Posts Tagged ‘left-wing’

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René Magritte, “The Infinite Recognition” (1963)

Dan Rodrick, like most mainstream economists, wouldn’t know left-wing economics if it bit him on the proverbial nose (as I explained in early 2015). What he’s really referring to—in his essay, “The Abdication of the Left”—is liberal economics, the left-of-center wing of mainstream economics.

But, if you replace all his references to “the Left” with “liberalism,” you can read Rodrick’s latest column as a forceful indictment of left-of-center mainstream economics over the course of the past few decades.

As an emerging new establishment consensus grudgingly concedes, globalization accentuates class divisions between those who have the skills and resources to take advantage of global markets and those who don’t. Income and class cleavages, in contrast to identity cleavages based on race, ethnicity, or religion, have traditionally strengthened the political left. So why has the left been unable to mount a significant political challenge to globalization?. . .

Economists and technocrats on the left bear a large part of the blame. Instead of contributing to such a program, they abdicated too easily to market fundamentalism and bought in to its central tenets. Worse still, they led the hyper-globalization movement at crucial junctures.

Rodrick is correct. The liberal wing of mainstream economics (in the academy, as advisers to liberal political parties, and in multinational financial and development agencies) did, in fact, embrace market fundamentalism—from domestic financial markets to international trade and capital flows—and the policies they promoted did serve to accentuate existing income and class cleavages. And then, after creating the conditions (in the form of growing inequality and financial fragility) for the crash of 2007-08, they proceeded to manage the imposition of austerity policies, both within and across countries.

So, indeed, liberals are in large part responsible for the resurgence of the Right, in the form of anti-immigrant protests and nativist populism. Those movements, which have been moving from the fringe to center stage in the United States and Europe, are the more-or-less inevitable backlash against free-market fundamentalism and economic austerity.*

That’s not to say those on the Left—the real Left, not Rodrick’s liberal mainstream economists—do not share some of the blame. Their own weak opposition to market fundamentalism and economic austerity, which often meant little more than a return to Keynesian macroeconomics and the defense of existing welfare-state programs, created a vacuum for other policies and strategies. What was needed (both where the Left was in power, from Greece’s Syriza to Brazil’s Workers’ Party, to where it was not, including the United States and the rest of Europe) was an approach that, at one and the same time, highlighted the structural causes of growing income and class cleavages and proposed alternative economic and social institutions.

If, as Rodrick explains, “the right thrives on deepening divisions in society – ‘us’ versus ‘them’.” and liberalism looks to enact “reforms that bridge” those cleavages, the Left aims to overcome those cleavages by creating new, noncapitalist ways of organizing economic and social life. Not just managing the cleavages but actually eliminating them.

That, as I see it, is the challenge for the Left moving forward.

 

*As Brad DeLong admits, the liberal fantasy of free markets and globalization—his own view of the world—”did go horribly wrong”:

Financial globalization was intended to take down barriers to capital inflows erected by rent-seekers in developing countries, and so speed growth in economies that had been starved of capital while also equalizing incomes. Financial deregulation was supposed to break up the cozy investment banking and other oligarchies of Wall Street and diminish their private-sector tax on the American economy. Financial deregulation was supposed to provide the poorer half of America with the access to fairly priced credit that it lacked and with the opportunity to invest in assets that would yield equity-class returns, which it also lacked. And, in a world in which central banks had the powers and the will to successfully stabilize aggregate demand, there seemed little downside to letting people who could not put together a 20% down payment buy a house, to forcing Morgan Stanley and Goldman Sachs to deal with competition from Citigroup and Bank of America, and to allow entrepreneurs in Mexico to raise funds not just from a cozy oligarchy of Mexico City banks but on the global capital market.

And France’s socialist technocrats were right: in highly-open economies the task of managing aggregate demand has to be a global, or at least a North Atlantic-wide, or at least a continent-wide exercise. In a good world, large exchange rate changes should only take place in response to persistent fundamental disequilibria rather than being used as first-line tools for demand management.

It all did go horribly wrong.

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The clear reemergence of and spreading interest in anti-establishment politics in the United States (together with the electoral success of left-wing and right-wing parties in a growing number of European nations) can be blamed squarely on capitalism.

As I see it, it’s the combination of the failures of capitalism and the unwillingness of the existing economic and political elites to effectively deal with those failures that explains the rejection of mainstream (center-right and center-left) candidates and policies and the turn to alternatives. The failures of capitalism go back some four decades—including stagnant wages, rising indebtedness, and growing inequality—and culminated in the crash of 2007-08—after which wages remained stagnant, people were not able to rid themselves of debt, and inequality continued to grow. What recovery there has been in recent years has mostly been captured by large corporations and wealthy individuals, while economic growth has remained slow. Meanwhile, economic elites have continued business as usual (moving production and jobs at will around the world, more interested in lowering costs, avoiding taxes, and inventing new labor-saving technologies than anything else) and political elites do everything they can to save large financial institutions and a business-friendly environment and imposing the costs—of the bailouts, the continued opening and expansion of markets, the refugees from war-torn zones, and much else—on the working and unemployed populations of their nations.

From this perspective, it’s no surprise that, in the United States, both Donald Trump and Bernie Sanders have attracted so much support—or, that, in Europe, both the Left (e.g., in Greece and Spain) and the Right (e.g., in Poland and Austria) are increasingly able to challenge mainstream parties.

To be clear, this is not to say that politics—political parties and movements, voter attitudes and behaviors, candidates and coalitions—are solely determined by the economy (or some subset of the economy, like class interests). There’s a great deal more that affects the rise and fall of political ideas and campaigns—from political practices and institutions through discourses and identities to media and communication technologies. Still, the failures of capitalism and the unwillingness of economic and political elites to solve or mitigate the effects of those failures to the benefit of the majority of the population have played a significant role in the current disenchantment with mainstream parties and the success of left-wing and right-wing alternatives in the United States and Europe.

But it is interesting that there appears to be a determined effort to absolve capitalism of any responsibility for these new political events. Both Greg Ip (writing for the Wall Street Journal) and Peter Eavis (for the New York Times) have attempted to argue that “it’s not the economy” that explains politics, but something else. And, if it’s something else, it can’t be the failures of capitalism that are to blame.

For both writers, “the economy” is economic growth, specifically growth in GDP. In Ip’s case, the difference between the 1960s (when social disarray and political dissension were accompanied by solid growth and “shared prosperity”) and now (when similar levels of voter discontent are occurring with slow growth and high levels of inequality) means we can’t make sense of electoral grievances in terms of economic discontent. For Eavis, most voters are currently “doing sort of O.K.” (with thousands of new jobs and a low unemployment rate). Therefore, he argues, this election can’t really be about the economy.

Desperate as they are to make such an argument, both Ip and Eavis miss two key issues. First, the economy is not just GDP growth. It’s also, at least for the majority of the population, about a great deal more: the tradeoff between wages and profits and the level of inequality, the ability of the government to capture portions of the surplus and to use it for social programs, the degree of security concerning jobs and the quality of the communities in which people live and work, and a great deal more. And second, capitalism doesn’t always exert its effects in the same way: in the 1960s, when both wages and profits were rising and the possibility of using part of the surplus to improve society (both for those who had prospered and those who had been excluded from that first. “Golden Age” decade of postwar growth), capitalist success created rising expectations (including the rethinking of aspects of capitalism that had previously been deemed successes); while now, in the midst of capitalism’s multiple, spectacular failures, the opposite is true (as people demand redress for their low-paying jobs, crumbling infrastructure, obscene levels of inequality, and the corruption of democratic politics by large corporations and wealthy individuals).

So, no, capitalism can’t be let off the hook. It creates and perpetuates the problems it claims to address. And even though economic and political elites want to believe otherwise, holding firm to the notion that people should be satisfied with current economic arrangements, recent developments in the United States and Europe suggest they’re not.

Not by a long shot.

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You’re not going to read or hear anything positive about the Bernie Sanders campaign from the usual liberal commentators and pundits. So, it falls to an unlikely source, conservative columnist Ross Douthat:

on his way to winning more caucuses and primaries than Dean or Bradley, Sanders has proved two important points about his party’s voters. First, they are quite ambitious. Many of them see the liberal policy victories of the Obama years (the health care law, Dodd-Frank, Lily Ledbetter Fair Pay Act) as first steps rather than capstones to the liberal project. Many of them regard Hillary Clinton’s leftward progress on issues like immigration and criminal-justice reform as admirable but wildly insufficient. And they’re eager for ideas — single payer! free college! a $15 minimum wage! — that would stamp their party as thoroughly rather than just partially left wing.

Second, their ambitions have demographic momentum on their side. The leftward, ever leftward impulse is concentrated among the party’s younger constituents, with whom Sanders has rolled up ridiculous margins. So there’s every reason to expect that a future left-wing insurgency could surpass his success even as he surpassed [Bill] Bradley’s and [Howard] Dean’s.

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According to the American Enterprise Institute (as conservative as they come), prior to New York,

Among the 20 states that have held their Democratic primaries and caucuses thus far and for which exit poll data are available, Bernie Sanders has won the youngest cohort (generally speaking, 18- to 29-year-olds) in every state except two—Alabama and Mississippi. In these two states, his support among younger voters was still stronger than among any other age group. Other than in his home state of Vermont where he won 17- to 29-year-olds with 95 percent of their vote, Sanders carried the most young voters in Illinois with 86 percent. The least amount of support he received from this age group while still carrying it was 54 percent in Georgia and South Carolina. In each of these 20 contests, the youngest age group made up no more than 20 percent of voters.

In New York, Sanders trounced Clinton among young voters, winning roughly 3 out of 4 voters younger than 29.

Clearly, young people represent a hope we can believe in.

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They’re often referred to in the major media, like the New York Times, as “left-leaning economists.” Although, as Doug Henwood observes, “So slight is their leftward lean that it would require very sensitive equipment to measure.”

So, I’ll just refer to them as liberal mainstream economists, who with colorful language and little in the way of an alternative analysis, have taken to attacking Bernie Sanders and one of his economic advisers, Gerald Friedman.

The language is over the top: Sanders’s proposals are various referred to as “puppies and rainbows” (ramped up to “magic flying puppies with winning Lotto tickets tied to their collars”) and “unicorns.”

And, aside from one careful, critical study of Sanders’s healthcare plan (by Kenneth Thorpe), there’s nothing in the way of an alternative analysis.

All liberal mainstream economists (like Alan Krueger, Austan Goolsbee, Christina Romer, and Laura D’Andrea Tysonthink they have to do is put their signatures to “An Open Letter from Past CEA Chairs to Senator Sanders and Professor Gerald Friedman” and assert, in the name of “responsible arithmetic,” that the Sanders campaign is citing “extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan.”

What we’re witnessing is an extraordinary spectacle of all the elements of “liberal ideology“—including, when all else fails, the ultimate threat: a campaign that dare steps outside the liberal mainstream and, thus, “is well on its way to making Donald Trump president.”

It’s as if Sanders has had the temerity of not consulting the liberal establishment in formulating his plans and that Friedman, who has been called out by name, has had the audacity of making headlines without the credential of belonging to the liberal establishment.

The liberal mainstream economists who are now attacking Sanders and Friedman seem to be taking it personally, as if their monopoly on analysis and policy has been challenged.

I guess it has.

So, how should we read Sanders’s plans and Friedman’s analysis of its costs and consequences? My view, for what it’s worth, is that Sanders and Friedman are not presenting a “realistic” proposal that follows the dictates of liberal policies and forecasts. What they’re doing is something bolder: they’re imagining a world in which a wide variety of fundamental changes have been made—a minimum wage of $15 an hour, universal health coverage, free public higher education, massive infrastructure spending, and so on. In such a world, their analysis suggests, there would be much lower unemployment, faster economic growth, and much less inequality than prevail under existing conditions.

It’s as if they’re holding up a mirror to what is being touted by liberal mainstream economists, which shows both that “realistic” policies and forecasts promise more of the same—excessive unemployment, slow growth, and grotesques levels of inequality—and that, as a country, we have the wherewithal to do much better.

Much better than we’re doing right now. And much better than the “liberal fantasy” suggests we can do.

Since liberal mainstream economists are being left behind, all they can do is resort to a language of rainbows, unicorns, and puppies.

 

Note: Rainbows, Unicorns, Puppies—”a true multiband distortion, with 3 variable signal paths – each with adjustable gain, comp, and level controls – plus clean blend, FX loops, mid boost and master 3-band EQ”—does, in fact, exist.

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Special mention

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Friends continue to remind me that, back in the day, when Obama first announced his plans to run for the presidency, I explained to them that, based on watching him in Illinois, he was one of the smartest and at the same time most moderate, middle-of-the-road Democrats around. He was not then, nor would he ever become, a “progressive.” Instead, he (along with much of the Democratic Party) was firmly in the middle of the mainstream consensus that austerity was inevitable. The only question was, how much?

Tim Duy, after witnessing Obama in the most recent negotiations over the fiscal cliff, comes to much the same conclusion.

From day one this has been a debate about the extent of the austerity, not a debate about austerity itself.  Does anyone have the sense that President Obama does not fundamentally believe in the pursuit of deficit reduction sooner than later?  I keep coming back to this observation from Bruce Bartlett:

In a little-noticed comment on Spanish-language television on December 14, Obama himself confirmed this typology of today’s political spectrum. Said Obama, “The truth of the matter is that my policies are so mainstream that if I had set the same policies that I had back in the 1980s, I would be considered a moderate Republican.”

I think this is correct and explains a great deal about why Obama refuses to use his leverage to pursue liberal policies and keeps inviting Republicans back to the negotiating table again and again on the budget. He wants a deal, he wants to cut spending and balance the budget if possible. This may or may not be a wise course for a Democratic president to follow, but that is who Obama is.

I frequently see commentators saying that Obama is terrible at the bargaining table, but I can’t help thinking that he is getting pretty much what he wanted.  Despite all the hate heaped upon him by the right, Obama just isn’t a progressive, and we shouldn’t expect him to seek a deal as if he was one.  After all, what progressive ensures a tax hike on the lower and middle classes (the expiration of the payroll tax cut with no offsetting cut elsewhere)?  Obama seems to believe the best deal is the one no one likes. . .

My guess is that Obama already knows that the outcome of that debate will be one in which he looks like he retreated over time.  But I also believe that the place he retreats to will be where he wanted to go in the first place; indeed, I suspect he never believed he would get 100% of the Bush tax cuts reversed in the fiscal cliff negotiations.  Note too that, to DeLong’s complaint, the next debate will again be an issue of how much austerity.  And expect that Obama will allow the negotiations to drag out to the eleventh hour, thereby forcing both Republicans and Democrats to choke down a meal – some combination of tax hikes and entitlement cuts – they both find distasteful.

But, we should remember, Franklin Delano Roosevelt wasn’t a progressive either. He and his administration moved in a more progressive direction, with the New Deal, because of sustained criticism from progressive economists, pressure from the left-wing of the Democratic Party, and, of course, organizing on the part of the Left and the threat of mass rebellion in the streets of America.

Their absence today makes the choice between two different paths to austerity the only game in town.

Does it make sense to vote?

In recent days, I have been engaged in two quite different sets of discussions about voting.

One discussion  has involved students. The argument I make to them is that, on the basis of neoclassical economic theory, voting is not rational. The argument is quite simple: since the probability that any voter will cast the “decisive vote” is negligible, effectively zero, it is not rational to go to the polls (or, alternatively, send in an absentee ballot) in any given election. I make that argument to demonstrate to them that not every activity can be reduced to or explained in terms of individual  rationality. Something else—like the practice of democracy or respectability in the eyes of others, doing what everyone else is doing, or something else beyond individual utility-maximization—must be involved in making sense of why people vote.

The other discussion is with lefty types, some of whom make the Tweedledum and Tweedledee argument—that is, the two presidential candidates or the two major political parties are effectively the same, and voting for the seemingly more progressive or less objectionable of the two is to avoid confronting both parties’ resistance to fundamental change. Sohail Daulatzai [ht: ke] has presented one version of that argument:

While there are those who claim that voting for Obama is the practical thing to do and that to either vote for a third party or to not vote at all is “impractical” and “misguided”, Malcolm might turn the tables and ask how “practical” is it to vote for either major party when the violent forces that define them are so intractable and resistant to change, let alone transformation?

And when confronting such forces, and recognising the others in the past who have tried so valiantly, how practical is it to continue to invest and commit to this process and expect something different? Isn’t that “impractical” and the path to irrelevance?

The problem with Daulatzai’s argument is that he makes it out to be a stark either/or situation: vote for Obama or engage in fundamental political change. What he doesn’t allow for is to vote for Obama (because, on a larger or smaller set of issues, conditions of life will be better than under a Romney presidency) and to engage in political activity, inside and outside the electoral process, to criticize the narrow options being presented and to create new possibilities.

My answer, therefore, is it does make sense to vote—and to do much more than simply cast one’s vote in this year’s election.*

 

*And there’s one final argument in favor of voting for Obama: to reject Romney’s “contempt for the electorate,” as explained by Greg Sargent:

The important thing to remember here is that the GOP argument for a Romney victory rests explicitly on the hope that those who turned out to vote for Obama last time won’t be quite as engaged this time around. Republicans are hoping the electorate is not as diverse as it was in 2008, and they are arguing that the GOP base’s enthusiasm is much higher than that of core Dem constituencies. The Romney camp seems to think it will help whip GOP base voters into a frenzy — and perhaps boost turnout — if Romney casts the way Obama is urging Democratic base voters to get more involved in the process as something sininster and threatening. This is beyond idiotic; it is insulting to people’s intelligence.

The Post editorial board, in a widely cited piece, has claimed that the one constant about the Romney campaign has been that it is driven by “contempt for the electorate.” To make this case, the editorial cites Romney’s nonstop flip flops, his evasions about his own proposals, his refusal to share basic information about his finances and bundlers, and his monumental Jeep falsehood and all his other big lies. It’s fitting that Romney’s closing argument rests heavily on one last sustained expression of that contempt for the electorate — one focused squarely on a call for more engagement in the political process, i.e., on something that is fundamental to democracy itself.