Today, "For Hillary Clinton, a Risk of Excess Caution in Economic Policy," Porter implores Hillary to go big in addressing the problems of today's economy, which he correctly identifies as the shrinking of the working class:
A big part of the problem is the erosion of America’s working class. It has been hollowed out as trade and technology have done away with most of the well-paid jobs once available to Americans without a college degree, tipping many of them into a service economy of low wages, uncertain hours and little job security.He likes Clinton's emphasis on rebuilding the nation's infrastructure, but he thinks her proposal to do so is too stingy:
For instance, she is proposing $275 billion in federal infrastructure investment over five years. That is less than 10 percent of what the American Society of Civil Engineers estimates will be needed.
Mrs. Clinton’s entire tax plan would raise only $1.1 trillion over the next decade, according to the Tax Policy Center, half a percentage point of the nation’s gross domestic product.Porter then goes on to list some helpful liberal ideas on how to create a more equitable economy:
What about dismissing the deficit scolds who shape the outdated Washington Beltway consensus and borrowing $1 trillion or so to sharply increase the spending on infrastructure, letting states and municipalities select the investments and manage the job?
How about taking advantage of the cheapest oil prices in a very long time to propose a carbon tax? Or how about imposing a progressive wealth tax to tap into the good fortune of 160,000 American families at the very tip of the wealth pyramid, who are on their way to pass $12 trillion to the next generation, much of it untaxed.
The money could be spent on high quality and universal early education, providing the next generation a better shot at a level playing field. It could be spent on training, to provide workers with needed skills, or job search services to help match workers and jobs. These strategies have been successfully employed by other advanced nations but remain a rarity in the United States.
Mrs. Clinton, of course, is not the only candidate indulging in nostalgia. Witness Donald Trump’s bombastic appeal to white working class men uncomfortable in an America where one must dial “1” for English.
Still, she has a rare opportunity. If she wins, she may well come into office with the political wind at her back: a Senate returned to Democratic control and a divided Republican Party with only a tenuous hold on the House. [Some robust magical thinking here.]
Americans have just lived through perhaps the most progressive presidency [!] since the 1960s. President Obama raised tax rates on the rich and expanded health insurance for millions of Americans. Facing stubborn resistance in Congress, he leaned on his executive powers to improve working conditions.
Yet the nation’s enormous inequities just got bigger. The income of the richest 1 percent grew 27 percent from 2009 to 2014. The average gain for everybody else barely exceeded 4 percent. A future projected along these lines does not look promising.
Bernie Sanders talks about a revolution. Mrs. Clinton might want to try to deliver one.Most liberals (they don't call themselves liberals anymore; if pushed, they call themselves progressives) are where Porter is at. They realize the economic paradigm is malfunctioning for the vast majority of people, but they are still attached to the delusion that the political system can address and solve the problem. It can't.
The idea that Clinton is going to have long coattails in November and sweep the GOP from control of the Senate, or even substantially reduce the Republican majority in the House, is fanciful. No fix is in store. And what will be interesting is the level of allegiance Hillary will enjoy from liberals who remained loyal to Obama even after it became apparent post-2012 election that he was not "the one we were waiting for." I suspect liberal loyalty will be at a minimum.
At least liberals like Porter are able to frame the question, as he did in last week's column on technology-induced unemployment, "Jobs Threatened by Machines: A Once ‘Stupid’ Concern Gains Respect":
Jeffrey D. Sachs of Columbia University has been working with a series of colleagues on an economic model of a world in which robotization both raises economic output and immiserates workers, pushing them out of their jobs. It is not a theoretical impossibility.
“The point for me is that these two scenarios — robots lead to nirvana and hell — can happen side by side,” Professor Sachs told me. “Generally capital wins and all labor can lose. It shows up as a fall in the labor share of national income.”
In that event, preventing a dynastic society of relentlessly growing inequality would require large-scale redistribution. It could even take the form of a universal income paid for with a hefty estate tax — using some of the vast profits accruing to the owners of robots to finance a living for everybody else.
Since most paid human labor would be pointless, the disincentive to work produced by a monthly check would be unimportant. People could devote themselves to unpaid creative affairs.
“Don’t destroy the robots,” Professor Sachs said. But recognize that “not everybody would be better off as a result of market forces. With redistribution everybody could be made better off.”
Many experts are not convinced. For every analysis like this one — forecasting that half of all jobs in the United States will be replaced by new technology — others point out that there is no evidence of humanity’s impending redundancy.
A research paper published last month by the Organization for Economic Cooperation and Development argued that even the occupations most at risk of being replaced by machines contained lots of tasks that were hard to automate, like face-to-face interaction with customers.My sense is that given a choice between interacting with another human or a computerized machine, consumers will overwhelming opt for the machine. Look at the fate of the corner video store. Streaming home video had a lot to do with the demise of the mom-&-pop neighborhood video rental store, but not so much as the appearance of the Redbox movie kiosks in grocery stores and in front of 7/11s.
We have to give more weight to predictions of 50% job loss due to automation than a pie-in-the-sky-by-and-by faith that robotic efficiencies in the job market will trickle down and create other types of employment.
To this end, Porter concluded his column last week with a Larry Summers anecdote. And who doesn't love a story about the pompous economics guru ex-Harvard president?
Last November, Lawrence H. Summers — a former Treasury secretary under President Bill Clinton, a top economic adviser in President Obama’s first term and one of the youngest people to earn tenure on the Harvard faculty — strode up to the podium at the Peterson Institute for International Economics in Washington and made an unlikely admission: Perhaps economists were not always the smartest people in the room.
He reminisced about his undergraduate days at M.I.T. in the 1970s, when the debate over the idea of technological unemployment pitted “smart people,” exemplified by the great economist Robert Solow, and “stupid people,” “exemplified by a bunch of sociologists.”
It was stupid to think technological progress would reduce employment. If technology increased productivity — allowing companies and their workers to make more stuff in less time — people would have more money to spend on more things that would have to be made, creating jobs for other people.
But at some point Mr. Summers experienced an epiphany. “It sort of occurred to me,” he said. “Suppose the stupid people were right. What would it look like?” And what it looked like fits pretty well with what the world looks like today.
For large categories of workers, wages are inadequate. Many are withdrawing from the labor force altogether. In the 1960s, one in 20 men between 25 and 54 were not working. Today it’s three in 20. The population is generally healthier than it was in the 1960s; work is almost uniformly less demanding. Still, more workers are on disability.
“Maybe the stupid people weren’t quite as stupid as I thought they were,” Mr. Summers conceded. “This was at least a serious concern that had to be thought about.”
In a world in which many Americans do not work during large chunks of their lives, we might have to conceive of Social Security and disability much more broadly than we do today.
That, Mr. Summers said, “could start to look like a universal income.”So this is where smart-set type liberals are now. They are the on the precipice. The economic system is clearly not working for the masses, and it promises to only get worse. Talk about solutions is headed in the right direction, but there is very little acknowledgement that the political system will address the problem in any significant way.
A political revolution is called for, but in the United States a political revolution is not on the horizon. So things are going to continue to get worse.
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