Thursday, October 25, 2012

The Republican Imperium

Steven Johnston
Neal A. Maxwell Chair in Political Theory, Public Policy, and Public Service, University of Utah

Mitt Romney, Paul Ryan, and the Republican Party represent not just a disturbing, destructive social and political movement; they also pose a threat to the very ideas of democracy and democratic government. This can be seen (it’s not as if they work hard or consistently to hide it) in two distinct, if also ultimately related ways. 

First, Republicans have been orchestrating a nationwide campaign to suppress voter turnout. Invoking the possibility of voter fraud, their own fabrication masquerading as a cause, the GOP has managed to pass numerous voter identification laws, especially in battleground states, to disenfranchise American citizens. The identification requirement, supposedly neutral, discriminates against the poor, elderly, young, and minorities, all of whom tend to vote Democratic. Republicans have also been purging election rosters of eligible voters (claiming citizens to be noncitizens), curtailing early voting periods, sanctioning voter registration campaigns with criminal penalties for the smallest of clerical errors, and whatever else they can think of to depress Democratic turnout. In moments of candor, they publicly admit these electoral measures are designed to produce one result: the election of Mitt Romney. Furious at the presidential election result four years ago, the GOP targeted for suppression groups critical to Obama’s victory. The GOP also has at its disposal electoral vigilantes (True the Vote) who plan to harass and intimidate voters at the polls, effectively forcing or keeping them at home. The 2012 election could well produce an illegitimate president, a Republican who holds office by virtue of crimes against democracy. The GOP is utterly indifferent to such a possible outcome, believing that it and only it has a right to rule in the United States. This conviction, rooted in a sense of superiority, patriotism, and truth, informs another feature of Republican conduct dominant these last four years: a “politics” of total obstruction, even destruction, no matter the social or economic cost, of an African-American president they loathe. A minority party, the GOP acts as if it has a mandate to rule. Remarkably, Republicans believed from the start that there would be no political cost to their sabotage insofar as they also believed the American voter would ultimately hold Obama responsible for the wreckage they produced. Republicans, in short, indulge an ugly form of political entitlement, namely, that they can commandeer a system to produce their desired outcomes, which, by definition, are the right outcomes. The presumption of political entitlement matches their sense of social and economic entitlement, deploying the vast resources of the state (subsidies, tax breaks, etc.) to enrich themselves—again, no matter the cost to others.

This brings me to the second source of the threat the GOP poses to the very idea of democracy. To many observers of American politics, Republican machinations may seem excessive but nothing more. Yet the GOP conducts itself domestically much like European imperialism conducted itself in the heyday of Western colonization in Africa and the Middle East. The latter ignored the natives of the lands it conquered, unwilling and unable to see them or the ways of life they had cultivate for generations. Europeans would treat natives as effectively invisible and proceed to remake (read: steal, exploit) the country in their own grand image. The dominant motif of the Romney-Ryan campaign, similarly, is, “We can rebuild it.” This claim presumes and professes a sense of overwhelming power, a power capable of removing any obstacles in its path. The power is so fantastic that Romney believes his mere election will result in economic revival. He doesn’t actually have to do anything to spur renewal. His mere status as President suffices. The claim also suggests that nothing meaningful or valuable (no institution, organization, party, program, or policy) stands in the way of rebuilding, certainly nothing Republicans can see. They are thus free to dismantle the social safety system and network of public institutions that tens of millions of hard-working citizens built across generations and earned, through blood, sweat, and tears, the right to enjoy. It would afford a modicum of protection against the regular, predictable ravages of an economic system the GOP would like to unleash on them. Accordingly, when Romney talks about “getting government out of the way,” this does not mean freeing economic actors to create jobs; they can do that already. It means leaving tens of millions of people exposed and vulnerable to the inevitable depredations of an economic and political system designed to concentrate wealth and power in fewer and fewer hands—hence the pathological hatred of unions, whether public or private, and the drive to eradicate them from American life. Opposition, let alone resistance, cannot be tolerated.

It’s no coincidence that Romney and Ryan champion more of the same policies and programs that led to the greatest economic crisis and social destruction since the Depression. The superrich thrive in these circumstances. The country may suffer, but they continue to prosper—and further separate themselves from the rest. The GOP relishes the brutality of a class warfare in which it enjoys a virtual monopoly of the social, political, and economic weapons needed to wage it. The GOP disdains the so-called 47% (the real figure is actually much higher) which would be left to fend for itself in a world where it has been effectively disempowered, stripped of its prior social democratic accomplishments and protections in the name of free market utopianism. After all, the 47% are parasites: they produce nothing; they create nothing of value themselves; they only take from the government, which means they take that to which they have no real right. They can thus be ignored, despite their real presence throughout the country. Worse, they can be acted upon, which is what the GOP plans to do as Republicans rebuild a country in no need of their imprint.

The GOP dreams of a world in which the very rich arrogate to themselves the vast wealth a capitalist economy produces, an outcome made possible by rules, regulations, and practices they devise; given the force of law thanks to “representatives” they usher into office courtesy of a political system they have bought; and sanctified by an activist Supreme Court they have installed. It’s a vicious economic-political noose that threatens to tighten the grip on democracy and make it yield to the slightest pressure from its masters. Republicans must rule the country they profit from, even pillage, while the rest are to be marginalized and dismissed, essentially foreigners in their own land. Those who think Romney and the GOP live in the 1950s may need to reset their calendars. They’re not nearly so modern.

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Monday, October 22, 2012

“Women are not an interest group”: The Issue of Women’s Issues in the 2012 Presidential Campaign

Michaele Ferguson
University of Colorado

Mitt Romney’s infelicitous phrase “binders full of women” has dominated coverage of the second Presidential Debate over the past few days at the cost of a deeper exploration of how both he and Barack Obama are framing so-called “women’s issues” to appeal to female voters. Romney and Obama use feminist rhetoric to appeal to women while also occluding the possibility of a more radical analysis of the issues they claim are important.

The way that Romney appeals to women voters is by arguing that the true women’s issues in the current election are economic issues. In the debate, he recited statistics that the “Women for Mitt” segment of his campaign has been pushing for months now: that more women have lost their jobs than men since Obama assumed the presidency, and that 3.5 million more women are living in poverty now than in 2008. His supporters argue that it is Obama, not Republicans, who is truly waging a war on women by not having turned around the economy fast enough.

This technique – expressing support for women’s issues by arguing that some other issue is the real women’s issue – has been a favorite among Republicans at least back to the “W is for Women” Bush/Cheney campaign of 2000. The logic of this rhetorical technique is to claim that if women care about an issue, it is by definition a women’s issue. Obama borrowed this approach in 2008, claiming on his campaign website that everything from national security to education to Medicare to the economy was a women’s issue.

Interestingly, on Tuesday night Obama flipped the logic of this rhetorical technique on its head. In response to a question about gender pay equity, he said, “This is not just a women’s issue, this is a family issue, this is a middle-class issue, and that’s why we’ve got to fight for it.” He repeated this rhetoric when speaking of contraception: “These are not just women’s issues.  These are family issues.  These are economic issues.” Women’s issues matter not only because they impact women, but because they impact the entire society.

Back in the spring, Obama gave us a preview of this rhetorical shift in his recorded message to supporters of Planned Parenthood.  In that speech, he argued that “women are not an interest group.”  Supporting women’s access to affordable health care and contraception is not about serving a special interest, it is about supporting our families and our community as a whole. Women, he explains, are “mothers and daughters and sisters and wives. They’re half of this country.” We should support Planned Parenthood because it benefits all of us, not just women.

Romney and Obama are both walking a very fine line in their appeals to women voters in this campaign: they want to address women specifically (or at least those demographics of women that are likely to support their campaigns), yet they cannot alienate male voters. As a consequence of this balancing act both candidates obscure the structures that cause the gender inequities they say they want to redress.

Romney and his supporters frequently mention that women have been disproportionately affected by the economic downturn since Obama took office, and yet they never talk about why this is so. More women than men have been laid off since the start of 2009, yet this is because job losses over the past four years have been primarily in the public sector, where women are more likely to have been employed. Romney cannot explain why women have lost more jobs under Obama, because that would require recognizing that the cuts in local and state government that his Republican base champions have been primarily to blame. Similarly, he cannot talk about why women are more likely to be in poverty because that would require examining the gendered division of labor, the causes of the gendered wage gap, and the lack of quality, affordable child care – let alone contraceptive care. Romney’s support for economic issues as a women’s issue, therefore, is only ever expressed in general terms.

This strategy, moreover, gives him a way to address women without alienating the white men he needs to win the election:  if women’s issues can be reduced to economic issues, then he helps women by fixing the economy – which is also how he proposes to help men. As he said at the debate, ”I’m going to help women in America get good work by getting a stronger economy and by supporting women in the workforce.” He doesn’t specify what he would do to support women in the workforce as President (although he suggests it might have to do with those binders), and so he appeals to women without promising them any special treatment that might alienate his white male base.

Obama, by contrast, noted that women in the workforce face discrimination, but it is a peculiar kind of discrimination: it oppresses women, but does not create any corresponding male privilege. He said, “One of the things that makes us grow as an economy is when everybody participates and women are getting the same fair deal as men are.” Men are getting a fair deal in the workplace. The men who surpassed the glass ceiling that kept his grandmother limited to the vice-presidency of a local bank deserved the promotions they were given. It is just that she did not deserve to be held back. Here, we can see Obama making his own version of the tradeoff that Romney has to make: he wants to appeal to women by talking about issues he thinks they care about, and yet he does not want men to think he is blaming them for discriminating against women, or claiming that they do not deserve their higher positions and higher wages.

Both candidates get caught in an odd dance between appealing to women while trying not to alienate men because they treat “women’s issues” as important primarily as a way to get women’s votes. It is no wonder that Obama had no evidence to demonstrate how he has opposed gendered discrimination since he signed the Lilly Ledbetter Act when he first took office. For all his talk, his actions suggest that women’s issues matter only when women’s votes are on the line.
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Wednesday, October 10, 2012

Hydrofracking and Home Rule

Jake Greear
Johns Hopkins University

With world leaders failing to make headway toward curbing carbon emissions at the 2009 Copenhagen Conference, and quietly throwing up their hands at this summer’s Rio +20 Summit, it may be time for environmentalists to focus energies on the dispersed global sites of fossil fuel extraction.  To that extent, the political battles now playing out in the Northeastern U.S. over the natural gas extraction process called hydraulic fracturing, a.k.a. “fracking,” merit attention. 
As energy companies run up against the political and natural limits of petroleum and coal exploitation they are turning to increasingly outlandish means to tap alternative fossil fuel deposits like tar-sands--where extraction means scraping the living surface off vast swaths of Canada--and the natural gas held in the Marcellus Shale under the northern Appalachian Mountains--where extraction means shattering billion-year-old rock formations that undergird the North American continent.  

Paul Thomas Anderson’s film There Will be Blood poignantly dramatized the violence inherent in fossil fuel extraction.  However, the sites of large scale hydrocarbon extraction are often either sparsely populated or inhabited by communities with few means of resisting the insults and injuries that are the usual local byproducts of extractive industries.  Most consumers of fossil fuels live a world away from their strip mines and oil fields.  
The Alberta tar sands are an example.  The construction of pipelines needed to carry tar sands oil to markets has been stalled for now, but the oil companies are not really worried.  They will get the oil out one way or the other.  The fortunate thing, from the industry’s perspective, is that not many people live in northern Alberta, so there is relatively little opposition in defense of the forests and rivers that are being destroyed there.  
The Marcellus Shale formation, by contrast, runs under densely populated parts of West Virginia, Pennsylvania, and New York.  The directional striations of the shale dictate the topological terms of methane extraction.  The industry sees the entire area divided into a staggered checkerboard of 1/2 x 2 mile quadrants oriented north-northwest, with a gas well in each one.  But to achieve this ideal energy companies must contend intensively with innumerable landowners and residents.
For many people living on the Marcellus Shale the revenues from gas extraction offer a way to ride out tough times on family farms that are obsolete by agribusiness standards.  But the opposition movement that has grown throughout the region voices serious concerns about quality of life, environmental health, and safety.  And in the ensuing political discussion bigger-picture issues like energy security, economic sustainability, and global warming have also become part of the conversation.  
In New York state particularly, fracking has come to the forefront of local politics in many municipalities.  Corporations long ago began haggling with willing landowners for drilling leases.  However, they have not yet been cleared at the state level to frack New York, and while they wait for the state’s go-ahead several townships have moved to protect the neighbors who stand to be fracked against their will, adopting ordinances ban fracking locally.  Although these efforts have met legal challenge, local anti-fracking ordinances have so far been upheld. 
The opacity inherent in the fracking process has served to stoke an already heated controversy.  First there is the fracking fluid injected underground in massive quantities.  It is known to be toxic, but the contents are protected as trade secrets.  Then there is the opacity of the earth itself.  Seismic imaging, lab tests, and trial and error tell us something about what is happening in the fracking process, but there is a limit to what we can know about the deep earth. No one has ever been down in a fracking well--they are six inches across and miles deep.  Like many other amazing technological feats, fracking remains an art even though it is served by science.  And because it is an art there cannot be any guarantees of ecological safety.  As with deep water oil drilling, no number of government inspectors will eliminate the extra-ordinary risks to lives, places, and ecosystems that an undertaking of this scale and technological complexity poses.
What we do know is that the earth is a big, complex thing full of surprises.  Paleo-ecology tells us that our particular world is characterized by both resilience and fragility--prone to tipping points, feedback mechanisms, and emergent phenomena that are not predictable.  Fracking is an amazing and ingenious technology that can do big things, like releasing a planetary amount of methane from the earth’s crust.  But the problem with doing big amazing things is that other amazing earth-scale events can be unintentionally triggered.
So far the unintended consequences appear to be relatively localized--methane gueyser eruptions, man-made earthquakes, poisoned waterways, and a few polluted aquifers.  Of course, few of these phenomena can be linked with certainty to fracking--once again, due to the opacity and complexity of the process.  Corporate representatives use this opacity to industry advantage as “merchants of doubt” painting themselves as practical and reasonable--“just show us the proof?!”--while slick TV ads promise “clean burning natural gas” is the “transition fuel” that will usher in a green-energy economy... any decade now!  The lie by omission is that the methane that necessarily escapes during the extraction process is many times more potent than other greenhouse gasses.
The fragile bulwark that some New York townships have erected against this well-lobbied industry draws upon the strong political tradition of “home rule” in the Northeastern states.  Home rule is the decentralizing political principal within a federal system, giving local municipalities the right to institute any statutes not prohibited or superseded by higher levels of government.  
There are voices on both sides who oppose New York’s adventures in ecological home rule.  Some claim this issue is too complex and important to be left up to town councils.  And of course whenever fracking is ruled on locally--either to permit or to ban--there will be a minority who feel strongly that their rights have been trampled upon.  Moreover, some fracking opponents even worry that while each local anti-fracking ordinance seems like a grassroots victory for the cause, deference to home rule may give Governor Cuomo just the political cover he needs to give fracking a foothold in those townships that approve it.  And yet, at a time when corporate money is bathing the machinery of the republic like never before, technocratic centralization is itself a suspect principle for environmental politics.  
So whither ecological home rule?  History tells us local direct democracy is no political panacea.  Democracy can eat itself at any level.  However, the fact that townships in the Northeastern states are taking a hard look at fracking is promising, whatever comes of it, if only because it has brought some of the complex political and ethical issues inherent in fossil fuel extraction home to many U.S. citizens as citizens.  An active citizenry with a taste for the complexity of ecological politics is what we need most if the worlds leading carbon economy is to become an ecologically responsible representative democracy.
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Monday, October 8, 2012

The Church of Capitalism: Why Right-Wing Economics is Once Again not Rational

Sanford F. Schram
Bryn Mawr College

At the end of the 18th century in England, a debate raged over what to do about the poor. Thomas Malthus, a clergyman recognized as an economic thinker of the first order, prevailed in this debate. As Peggy Somers and Fred Block note, Malthus argued, essentially, that it is against the natural order of things to aid the poor, who would only propagate further and thereby bring down the whole society with them. Malthus’s arguments contributed to reform of the Poor Laws designed to restrict aid in the name of encouraging work. Malthus based his thinking on a melding of economic theory and Christian theology, arguing that policy needed to be consistent with the will of God and the natural laws that flowed from God’s vision for the world. Human attempts to deviate from our divinely-inspired natural state of being would only fail. As a result, public policy must not subvert processes by which people’s natural inclinations were made manifest. Malthus’s invisible hand was not unlike Adam Smith’s and laid the basis for a Darwinist view of how society evolved.

This amalgamation of religious belief and economic reasoning eventually lost its prominence. By the mid-20th century, for example, conservatives in the United States such as Irving Kristol could only offer “two cheers” for a capitalism that had lost is sacred commitments to doing what was not just economically efficient but also morally viable. Conservatives at times could even rail against the tendency of capitalism’s hedonistic consumer culture to rend the moral fabric of the social order.

Yet, more recently, as William Connolly and others have demonstrated, Christian religion and capitalist economics have again been fused tightly in the extreme conservative movement that has captured the Republican Party. This, I believe, is the main reason that so much of their economic reasoning appears irrational and in direct violation of mainstream economics. It disregards almost all available evidence regarding the efficacy of their specific, or more appropriately, often unspecific, economic policy proposals. The insistence that their economic ideas be simultaneously consistent with religious belief makes for a faith-based economic policy that is impervious to reconsideration in light of rational analysis or factual evidence. Going beyond the old aphorism, not only will they will not allow a few good facts to ruin a bad theory; they will also not allow anything that smacks of secular-scientific rational thought to undermine their firmly held religious beliefs. 

Witness Mitt Romney’s factually incorrect statement that all Obama supporters pay no federal income taxes and they feel they are entitled as victims to government benefits. For some conservative commentators Romney’s factual errors were to be excused because they were in service of an important moral judgment that Obama’s supporters fail to practice personal responsibility.

This privileging of moral belief over evidence can be seen in other policy issues discussed by the right. The 2012 campaign has publicized the extreme conservative belief that rape victims cannot get pregnant, thereby making it less controversial to deny them access to abortion services (which the Republican Party platform has advocated for years). The same holds true for global warming, which the extreme conservatives continue to insist is a hoax, perpetrated somehow by conniving scientists. And, more generally, the Romney campaign has responded to complaints that many of its criticisms of the Obama Administration are outright lies by declaring that it refuses to be governed by fact checkers, as if the facts were an unfair constraint on true believers.

Still, it is in economic theory that one finds the strongest version of creedal insistence. From tax cuts to stimulate job growth to balanced budgets to create more confidence in economic policy to opposition to any new business regulations in order to establish certainty about the economic playing field, there remains scant evidence that these policy positions have any factual basis or are consistent with established economic thinking. The problem with the proposals is that they are proffered like universal beliefs true for all times under all circumstances, much like Malthus’s assertions that policy must always be consistent with an unchanging, underlying natural order. The insistence that these policy positions are always the only thing the government should do to stabilize the economy and encourage growth sounds a lot like a set of dogmatic religious principles that when violated merit nothing less than damnation. But economic reasoning has moved beyond Malthus’s unchanging natural order of things. Historically sensitive analysis steeped in facts supports a more nuanced approach. Tax cuts can, at times, stimulate the economy, but it depends on which cuts under what conditions. Balancing budgets can produce greater confidence and heighten willingness to invest without fear of inflation, but confidence-building maneuvers are likely to work only if investors think the economy is likely to grow as a result. And the idea that much-needed regulation should be forestalled is not likely to increase certainty about a predictable economic playing field where no new government intervention will occur if it only leads to corrupt practices that allow those who cut corners to lower prices compared to competitors who are reluctant to undermine the public’s health and safety and the nation’s well-being.

Malthus-like religiously-inspired economics has returned to public discourse with a vengeance. Its unwavering insistence on its policy prescriptions regardless of circumstances is perhaps one reason it appeals to deeply religious constituencies, who steadfastly believe in timeless moral certainties regardless of the facts. It may also be why these constituencies support these policies at the cost of their own economic interests. In the end, however, it is our ability to act collectively as a nation to take rational, factually-supported steps to resolve the current economic crisis that is the major casualty of this return to economic mysticism.

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Wednesday, October 3, 2012

Republicans, Democrats, and Jobs

"Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism…."
John Maynard Keynes

John Buell
is a columnist for The Progressive Populist and a faculty adjunct at Cochise College. His most recent book is Politics, Religion, and Culture in an Anxious Age.

“It is a jobless recovery, if it's a recovery at all,” said Romney on NBC of the latest employment data. “It really doesn't look like a recovery. If this president's re-elected you're going to see chronic high unemployment continue for another four years or longer.” 
  If it is a jobless recovery, much of the credit will surely go to Republicans, who have done everything in their power to cripple the current recovery, not out of intellectual;/ideological conviction that government is powerless in the face of a major recession but merely in order to maintain or even worsen the adverse circumstances in which Obama is running. 
Congressional Republicans almost to a person voted against President Obama’s American Jobs Act. Yet surprisingly, economists for both business and labor groups argued that this proposal, which included school repairs, rehiring laid off teachers and first responders, and extended emergency unemployment insurance, would have cut the unemployment rate to nearly 7%. As Mark Zandi of Moody’s Analytic put it: “If fully implemented, the Obama jobs plan would increase real GDP growth in 2012 by 2 percentage points, add 1.9 million jobs, and reduce the unemployment rate by a full percentage point, compared with current fiscal policy.”
Congressional Republicans maintain that whatever the views of labor and business economists, they are sure that “government does not create jobs.” Yet there is good reason to believe that they don’t accept this mantra. The same party that steadfastly rejects government spending for school repairs also defends increased spending for the military on grounds that it creates jobs. Paul Krugman nicely summarizes this case by quoting Romney against Romney: “ Obama’s trillion dollar cuts to our military will eliminate hundreds of thousands of jobs, and also put our security at greater risk;…And his trillion-dollar deficits will slow our economy, restrain employment, and cause wages to stall.”
  OK, so deficit spending hurts the economy — unless it’s spending on the military (or on the medical-industrial complex), in which case cutting spending destroys jobs..”
  The agenda here is transparently political. The same intellectual/academic tools used to justify the job creation potential of military spending are also applicable to domestic infrastructure. Republicans have not even attempted to explain why money spend on tanks creates US jobs whereas money for urban transit does not.
 But rather than explain this obvious contradiction, they turn to another favorite conservative line, that fear of future regulations and taxes is deterring new corporate investment. Conjuring up visions of today’s fearful corporate execs may be good strategy. It distracts from talk about the failures of deregulation and tax cuts under George W Bush to deliver solid growth even before the Lehman Brothers collapse. Just as tellingly, current corporate behavior as well as surveys of corporate CEOs do not reflect such purported concerns. Dean Baker points out: “If the story that regulation was impeding job growth were true, then there should be evidence to support it. For example, we should see firms increasing average hours as a way to avoid hiring workers. We don't: Average weekly hours are still below their pre-recession level. We should be seeing firms hiring temps as a way to avoid hiring more permanent workers. We don't see this, either. Temp employment is still down by almost 20 percent from its pre-recession level….We might also expect that businesses would blame regulation for limited growth when they are asked. They don't. The National Federation of Independent Businesses' survey of its members show little change in the percent of businesses that list regulation as a major obstacle from the Bush or Reagan years.”
 If the Republicans’ current agenda is simply to trot out any argument or policy response to defeat Obama, they also have a longer- term focus. Years of high unemployment coupled with trashing all domestic job creation and regulatory initiatives lay the groundwork for fierce implementation of the neoliberal agenda. Military spending will be ratcheted up and financial regulation, inadequate as it is, will be scaled back. In the face of the continuing unemployment, look for restoration of more Depression era mantras, such as the “natural rate of unemployment,” the notion that markets tend toward a natural rate of unemployment and any effort to boost jobs by government policy only increases inflation.
 More crudely, unemployment will be viewed as a voluntary choice only worsened by unemployment compensation, a notion recently articulated by Casey Mulligan. Dean Baker thoroughly dismisses this logic:
 “Unfortunately Mulligan provides no evidence to back up his version of reality. By contrast, Jesse Rothstein, an economist at Berkeley, looked at the behavior of unemployed workers. He found that at most, the supply-side effect from the extended duration of unemployment benefits in this downturn increased measured unemployment by 0.1-0.5 percentage points. Furthermore, most of this increase was due to keeping workers looking for work and therefore being counted as unemployed. (When a worker stops looking for work, they are no longer counted as being unemployed.){In addition}, since the benefits gave workers tens of billions of dollars that they would not have otherwise, they undoubtedly had a large demand side effect. The Congressional Budget Office estimates the multiplier for unemployment benefits as being 1.6, meaning that the $40 billion a year in extended benefits (roughly the amount at stake) would lead to an increase in GDP of $64 billion or more than 0.4 percent of GDP. If the increase in employment is proportionate, it would imply 560,000 additional jobs. This would swamp the negative supply side effect that Rothstein found in his research.”
A Jobless Future? Bank on it.
 President Obama has been smart both economically and politically in pushing his modest job agenda. Nonetheless, he is not without fault, especially in his neglect of the role investment banks have played in the current crisis.  Though staunch Republican opposition explains the relative parsimony and poor targeting of the initial job creation package, the President’s premature proclamation of victory and conversion to deficit hawk cast suspicion on his subsequent efforts.  Worse still, the President continues to shy away from the role that banks played in the crisis and the problems private debt pose for any future recovery.
Australian economist Steve Keen believes that a modern capitalist economy is intrinsically unstable, that banks and debt creation are the most powerful fingers of instability. There are limits to our ability to predict the course of the economy and we must therefore take steps to build firewalls to limit the range of outcomes the system can generate.
  Keen agrees that a Keynesian stimulus is a good short- term response to depression. Keeping teachers, police, fire fighters on board surely clips the unemployment rate and their spending is likely to stimulate some other jobs. But how good is this temporary job creation in the long term and will it produce a self-sustaining recovery? And how accurately can our models tell us what will happen?
  Most of the models, even those used by liberal economists, assume that markets basically work and move toward equilibrium at optimal price and quantity points. Conservatives see the process of adjustment to external shocks as automatic. Liberals argue that because some market are not perfectly competitive, the system must be juiced occasionally but will then move easily to smooth growth.
Keen argues that Keynes had a more profound and compelling view. Uncertainty is at the center of economic life. A new stimulus puts money in the hands of teachers and firefighters who would otherwise be fired. But money also trickles into the banking system and levels of debt remain high. What banks will do with the money and when individuals or entrepreneurs will begin to borrow again even for productive investment remains a question.
  Predictions make the most sense when they are short term, based on recently observed empirical regularities, are done with a mindset to monitor their progress continually, and cover domains less subject to volatility. Entrepreneurial investment and new borrowing for consumer durables are areas more subject to volatility than is ordinary consumer spending. Business leaders face an uncertain future.  They are trying to guess what consumers and their competitors will do and the latter are busy trying to predict business. In such a climate, a herd mentality easily emerges and is itself highly volatile. With the large private debt overhang, small ups and downs in business hiring make a big difference. If wages and prices fall, the debt burden in real, inflation-adjusted terms becomes greater, leading to further cuts in spending, and panic sale of other assets. A virtual avalanche results.  
Debt per se is not the problem, but its level and purposes are the issue.  Debt has played a key role in the emergence of capitalism and has spurred productive investment. Entrepreneurs with innovative product and production processes but limited means have approached banks to request that their efforts funded. But the very growth of the economy often leads banks to move beyond funding such projects to investment in ponzi schemes where interest on loans can only be paid by finding another bank willing to loan at an even higher price.  A reform agenda true to Keynes’s recognition of the role of the debt burden currently in economic life would thus also move to reduce that burden and put some structural limits on debt creation in ways that might blunt future volatility.
There would have been no housing bubble had banks not made exorbitant sums through the rapid issuance and securitization of loans. Borrowers, however, could meet their obligations only by selling the asset at a higher price to the next purchaser, a process that could not go on forever.  The Fed’s easy money and lax lending standards did allow private debt to grew to 300% of GNP and debt still stands at 130% of GNP. Private debt to GDP was 45% coming out of Great Depression. The Economist reports: “America has begun to pare its debt burden, although the drop is small compared with the build-up in 2000-08." As long as that is the case, private investment—even in productive activities-- and new consumer borrowing and demand will remain far from optimal. Banks may sit on new deposits or QE injections from the Fed or worse still invest in new ponzi schemes. Even modest rebounds may soon be followed by setbacks. Unemployment is likely to remain high for another decade as bankruptcies wind their way through the system. This is especially unfortunate since current definitions of unemployment underplay the depth of the economic crisis. In the mid nineties, the US government changed its statistics on discouraged workers and no longer counts someone unemployed for more than a year as part of the labor force. Shadowstats estimates that if these workers were counted as labor force participants, unemployment would be over 20%.
The media may blame irresponsible borrowers, but for every such reprobate there was an incautious or avaricious bank eager to loan and then dump the security. Those banks have been bailed out but not their victims.
  That private debt is an issue whose time has come may be seen in growing protests around the country. Occupy Wall Street inspired a working group that has assembled a detailed handbook of how to resist burdensome debt collection. Debt relief has been ridiculed in the corporate media as another form of welfare to the undeserving. (Remember  CNBC’s Chicago Mercantile Exchange correspondent Rick Santelli’s rant inspiring the birth of the Tea Party. He condemned help to insolvent householders on the grounds such assistance would be financed by taxing their thrifty but also squeezed neighbors.)  One of the new OWS handbook’s great strengths is the wide range of debts addressed, from mortgages, to student, credit card, medical bills etc. By broadening the scope of debts addressed and by the willingness of debtors to stand and speak for themselves, demonization of debtors becomes more difficult. See debt resistance statement--A QE for ordinary citizens would be both good politics and good economics. Keen recommends a cash infusion for all citizens, borrowers as well as net savers, on the condition that the cash first be used to pay down their debts. By its universal scope, it would reduce the potential demonization of suspect groups.
  In addition, Keen’s proposal would reduce banks income from fees and interest payments and the size of the financial sector without fostering the insolvencies that simple debt default occasions.  The size of the financial sector and its ability freely to expand and contract the money supply, the circulatory system for the whole economy, adds a degree of unpredictable instability to world capitalism, even apart from outside shocks to the system. 
  Federal job creation is urgent. Direct job creation initiatives are necessary and need our support. But Obama’s mistakes and a relentless Republican assault make their promotion a difficult task. It is time both to call Republican obstructionism for what it is and to demand of the President and the Democrats in Congress a broader counterattack.
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