Posts Tagged ‘government’


We can thank Donald Trump for one thing: he’s put the white working-class on the political map.*

In recent months, we’ve seen a veritable flood of articles, polls, and surveys about the characteristics, conditions, and concerns of white working-class voters—all with the premise that the white working-class is fundamentally different from the rest of non-working-class, non-white Americans.

But why are the members of the white working-class attracting so much attention? My sense is, they both represent a threat—because many plan to vote for Trump and, more generally, reject much elite opinion (including, but not limited, to Trump)—and, at the same time, are assumed to be a dying breed—as the U.S. working-class becomes more female, more racially and ethnically diverse, and increasingly employed in non-manufacturing jobs. So, the argument goes, the white working-class, supposedly radically different from the rest of Americans, is motivated by fear and resentment occasioned by a loss of identity and standing.**

Hence the curiosity—best exemplified by a new CNN/Kaiser Family Foundation [ht: ja] poll, about what white working-class Americans think. The results of the poll are interesting, if only because on many issues (aside from support for or opposition to Trump and immigration) the white working-class holds views that are not all that different from other whites, blacks, and Hispanics.

The fundamental problem with CNN/Kaiser poll (as with so many others) is its basic definition of the working-class: “those who have attained less than a four-year college degree, excluding those between the ages of 18-24 who are currently enrolled in school.” As I have argued before (e.g., here and here), that’s not the working-class. It’s just people who never went to or didn’t finish college. What they’re using is a definition of the working-class that doesn’t include all those other people, many of whom have college degrees, who are forced to have the freedom to work for someone else in order to make enough money to support themselves and their families. Together, most Americans with and without college degrees work for the boards of directors of large corporations—and they don’t manage the production process or supervise other employees.

As Vivek Chibber explains,

Workers show up for work every day knowing that they have little job security; they are paid what employers feel is consistent with their main priority, which is making profits, not the well-being of employees; they work at a pace and duration that is set by their bosses; and they submit to these conditions, not because they want to, but because for most of them, the alternative to accepting these conditions is not having a job at all.

The working-class, as I am defining it then, turns out to comprise the vast majority (70-80 percent) of the U.S. population. And most of them, of course, are white.

So, what does the CNN/Kaiser pool reveal about the views of, to be clear, one portion of the white working-class? As I wrote above, on many issues, they’re not all that different from other whites or blacks and Hispanics without college degrees. In terms of their own lives, most of the so-called white working-class, as the other poll respondents, are not angry, worried, pessimistic, or unhappy. But they are dissatisfied with the country’s economic situation and with the influence on the political process of people like them. In recent years, they report it’s become harder for them to get ahead financially and to find good jobs. Finally, they blame the federal government much more than their employers or Wall Street for the economic problems facing the working-class and they believe the federal government helps wealthy people too much and members of the working-class too little.

That’s exactly the set of answers one would expect from the American working-class—white, black, and Hispanic, with and without college degrees—right now. They’re getting screwed and, while they may not be dissatisfied in their own lives, they certainly think both the economic and political systems are stacked against them. Perhaps the only surprising item in the survey is the extent to which they blame the government, and not their employers or Wall Street, for the economic problems facing the working-class.

The only major differences within the working-class have to do with Trump and the role of immigrants. While 56 percent of whites without a college degree would consider voting for Trump, most other respondents would definitely not vote for him. A similar difference emerges with respect to immigrants: a much smaller percentage of the so-called white working-class believe immigrants “strengthen our country” and a much higher percentage thinks “immigrants today are a burden on our country” than the other groups.***

In the end, those two differences—on Trump and immigration—are what make the so-called white working-class interesting to the media. It’s not their conditions or their grievances, much of which they share with other members of the working-class. It’s only the fact that they threaten to vote for the renegade presidential candidate and they’re wary about the role played by other, immigrant members of the working-class. And, of course, many of them are thrown into the “basket of deplorables” by the opposing campaign.

Both presidential candidates, then, are sowing and exploiting those differences to their own advantage, which is what U.S. politicians have always attempted to do when it comes to real or imagined divisions within the working-class. That’s how they campaign and that’s how they hope to get elected.

Trump and Hillary Clinton (and their echoes in the mainstream media) have created the “white working-class” and they hope to ride it—as a source of support or a specter—to victory in November. And then, whoever wins, they’ll abandon it—along with the rest of the working-class.



*Actually, Bernie Sanders also played an important role in focusing attention on the white working-class, especially with his stunning primary victories in Michigan and West Virginia. Since his loss to Hillary Clinton, however, the white working-class (along with the rest of the American working-class) has virtually disappeared from Democratic discourse.

**As Connor Kilpatrick has explained, the Democratic Party “has established a clear line on the white wage-earning class: they’re all either dying (demographically or literally), irrelevant in an increasingly nonwhite country, or so hopelessly racist they can go off themselves with a Miller High Life-prescription-painkiller cocktail for all they care.”

***There is one additional difference that requires mention: while a majority of whites—with (62 percent) and without (69 percent) college degrees—believe trade agreements cost the United States jobs, a much smaller percentage of blacks and Hispanics without college degrees (both 37 percent) think that’s the case.


Has the policy consensus on economics fundamentally changed in recent years?

To read Mike Konczal it has. I can’t say I’m convinced. While some of the details may have changed, I still think we’re talking about different—liberal and conservative—versions of the same old trickledown economics.

But first Konczal’s argument. He begins with a pretty good summary of the policy consensus before the crash of 2007-08:

Before the crash, complacent Democrats, whatever their disagreements with their Republican peers, tended to agree with them that the economy was largely self-correcting. The Federal Reserve possessed the tools to nudge the economy to full employment, they thought. What’s more, government programs, while sometimes a necessary evil, were likely to be an inefficient drag compared with the private market. Inequality was something to worry about, sure, but hardly a crisis, and policies were correspondingly timid and market-focused.

And it’s true: the debate about the conditions and consequences of the crash—after Occupy Wall Street, in the midst of the Second Great Depression—challenged that consensus, by focusing much more attention on inequality and disrupting the idea that the growing gap between rich and poor is somehow natural and necessary and by calling into question the idea that capitalist markets are self-stabilizing and full employment can be guaranteed by relying on markets.

In all honesty, that’s the least that can be expected, especially on the liberal side of mainstream political and economic thinking in the United States.

But then, when Konczal outlines the policies that make up what he calls the “new liberal economics,” embodied in Hillary Clinton’s campaign and the current Democratic Party, the evidence is very thin. In terms of specific policies—like following the dual mandate for the Fed of stabilizing prices and maximizing employment and supporting paid family and medical leave—the new liberal economics looks a lot like the old liberal economics of the Great Society programs (and, for that matter, of the Nixon administration). And while the policies Democrats support are certainly different from those of current Republicans (which Konczal summarizes as a “mix of Kempism, austerity, and favorable taxes and regulations for businesses that characterizes Paul Ryan’s ideas” and “Trump’s agenda of mercantilism and a chauvinistic welfare state”), they aren’t evidence the existing policy consensus represents a radical change.

That’s because the consensus before the crash, and now seven years into the recovery, has been based on trickledown economics. On both sides of the political and economic aisle.

The overarching idea, shared by liberals and conservatives, is that the existing economic system—with the surplus being appropriated by a small group at the top, who then decide what to do with it—will eventually deliver benefits to everyone, including those at the bottom (through, e.g., more jobs and higher incomes).

There are differences, of course. While the conservative view of trickledown economics emphasizes individual decisions and private markets, the liberal view is based on the idea that individual decisions are constrained by larger institutions and structures and and government programs are necessary to achieve desirable social outcomes. But, in both cases, the benefits created by existing economic arrangements are supposed to start at the top and trickle down to the bottom.

The consensus before the crash was that the liberal and conservative approaches to trickledown economics represented the limits of the relevant debate about economic policy. And now, seven years into the recovery from the crash, the debate that takes place between those limits remains the policy consensus.*

So, to my mind, there’s nothing new about the “new liberal economics.” It’s just a different mix of policies that together make up the latest version of liberal trickledown economics.


*If the existing policy consensus has been disrupted, it’s only because Donald Trump has highlighted the fact that trickledown economics, in both its versions, represents an unfair hustle.


Back in 2012, I wrote about the residents of Rio de Janeiro’s favelas (shanty towns) who were being evicted by the Brazilian government on behalf of the organizers of the 2014 World Cup and the Olympic Games now taking place there.


In the place of one such favela, Vila Autodromo, which was once home to more than 500 families, all that remains are “Olympic parking lot tarmac, raw dirt and 20 tiny white utilitarian cottages, built grudgingly by the city as a concession to a core of families who refused to leave even as their homes were demolished.”


But the former residents haven’t forgotten either their old working-class neighborhood or the force that was used to evict them. So, they and their supporters have erected an open-air museum, the Museu das Remoções (Museum of the Evicted). It consists of seven installations built from materials left behind after the demolitions.

Each installation pays homage to a house or building that was demolished, as well as the struggle faced by the residents of the community.

The plan is for the museum to stay open through to the end of the games.

Meanwhile, the slogan “Nem todos tem um preço” (Not everyone has a price) remains visible on some of the free-standing walls of demolished buildings.


The other day, in a conversation with a friend (who happens to be an avid reader of this blog), I was asked why I don’t write more about events in Brazil, especially the most recent coup. I explained that, while I have been following events there pretty closely, I simply didn’t have the time to do what I considered the appropriate amount of research to offer an analysis that offered something different from what I’ve been reading.

I did, however, suggest to them that, given the class nature of the coup, the first thing the new government would do would be to set about undoing the legacy of the Workers Party.

Well, as Jonathan Watts reports, that’s exactly what’s happening:

It is just a week since Michel Temer became interim president of Brazil, but his new centre-right administration already has begun scaling back many of the social policies put in place by Workers’ party governments over the previous 13 years.

Moves are under way to soften the definition of slavery, roll back the demarcation of indigenous land, trim housebuilding programs and sell off state assets in airports, utilities and the post office. Newly appointed ministers also are talking of cutting healthcare spending and reducing the cost of the bolsa familia poverty relief system. Four thousand government jobs have been cut. The culture ministry has been subsumed into education.

For the interim government and its supporters, these austerity measures represent sound fiscal management as they attempt to rein in the government’s budget deficit and restore market confidence in Brazil, which has seen its sovereign debt rating downgraded to junk status over the past year.

For critics, however, they represent a shift toward a neoliberal economic policy by the old elite that ousted elected president Dilma Rousseff, who is suspended pending her impeachment trial in the senate.

That, in the end, is what the coup was about: not eliminating corruption (which is how it’s been covered here in the United States) but changing the class content of the policies of the Brazilian government.

Fig 48

Donald Trump is right—and his critics are wrong. (I’ll bet you never thought you’d read that on this blog.)

This one actually comes from a reader (ht: db) who wanted to know what I thought of the recent article by Ellen Brown on the debate concerning Trump’s “reckless” proposal to “print the money.”

First, though, a couple of key corrections: First, modern money takes the form of both bank deposits and currency (bills and coins).* Second, while sovereign governments (like the United States) can create money, they don’t print it (at least most of it). Instead, they create it electronically by purchasing financial assets or lending money to financial institutions (as with the various rounds of so-called quantitative easing, which increased the Fed’s holdings of mortgage-backed securities and other forms of bank debt and were purchased by new money that simply appeared on the banks’ computers).

Aside from that, Trump is right (as Brown explains), both historically and theoretically.**

The United States has long created money—to finance war, to purchase private and public debt, and so on—stretching back to Abraham Lincoln’s $450-million greenback program on up to the total of $4.2 trillion across three rounds of quantitative easing. In every case, it was money created by the government from nothing.

And, theoretically, that’s exactly how government money creation works. The only real distinction that needs to be made is between using the newly created money to purchase private debt and thus to create bank reserves (as was the case with quantitative easing) and using it to directly finance government deficits or to pay off government debt (otherwise known as monetizing the debt). The latter usually falls under the rubric of “helicopter money,” a term coined by Milton Friedman in his now-famous paper “The Optimum Quantity of Money”(pdf):

Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.

The effects are, of course, different in those two different uses of government-created money but the basic idea—that a sovereign government can create money for many different purposes—remains the same. It’s simply not controversial—or at least it shouldn’t be.

The only real issues from the government creation of money are (1) timing and (2) who benefits. Obviously, creating more money under conditions at or close to full employment has implications that are very different from a situation characterized by less than full employment (as has been the case for the past eight years). If resources are not being fully utilized, more money (helicopter or otherwise) does not lead to hyper-inflation. So, the critics who claim that, under current conditions (with millions of people who are unemployed or underemployed), creating more money is inflationary are simply wrong.

As for who benefits, that’s the real controversy—and the issue that is rarely discussed. Creating money to finance purchases of private debt from banks obviously improves bank balance sheets (and the incomes of their owners and the power wielded by the boards of directors) but it doesn’t necessarily stimulate economic growth (if banks are unwilling to lend, because for them it’s not profitable), and it doesn’t help homeowners and others who are drowning in debt. In fact, one can argue, as former head of the Federal Reserve Bank of Minneapolis Narayana Kocherlakota recently did, that Federal Reserve’s policies after the Great Recession actually contributed to increasing wealth inequality in the United States.

That’s the real issue, as it is with all forms of government financing. Who benefits? Think about increasing taxes versus running deficits. Would wealthy individuals prefer to be taxed to finance government expenditures or, instead, do they want to be paid (via interest payments) for the privilege of lending money to the government? The answer is obvious.

Continually raising the specter of deficits and debt keeps the debate within their purview. Their real opposition to creating money is based on the fact that they’d have less control over the amount and kind of government expenditures that might be made. Things might get out of control—not the price level (that’s just a scare tactic, which too many people fall for), but the mass of ordinary people. They’re the ones who could demand and who would benefit from new schools and better-paid teachers, clean drinking water and more drug clinics, programs that offer jobs as well as assistance in forming worker-owned enterprises, and so much more through the expenditure of government-created money.

That, of course, is not what Trump (or, for that matter, Clinton) is proposing. But it’s the issue that really should be at the center of economic and political debate in the United States.


*When a bank makes a loan, a deposit is created in the borrower’s bank account. Thus, new money is created as a bookkeeping entry, with the loan representing an asset and the deposit a liability on the bank’s balance sheet. Thus, for example, the total amount of U.S. money (defined in terms of M1) at the end of April 2016 was $3,184.9 billion, the major components of which were currency ($1,365.9 billion) and bank demand deposits ($1,298.4 billion). Currency is an even smaller proportion of “near money” (defined as M2), which totaled $12,659.3 billion at the end of April.

**At least right now, unless and until Trump changes his mind and announces a very different approach.

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For more than a week, vast nocturnal protest gatherings that are rising in number—from parents with babies to students, workers, artists, and pensioners—have spread across France [ht: jf] in a citizen-led movement that has rattled the government.

Called Nuit debout, which loosely means “rise up at night”, the protest movement is increasingly being likened to the Occupy initiative that mobilised hundreds of thousands of people in 2011 or Spain’s Indignados.

Despite France’s long history of youth protest movements – from May 1968 to vast rallies against pension changes – Nuit debout, which has spread to cities such as Toulouse, Lyon and Nantes and even over the border to Brussels, is seen as a new phenomenon.

It began on 31 March with a night-time sit-in in Paris after the latest street demonstrations by students and unions critical of President François Hollande’s proposed changes to labour laws. But the movement and its radical nocturnal action had been dreamed up months earlier at a Paris meeting of leftwing activists. . .

The idea emerged among activists linked to a leftwing revue and the team behind the hit documentary film Merci Patron!, which depicts a couple taking on France’s richest man, billionaire Bernard Arnault. But the movement gained its own momentum – not just because of the labour protests or in solidarity with theFrench Goodyear tyre plant workers who kidnapped their bosses in 2014. It has expanded to address a host of different grievances, including the state of emergency and security crackdown in response to last year’s terrorist attacks.

It’s an old American saying, “If you steal a loaf of bread you’ll surely go to jail, but if you steal a railroad you’ll be made a senator.”

Or, as Melvin B. Tolson (Denzel Washington) puts it, “A hungry Negro steals a chicken, he goes to jail. A rich businessman steals bonds, he goes to Congress.”

Most recently, there’s Elizabeth Warren (pdf):

If justice means a prison sentence for a teenager who steals a car, but it means nothing more than a sideways glance at a CEO who quietly engineers the theft of billions of dollars, then the promise of equal justice under the law has turned into a lie.

Warren and her staff have issued the first in what they promise will be an annual series on enforcement. “Rigged Justice” highlights twenty criminal and civil cases in 2015 in which the federal government failed to require meaningful accountability from either large corporations or their executives involved in wrongdoing.

The purpose of this annual report is to highlight examples of the most egregious enforcement failures from the previous year. Sometimes these weak enforcement cases are the result of laws – such as OSHA, and the federal mine safety law – that give the agencies only limited authority and allow only limited punishment.

But in most instances, these cases are a result of failure by regulators to use the tools Congress has already provided to impose meaningful accountability on corporate offenders. Whether as a result of limited resources or a lack of political will, this limp approach to corporate enforcement, particularly in response to serious misconduct that cost Americans their jobs, their homes, or, in some cases, their lives, threatens the safety and security of every American.

As the examples in this report demonstrate, federal regulators regularly let big corporations and their highly paid executives off the hook when they break the law.