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Wednesday, December 12, 2018

AND YET AGAIN PIKETTY


I should like to return yet again to the Piketty, Saez, Zucman paper, about which I have written these past two days, because it is centrally important to my thinking about American politics, but first I must respond to the interesting questions posed by Michael S. concerning the turmoil in British politics [see the comments section on yesterday’s post.]  I realize that I am violating one of the sacred principles of blogging by saying this, but I simply do not know enough either about the British parliamentary system or about Brexit to have a coherent opinion regarding the possibility of a second referendum.  I could, of course, pontificate – what else, after all, is a Blog good for? – but I am so clueless on this issue that I would not even know which is the reliably left-wing side of the issue, let alone [as Michael S. asks] the anarchist position.  There, I have said it.  There are some things I just don’t know anything about.  I hope Google will not decommission my Blog as a consequence.

Without endlessly repeating myself, let me come back to the broad outlines of the Piketty et al. paper, and try in this post to think about what it tells us about the lived experiences of the several groupings on which it concentrates.  Specifically, how do the experiences of the Bottom 50th in the last two generations differ from those of the Middle 40th  to 90th?  I refer to “two generations” rather than a span of time [roughly 1980 to the present] because I am interested in what it is like to grow up and grow old in one or another of those segments of American society. 

Remember, the central and defining fact of human existence is the endlessly repeated life cycle:  birth, childhood, young adulthood, mature adulthood, old age [assuming you are fortunate enough to make it that far].  As Erik Erikson and many others have noted, our lived experience of what happens to us is powerfully shaped by what we learn to expect when we are young and then either have confirmed or disconfirmed by what happens to us as we grow older.

To those born roughly when my parents were young, in the years before the First World War, the defining experiences were that war, the boom years that followed, and then the Great Depression.  People of that generation could see the poverty and fragility of old age, and then experienced the threat of unemployment, only lifted by the Second World War.  The Social Security Administration was established in 1935, and by the time the war years were behind us, people were seeing the radical alteration in the arc of the life cycle that it brought.  Thirty years later, in 1965, Medicare began, and that, coupled with increases in life expectancy, transformed the expectations most people had of retirement and old age.  By the end of World War II, life expectancy in the U.S. was barely up to the age at which Social Security kicked in, although of course if you made it past early childhood the prospects were much better. 

Putting all of this together, we can conclude that children and young adults of the Bottom Half in the early ‘80s could see, looking around them, large numbers of grandparents and aging parents whose Golden Years were protected by Social Security and Medicare.  This was simply a part of the background expectation of their lives.  They did not think of these transfer programs, as economists like Piketty et al. do, as part of their income.  They took them for granted.  So when, for the next thirty years and more, their cash-in-pocket income either barely kept pace with inflation or actually declined, they did not say, “Ah, but we must take into account our future Social Security and Medicare.”  Instead, they felt things slipping away.  What is more, they completely lost the easy confidence of their parents that each generation would have things better than the generation just before.

The life experiences of the Middle Class, so called, were completely different.  Social Security for them was not the only thing between decent old age and desperate poverty.  Rather, it was a convenient add-on to pensions, investments, and other protections of the non-earning phase of the life cycle. 

The Bottom Half watched as politicians ceased to concern themselves with their needs and anxieties, and instead spoke endlessly, obsessively, about a Middle Class of which they were not really members.  To be sure, for reasons of race, White members of the Bottom Half identified themselves as “Middle Class,” by which for the most part they meant “Not Black.” But they were not really part of that ever-better-off 50th to 90th, and they knew it.
As has happened so often before in many, many countries, they turned their anger not on the 50th to 90th, whose life chances continued to improve, nor on the Top 10th, whose wealth soared into the stratosphere, but on the Black and Brown fellow Bottom Halfians, who by and large were doing even worse than they.

These are the realities that have shaped American politics for two generations.  Even Bernie’s clarion call for Free College spoke to the burdens of debt of the 35% of Americans who earn college degrees, or maybe to the 55% who start college, whether they finish or not.  It had nothing to say to the thirty-five or forty percent or more who never enroll.

The challenge we on he left face is to craft an integrated program of legislative proposals designed to alter the basic 50/40/10 shape of the American economy.  Clearly it will require major inroads into the already accumulated and relentlessly accumulating wealth of the top 10%, but it will as well require breaking down the division between the next 40% and the bottom 50%.

I do not have a clear vision of what those proposals might be, and I welcome discussion from all of you reading this blog.

6 comments:

s. wallerstein said...

My view, from a distance, is that there is a huge cultural division between the bottom 50% and the middle 40%, and that in cultural terms they don't feel much affinity for one another.
Without any sense of cultural affinity it is difficult to get two social groups to form a common political force, except in moments of genuine emergency, war or outright depression.

So I don't see how to break down the division between the middle 40% and the bottom 50%.

As most of you must know, I live in Chile and have not visited the U.S. for almost 10 years now, so most of my information about the U.S. comes from this blog, the media and a few friends and family members, all of whom come from the middle 40% or maybe in a couple of cases from the top 10%. Most of them are Jewish too. So I may be missing some changes in the picture in the U.S.

Jerry Brown said...

So as to how to make the bottom %50 better off- I thought your proposals from yesterday's blog made a good start.
I would add trying harder to limit the influence of private and corporate money in political campaigns so maybe the people who got elected cared about those who can't make large donations. And adding a Federal job guarantee along with the increased minimum wage.

Anonymous said...

About a generation younger than RPW, I'd be content to leave the basic 50/40/10 structure in place so long as we could push them massively closer together. Economists (maybe statisticians too) talk about a "mean preserving spread" -- increasing the variance of a distribution without any change in its mean. I am not sure what the opposite of spread is, but at the moment (and, realistically, probably for the remainder of my life) I'd settle for mean preservation if we could reduce the variance by an order of magnitude or 2 or 3.

A good start might be just returning to the high end marginal tax rates (income taxes, wealth taxes) to the same level we had during WW2, with (progressive) negative marginal rates for the lower 50-60%.

For some history, see the following links:
* https://www.dailykos.com/stories/2014/11/10/1343821/-A-99-YEAR-HISTORY-OF-TAX-RATES-IN-AMERICA (very summary: text)
* https://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates (a table of the history of the top rate)
* https://www.dailykos.com/stories/2014/11/10/1343821/-A-99-YEAR-HISTORY-OF-TAX-RATES-IN-AMERICA (some graphs and discussion)
* https://www.vox.com/policy-and-politics/2017/4/17/15324492/100-years-tax-brackets-chart (a mildly dynamic presentation)
* https://www.google.com/search?q=historical+marginal+tax+rates+graph (a page of google results if you are a glutton for this sort of thing)

I was just a wee tot during the Eisenhower-Kennedy-Johnson years, but my impression is that this is where the MAGA-gaze lingers. It was a time of optimism for most, and economic growth that looks quite good my modern-day standards. High & progressive marginal tax rates do not seem to have been much of a problem then.

Very high marginal rates at the top end, if well enforced*, would likely do a lot to discourage much of the self-dealing that is commonplace in the corporate (and esp. the financial) sector of contemporary America.

*A big if: https://infoweb-newsbank-com.dartmouth.idm.oclc.org/apps/news/document-view?p=WORLDNEWS&t=pubname%3AAMB9%21Atlantic%252C%2BThe/year%3A2018%212018/mody%3A1201%21December%2B01&action=browse&format=text&docref=news/16FD0311AFF298E0

marcel proust said...

Anonymous was me (pseudonymous). Sorry

marcel proust said...

The final link in my (too lengthy) comment above, the link at the asterisk, is the not the one I intended. The one I intended is

https://talkingpointsmemo.com/news/how-irs-was-gutted

Jerry Fresia said...

I think a good place to begin is to identify and explain the movement among capitalists that began under Jimmy Carter and has continued to the present, through the administrations of both parties. I'm referring to neoliberalism. It was and has been a way to prevent the democratic and civilizing uprisings of the 60s from reoccurring. It does this by reducing the role of the state at the same time that its policies enhance the wealth and the sphere of private power. As we know these policies have centered on deregulation, privatization, the repression of labor unions and other organizations used by ordinary workers/citizens, decreased taxes on corporations and the rich, the stagnation of wages by insuring that do not track productivity, relentless attacks on social security and social programs, and huge increases in military spending, wars of aggression, and the militarization of police.

Unfortunately most Americans are made clueless to this movement from above and, therefore, are unlikely to resist it effectively. This is evidence by the fact that 1) discussions of party politics within the mainstream media always focus on how the political elite go about getting elected by courting visible constituencies (various voting blocks - Main St) while ignoring the relationship of political elites to their invisible but governing constituencies/agenda within capital (Wall St.) and 2) resistance to neoliberalism, specifically, is made invisible within the mainstream media through censorship by omission. An excellent example of this is the democratic uprising against the neoliberal policies of Macron unfolding right now in France. In the mainstream press this historic uprising doesn't really exist. See: https://bit.ly/2PCIqjk

Two thoughts from this follow:

1) While legislation is the crossing of the goal line, what brings the ball into proximity of the goal line is both electoral organizing AND massive, militant disruptive but peaceful protest of specific policies and the advocacy of specific policies. This was the case with both New Deal and Great Society legislation. Macron already is desperately trying to put out the flames with concessions but has so far refused to rescind tax cuts to the rich.

2) Malcolm X famously said, "If you read the newspaper everyday you'll love your enemies and hate your friends." Today we can say that if all we do is read the New York Times, the Washington Post, and watch CNN and MSNBC, we will be pretty ignorant about what vital left organizing is taking place, their visions of a new world and attendant policies. There are dozens of left news sites and media that we ought to know, follow, and support.