Let me offer a preliminary response to the question I posed
several days ago, namely what should we do going forward if the Democrats do
indeed sweep the table and take control both of the White House and of both
branches of the legislature? There are quite obviously an enormous number of
particular things that need to be done right away to reverse some of the damage
that Trump has inflicted on the country but I am more interested in larger
long-term changes that this moment may for the first time make possible.
The pandemic and the economic crash that it has triggered
have together, I believe, created the possibility for major progressive
initiatives. Not the certainty, Lord knows, but the genuine possibility. Let me
briefly suggest three interconnected large-scale programmatic changes that I
believe are now for the first time genuinely possible.
First of all, the pandemic and consequent massive
unemployment have, I believe, finally made it manifest even to those who wish
not to notice that America’s accidental connection of employment with
healthcare has to go. I think I am correct that we are the only major
industrial nation in the world that ties health insurance to employment. Fully
half of the country gets its health insurance through a job. This is
manageable, although hardly ideal, so long as unemployment is low, but to have scores
of millions of working people lose their health insurance in the middle of a pandemic
is so insane as to be unsupportable. Oh yes, there will be fights about what to
do about this, and most politicians, among whom I am sure Biden is numbered,
will argue that we should make some temporary accommodation in Obamacare to
handle the problem. But if we continue to elect more and more genuinely
progressive members of the House and even of the Senate, I think the way might
be open to the establishment of universal single-payer health insurance.
Secondly, the present disaster has made it possible for the
first time in my memory to raise in polite conversation, and not in whispered
conspiratorial tones, the idea of a guaranteed universal minimum income. Not a
minimum wage but a minimum income for everyone in the country.
Finally, as I somewhat puckishly observed back when the
first trillion dollar emergency stimulus package was passed by Congress, MMT
has finally come into its own. The next time a corporate Democrat says that
some proposal is not viable unless it is paid for immediately by taxes, I think
we can simply laugh him or her out of the room.
None of this is socialism, needless to say. But it is light
years beyond what seemed possible only six months ago. To accomplish this will
take organization, pressure from below, and the election of large numbers of
progressive members of the House. But if these proposals do not give Chuck
Schumer a heart attack, as they well may, and if Biden can forget who brought
him to the dance long enough to sign what Congress puts on his desk, in the
next several years might actually be enough to warm an old philosopher’s heart.
I agree with the spirit of the post but I would also like to unpack there issues a bit in a long comment broken into sections, since getting the requisite bills on the president’s desk, backed by popular support in not a simple task. The first step is vision and the second is the plan for actualizing it. Both require background.
ReplyDelete1. Health care is the top priority, since while the "pandemic" (definition dependent may "end" (definition and criteria dependent) the emergent challenges will not — including COVID 19, since virus mutate.
The connection between employment and health care insurance is a relic of the strong unions of the past. The lobbying for it then apparently didn’t realize that it would turn out to be a trap. Secondly, it reduces the competitiveness of American business internationally, since costs are passed on rather than absorbed by reducing profit. This was inflationary and it also contributed to offshoring as a way to reduce costs. Dumb idea that has held on for too long. Bad for firms and bad for households. Get rid of it already. The pandemic provides an excellent opportunity to do so. But don’t stop there.
I am not expert in health care economics but I keep up with the debate and it appears to me that the only efficient design solution economically and effective social is some for of single payer and the simply way to get from here to there is some sort of Medicare for all. The system is already in place. MMT shows that financing is not an issue for a government 1) that is sovereign in its currency, defined as being the monopoly issuer of its currency and not creating obligations other than in the currency of issue, and 2) that allows the exchange rate to float.
The only constraint is the availability of real resources. First, the resources must be avail in the first place. Secondly, if the government competes in markets with the private sector, prices will rise, which is inflationary.
In Medicare for all, the government would not be competing with the private sector on than in case where private insurance and treatment would be permitted in a two-tier system with a privately available "Cadillac" sector. I have not seen any evidence that this worrisome as far as inflationary pressure goes.
But there is also the question of availability of real resources. According to what I understand, the US does not have the real resources available to extend Medicare to all to the entire population since this would be beyond the capacity of the system to deal with effectively.
More personnel would have to be trained and more plant and equipment would be needed. This is entirely doable over several years and financing it not a problem. But this is a consideration in working out a plan.
continued
2. While I am a philosopher and not an economist. I have been working with MMT for over a decade, blogging about it as a contributor at Mike Norman Economics. From this vantage, I have to contest that the universal basic income (UBI) is the way to go. According to MMT economists it is inflationary. The better way is a universal job guarantee (JG) at a living compensation (wage and benefits) for all willing and able to work, along with a basic income (BI) for those not able to work. See, for example, Pavlina R. Tchernova's The Case for a Job Guarantee
ReplyDeleteThe MMT JG functions as a price anchor also, which is anti-inflationary.
According to MMT co-founder Warren Mosler in his white paper on MMT basics:
Inflation
Only MMT recognizes the source of the price level. The currency itself is a public monopoly. Monopolists are necessarily “price setters”.
Therefore:
The price level is necessarily a function of prices paid by the government’s agents when it spends, or collateral demanded when it lends.
In what’s called a market economy, the government needs to set only one price, as market forces continuously determine all other prices as expressions of relative value, as further influenced by institutional structure.
http://moslereconomics-kg5winhhtut.stackpathdns.com/wp-content/uploads/2018/04/Tcherneva_MonopolyMoney_2002.pdf
http://www.levyinstitute.org/pubs/wp_864.pdf
The price that the MMT JG sets is the compensation for 1 hour of unskilled labor. This effectively sets the minimum wage at a living wage while anchoring the currency to a real good using a price in the labor market.
There is an extensive literature on the UBI, BI, and JG, some by MMT economists and a great deal by others. Even being an economist is not enough to understand the ramifications. One needs to be not only a macroeconomist but also fairly expert in these areas to understand the issue well enough to formulate government policy proposals about it so that bills can be written. And ideally, a bill would be on the floor of Congress immediately after the election if the Democrats prevail. But before a bill is passed a lot of "horse trading" takes place, and many of the interest groups involved are big donors who are affected. If the public doesn't understand the issues and the stakes, and the stakeholders, they will be taken again. Hint: there is a reason that the big players favor a UBI.
My conclusion is that the basics can be understood by educated people but the devil is in the details with respect to policy formation. Getting right is essential so the program doesn't blow up and the critics get to say, We told you so.
The other challenge is that this is a macroeconomic issue as well as social and political issue. There will be winners and loser, and this necessitates tradeoffs and political compromise.
Finally, it is huge political challenge, since the right will opposite it on principle, and business and finance based on the bottom line. Economic rent extraction is based on low wages, benefits and protection, and diminished labor power in the labor market.
continued
3. Regarding both health care and incomes policy, the Democratic establishment has been allied with industry on social and economic issue that directly or indirectly concern business and finance.
ReplyDeleteProgressives are more or less behind reform in these areas, but there is no agreement yet among progressives on how to proceed. Many so-called progressives are neoliberals, like the establishment, have neoliberal tendencies, or have fallen for the neoliberal narrative.
This is understandable considering the barrage of neoliberal propaganda since Milton Friedman replaced John Maynard Keynes as the go-to economist. More over, most people don't have the time, inclination or perhaps even the ability to deal with complex issues like health care, employment, and incomes policy.
I have lined up behind the MMT economists after careful consideration. I think their understanding the keenest and their policy stance is not only progressive but also doable in the analysis presented.
4. For most people this is a personal and social issue with political implications. It is also an economic issue since they thing that government revenue (taxation) and borrowing (offsetting deficits with Treasury securities) finances government when the reality in the US is that government is self-financed by currency issuance. The objection to this is inflation (Weimar, Zimbabwe, Venezuela). MMT shows how this is just wrong. It is not the way the system works at all.
But it is an economic issue for two important reasons:
The first is that it is an article of capitalism that market distribution based on price rationing in the correct way of doing things since “markets know best” (See Hayek’s Nobel Lecture). "Free market" in this view is markets free of government intrusion. It does not mean markets free of asymmetries. These asymmetries are the basis of extracting economic rent, which is expropriation of a portion of labor share and exploitation of the environment, which leads to socializing negative externalities.
Being based on economic rent, capitalism will fight to continue it. So any genuinely progressive policy has to address this. For example. a UBI, e.g., as a citizens' dividend, doesn't while a universal job guarantee and BG do. The story in the rent extraction and distribution.
So, yes, a Biden together with a Democratic Congress should immediately address these issues, but both health care policy and income policy are complex issues that have to be thought through to the end, the result may be better than the status quo bu the opportunity to arrive at a satisfactory solution will be lost.
end
Your optimism is a continuing marvel. One struggles to share it. I would sincerely ask you this: if Trump wins re-election, what are the worst and best case consequences? Since despair is not an option, how might optimism navigate the future?
ReplyDeleteJoe Biden at this point is a token candidate, years ago we sowed hanging chads and controversy, now we have moved on to the modern day U.S. election, Donald Trump vs. the "opponent", an old politician in cognitive decline. We comfortable people can retire to the study and enjoy the luxury of what ifs but the mental map does not equal the territory. Come right around September, the climate will be that Trump is pretty bad but the country can't afford Biden at the helm. In the world peace scenario of change Bernie gets the nomination and small businesses thrive through fairness and quality competition, but guess what, the Bernie real change horse has left the barn and we have the real world of Trump and all the negative worded spoor that he drags with him. Snap out of it people and face the harsh reality of what is at this present moment and for 4 more years. Putin is not going to lose his "election" and neither will Trump.
ReplyDeleteBefore anything on the economic and social front can be done, the bleeding has to stop. What Chomsky called the “malignancy in the White House” has to be removed. Americans are dying daily because of Trump’s neglect—130,000 or thereabouts now. With less than 5% of the world’s population, we account 25% of its CV19 deaths. Temperatures are above 100 degrees F in Siberia—Siberia! Australia and California are essentially on fire every summer. His from-the-gut foreign policies have increased the chances of nuclear proliferation and nuclear holocaust. Nothing, nothing! is more important than defeating Trump in November. People are dead who would otherwise be alive solely because of that man. More will die unnecessarily if he is reelected. And anyone who believes that there is not a significant difference between Trump and Biden, or that Trump may in some ways be superior, doesn’t seem to be aware of the Supreme Court. If 600 of the 97,000 voters of in Florida in 2000 had voted for Gore rather than Nader, there would have been no Iraq war and no John Roberts and no Samuel Alito on the Supreme Court. Roe v. Wade would not be under threat. The 2nd Amendment would not confer a personal right to bear arms. Compared to the cancer that is Trump, just about everything else is hang nails. It’s time for sensible triage, for focus on what’s important: beating Trump.
ReplyDelete"if Trump wins re-election, what are the worst and best case consequences? Since despair is not an option, how might optimism navigate the future?"
ReplyDeleteHope that Canada may start to grant refugee status to those ready to move on to greener pastures.
This comment has been removed by the author.
ReplyDeleteI like your policy proposals and we could certainly add to the list. But there is no real political "left" apart from a tiny handful of "progressives" in Congress and I use quotes because when it comes to foreign policy nearly all of them defer to the bipartisan imperial thinking that undergirds the American empire, endless wars, and the brutal crushing of every socialist or semi-socialist success around the world (Cuba, Vietnam, Chile, Indonesia, Grenada, Venezuela, and so on).
ReplyDeleteIn tandem with these policy proposals we would need to:
1. Explain neoliberalism, its origins, its impact, and how it has been a bipartisan set of specific policies that has resulted in the destruction of FDR's middle class and the worse distribution of wealth in US history.
2. Explain how the Democratic establishment has worked hand in glove with Republicans to advance a huge global military presence, the militarization of police departments, and the privatization of many government services (education, health, the military, prisons and so on.)
3. Explain how our two party system has structurally (electoral college, single member districts, electoral college) constrained progressives into having to vote for the lesser of two evils over and over and over again.
4. Explain how the Democratic establishment has been the single most important force in crushing domestic progressive movements and filtering out progressives from its political base.
5. Along with the above and a critique of the corporate media, explain how these forces have cohered to obstruct a left counter movement to neoliberalism.
6. The first and most important step, therefore, would be to build socially disruptive political movements both outside the electoral system and a coalition of REAL JUSTICE Democrats within the political system to defeat and eliminate the Democratic establishment caucus and create a vibrate second party that insures that the bottom two thirds of America actually have a meaningful voice in public affairs.
I could go on - voting is not a right in the US, it is a privilege granted by the state for which we must qualify which then opens the floodgates of voter suppression - but you get the idea. Yes, move forward with progressive policies, (national health insurance, green new deal, stop endless wars, defund the military/polices, guaranteed income, and yes MMT to pay for it) but unless these proposals are part of a package movement with an educational, truth telling critique of our institutions, is it really outré to suggest that advancing policies alone would be akin to pisser dans le vent?
(I have been using a lot of clichés in my commentaries so I thought the addition of "outré" and a few French words might mitigate that somewhat!!:))
It strikes me that pushing for the policies Jerry references provides the opportunity to explain the rationale for said policies. Had UBI been in effect at the time of the pandemic, the millions of people who were bankrupted or became homeless, etc., due to the flaws in emergency appropriation would have been spared those fates. Similarly with universal health care. The political fight is the opportunity to educate. One consolidates support by making impacts clear - UBI means virtual elimination of poverty programs, as well as the cost shift from employers to taxpayers inherent in the minimum wage system.
ReplyDelete"Voting is not a right" is absolutely right, and a new voting rights act needs to be an immediate priority. It will need to reassert that discriminatory practices of any kind impacting any group, specifically including race, are illegal. There needs to be a clear message to the Court that Robert's decision was based on an ideological delusion and badly decided.
I don't know how to make it clear in the law that artificial 'persons' do not have the same rights a natural persons, but electoral financing reform is necessary. Similarly, the move to grant religious groups the 'liberty' to discriminate in the public sphere has to be stopped. And this points to the problem that FDR had with the Supreme Court. How to deal with a right wing court in a era that requires progressive change is a problem that it seems will be revisited.
Trump's inability, or refusal, to use the powers a president has to contain the pandemic would seem to guarantee he loses in November. What we are seeing now is that the best, and largely successful, efforts of Democratic states to control the pandemic are now being overtaken by the failures of neighboring idiotic republican governors. New Mexico, which a few weeks ago had a declining covid 19 caseload, now has an increasing one in large part due the the failures of neighboring states (Arizona, Texas, Oklahoma). Failing to control the contagion means not opening schools, keeping restaurants closed, continued high unemployment and so on.
Politicians, as a rule, don't survive these kinds of circumstances. The closest historical analog is, of course, the Great Depression and Herbert Hoover didn't survive.
'MMT has finally come into its own. The next time a corporate Democrat says that some proposal is not viable unless it is paid for immediately by taxes, I think we can simply laugh him or her out of the room.'
ReplyDeletedefine 'viable'. Meanwhile, MMT's main tenets challenge the mainstream economics view that government spending is funded by taxes and debt issuance. I wonder if we are going to simply 'laugh right out of the room', mainstream economics understanding of how money creation and inflation works. I might at least tarry to clarify what it is, that MMT economists disagree with mainstream economics about. There are everal policy claims made by MMT -- cutting interest rates is ineffective in a slump, raising rates is a form of stimulus, achieving full employment can be administered via a federally funded job guarantee, expansionary fiscal policy (i.e., money creation to fund purchases) can increase bank reserves, which can lower interest rates, in short, explaining several of the premises of MMT and their policy implications will entail claims that the word "borrowing" is a misnomer when it comes to a sovereign government's fiscal operations, creating money alone does not cause inflation, just, MMT can be compared and contrasted with mainstream Keynesian economics in a variety of ways. Achieving full employment and/or inflation control, might sound good and still, if it seems relevant at all, we might at least be clear that many economists dismiss heterodox economics as "fringe" and "irrelevant", with little or no influence on the vast majority of academic mainstream economists in the English-speaking world. As I understand it, the central dogma of MMT is that a government can always just print more money. Okay, technically, MMT is true! As a practical matter, look at Israel in around 1980. Because they were printing money to cover a deficit, inflation got up to an annual rate of 100 percent. Having your currency start inflating so rapidly that it no longer becomes a store of value .. well, all sorts of relative prices get distorted and so forth..
Sure, I get that MMTers seem to favor government spending rather than tax cuts, though maybe we don't insist that this follows automatically, unless it just is part of a certain naive and crude quality which is different than saying 'I think it would be helpful to better nail down the true causes of high inflation.' Or maybe: 'So what level of deficit spending is OK?' Or: 'Does it matter how the deficit spending is done?' Could I even say, about this certain naive aand crude quality, that fiat money invites a price control on interest and impairs contracts, without exposing this? If not, then okay, why go through the step of borrowing at all, if you explicitly have decided to print all the money needed to pay the debt? There is no point in an independent central bank – think of the savings! There is no point in secondary markets for the sovereign’s debt. Just print what you want to spend, when you want to spend it! Of course, no one needs to worry about the price of imports or anything like that.