it will bleed votes from some part of his base.

The strategy could work in down ballot races as well, particularly in the Rust Belt. Maybe working class conservatives will hear her, and not vote against their economic interests for once.

We’ll see if she will move from status quo, to “let’s go” as a campaign strategy.

More Political Lessons From Brexit

There is a neoliberal aspect to Brexit that has many Brits in the 1% quietly (and tentatively) quite happy. Fraser Nelson, editor of the Spectator and a columnist for the Daily Telegraph, writing in the WSJ, said the Brexiteers:

…think the vote for Brexit was about liberty and free trade, and about trying to manage globalization better than the EU has been doing from Brussels.

Neoliberalism at its finest. You could substitute “No Obama” for “Brexit”, and “Washington” for “Brussels”, and think it was the GOP talking.

Mr. Nelson says that a major problem was that the EU’s centralized, command-type structure makes local issues difficult to manage. He says that regulations issued at the European level, rules promulgated by officials whose names Brits didn’t know, people they never elected and cannot remove from office, became law in the UK. More from Mr. Fraser: (emphasis and brackets by the Wrongologist)

Mr. Cameron has been trying to explain this to Angela Merkel…He once regaled the German chancellor with a pre-dinner PowerPoint presentation to explain his whole referendum idea. Public support for keeping Britain within the EU was collapsing, he warned, but a renegotiation of its terms would save Britain’s membership…Mr. Cameron was sent away with a renegotiation barely worthy of the name. It was a fatal mistake [by the EU] not nearly enough to help Mr. Cameron shift the terms of a debate he was already losing.

The EU took a gamble: That the Brits would not vote to leave. A better deal—perhaps aimed at allowing the UK more control over immigration, a top public concern in Britain—might have stopped Brexit. But the absence of a deal sent a clear message: The EU isn’t interested in reform.

The EU apparently needs fixing, but it won’t be the UK who does it. Cameron tried in a lukewarm way to fix Europe a little around the edges, and failed. A final point from Mr. Fraser:

The question is not whether to work with Europe but how to work with Europe. Alliances work best when they are coalitions of the willing. The EU has become a coalition of the unwilling, the place where the finest multilateral ambitions go to die.

Perhaps. It IS clear that not all regulations are created equal, some are inefficient, and some are just stupid. But, a business environment with fewer government regulations is the wet dream of most business owners, while it often harms consumers. It is also true that the Brexit supporters were able to conflate in the minds of voters all the discontent with UK austerity, benefit cuts, poor quality job creation and wage stagnation along with the EU’s hegemony, into a big ball of emotion.

And it worked.

The inside-the-bubble UK neoliberal view is that the EU was the problem, and the British voters solved that. America doesn’t have an analogue. We could leave NAFTA, but that has none of the earth-shaking possibilities. We could fail to pass the TPP. That would be a yuuge anti-neoliberal event.

There is an economic malaise in blue collar UK. Once an industrial powerhouse, it has become service driven, with finance and lawyering representing a significant portion of its economy. Sounds just like America in 2016.

Let’s link all of this up with our domestic political economy:

Income inequality has grown in the US since at least the 1980s.
Real median income is the same as in 1996.
Our Labor Participation Rate (the share of American civilians over the age of 16 who are working or looking for a job) is about where it was in the 1970s.
Despite a rosy headline unemployment rate of 4.7% (which counts only people without work seeking full-time employment), the U-6 rate (includes discouraged workers and all marginally attached workers, plus those workers who are part-time purely for economic reasons) is much higher at 9.7%. In human terms, that is 15.3 million souls who need a job.

Donald Trump and Hillary Clinton both see these things. The candidate who convinces voters that s/he will really address them will win.

Trump is correct when he says if there are millions out of work, how can we permit immigration? He wrongly focuses on Mexicans, but he’s right: We need fewer people pursuing the fewer jobs we will have until at least until 2025, when finally, all the Baby Boomers retire.

America is in a class war, but it’s the working class versus the middle class rather than workers versus billionaires, as Bernie talks about. Joe Six-pack doesn’t hate the billionaire class. Therefore, Trump is acceptable.

The Pandering Pant Load sees this, and has moved to exploit their anger.

How Brexit Informs The Pant Suit’s Strategy

We are told that the Pant Suit is the candidate of the status quo, while the Pant Load is a wild card who will bring about change, possibly change that causes immediate remorse if he is elected. That’s just what the UK is experiencing. After a weekend facing the realities of Brexit, 3.5 million Brits have signed a petition for a do-over vote on “Remain vs. Leave”.

The pundits say Clinton can’t be the candidate of change because she supports President Obama, and the common view is that her first term would be Obama’s third term. But, if Brexit has relevance for the American election, she must avoid appearing to be the candidate of the status quo.

If the Pant Load can make the election about any kind of change vs. more of the same, Clinton will be vulnerable.

She should run against Trump’s fitness to govern, and the fitness of the Republicans in Congress to govern as well. After all, Republican Congressional leaders decided not to govern in January 2009, and so far, they have not paid a political price for their obstructionism. Of course, Mr. Obama tried to run against the do-nothing Congress in 2014, and the result was that the GOP took control of both houses.

Maybe it would be different this time for the Pant Suit. As Steve Waldman said about this strategy at the WaMo:

But if it could ever work, it’s now. The most recent Economist/YouGov poll reported a 9% approval for Congress among registered voters. It is literally the most unpopular Congress in the history of polling. Clinton can make the attack more effectively than Obama, because it won’t sound as much like blame-shifting.

And she could make running against Congress sound like change. She needs to shift some of her focus away from declaring the Pant Load unfit for office. That is, unless he keeps making more mistakes like his inexplicable PR disaster in Scotland. If he does that, her speeches will write themselves, and he will keep sliding in the polls.

She should run to enact specific things that Congress has blocked – infrastructure spending, ending tax breaks for corporate off-shoring, and universal background checks for gun ownership. But she needs to distance herself from more from Obama on global trade deals. Consider this from the Detroit Free Press:

CNN’s exit poll, which surveyed 1,601 Michigan Democratic voters as they left their precincts Tuesday, showed that 58% of them believed trade with other countries costs jobs, compared to 30% who believe they create them. And among those who believe trade costs jobs, Sanders won by a large margin, 58%-41%.

Michigan is a key state for Clinton, and she needs to build a firewall in a few other states that Obama won in 2012, but where she now has some trouble, if the June 21 Quinnipiac polls for Florida, Ohio, and Pennsylvania are correct. The polls show Clinton with a clear lead in Florida (47%-39%), but locked in ties in Ohio (40%-40%) and Pennsylvania (42%-41%).

She has to keep the Pant Load from winning both Ohio and Pennsylvania, which right now, look to be toss-ups, meaning Trump could win both. Pennsylvania also has a number of swing House districts and an important Senate race, so Clinton must work hard there, even if it were completely in the bag for her. OTOH, PA elected a Democratic governor in the 2014 Republican landslide, and hasn’t gone red in a presidential election since 1988. This, from Booman:

For starters, Obama won in 2012 with 332 Electoral College votes to Mitt Romney’s 206. If we keep everything the same and award Ohio and Pennsylvania to Trump, the result is 294-244.

So, winning Ohio and Pennsylvania would be a start for the Pant Load, but without Florida, it’s hard to get from 244 to the 270 votes needed to win. In fact, without Florida, Trump would have to win Ohio, Pennsylvania, Virginia, New Hampshire and Michigan, while losing Iowa in order to garner a 277-261 victory.

It’s a long way to November, and who knows who will win? It’s difficult to believe it will be close, but we lived through two Nixon wins, so electing someone you dislike and distrust is nothing new for America.

The Pant Suit vs. the Pant Load – Jobs, Part Infinity

We are in a time when a presidential candidate’s personality counts for more than the candidate’s policies. Candidates obfuscate on most policy issues and the media lets them get away with absolutely outrageous declarations of near-facts or outright half-truths.

One policy we must make them nail down explicitly is their jobs policy.

The key to making America great again is adding more jobs. Wrongo is a pest on this subject, but without more jobs, growth in GDP is harder to achieve. Tax revenues are more difficult to grow. People who are idle get into trouble.

The Pant Suit and the Pant Load know this, so they will talk from here to November about adding manufacturing jobs back to cities that lost them starting in the 1970’s. Those jobs are never coming back, but both of them are working hard to convince you they can do it. Consider this, from Parallel Narratives:

We’re now being told by folks who know better that all we need to do to bring those jobs back, to resurrect a future we can believe in, or make America great again, is to elect the outsider politician who is not beholden to elite interests like banks, CEOs and politicians. Unfortunately, that horse has left the barn, those jobs are gone for good…

A great example of a politician braying the “I can bring jobs back” mantra was in Sunday’s NYT business section’s column, “Preoccupations.” In it, a young couple had the option to work from home, so they moved from Austin, TX, that hot-bed of tech, to South Portland ME, not so techie. They work for two different firms from two home offices. Then, they are invited to attend a funds-raiser for a gubernatorial candidate: (emphasis by the Wrongologist)

The candidate raising campaign funds was a hard-working lawyer who seemed genuinely well meaning, but no one had told him that his economic platform of protecting manufacturing jobs and Maine’s traditional industries wasn’t going to fly with an audience of health care professionals, programmers, web designers and researchers…We muttered to each other that this guy didn’t have a place in his platform for people like us, many of whom worked for employers in other states. Our checkbooks stayed in our pockets.

If you hear this kind of BS from the Pant Suit or the Pant Load, your checkbook should also remain hidden.

While the low-wage jobs problem has been around for more than 40 years, America’s politicians are still peddling the same solutions. In fact, a new analysis from the White House’s Council of Economic Advisers (CEA) released Monday shows that only 88% of men ages 25 to 54 are participating in the US workforce. The CEA reports that the US has the third-lowest labor-force participation rate for “prime-age men” among the world’s developed countries. We have done so well that, on a percentage basis, Greece, Slovenia and Turkey all have more men working than the US does. Greece! The decline is concentrated among less educated. Here is a chart:

Male Labor Force Part by Edu

More than 95% of men used to work in 1964, regardless of their educational attainment. Today, you better have at least a bachelor’s degree if you want to be sure you will get a job. But it is worse than that. The CEA said:

In recent decades, less-educated Americans have suffered a reduction in their wages relative to other groups. From 1975 until 2014, relative wages for those with a high school degree fell from over 80% of the amount earned by workers with at least a college degree to less than 60%.

Clinton and Trump would have you believe that the problem is bad trade deals with China, the TPP, or immigration. Trump in particular, is saying that the political elites have knowingly caused this all at the expense of the American worker. There is a modicum of truth to that, but it is the American corporation and the American tax code that is closing out US jobs, and hammering the middle class. American corporations now pay about 11% of our total US taxes, down from about 30% of US taxes in 1960, as jobs (and markets) have moved abroad.

What are the Pant Suit and/or the Pant Load going to do in the face of advancing automation now facing us not just in manufacturing, but also in the service and knowledge industries?

It is time to make the candidates talk about this on the campaign trail.

The basic policy choice we have is to put people to work, or to continue to allow the profit motive to dominate. If the profit motive remains supreme, we will continue our relentless drive to reduce labor costs — by eliminating jobs, or by paying workers less for the same work.

To date, our leaders have chosen the latter path, and we have reaped the results. We have become a land of spreadsheets and flags.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Inequality