OK, so I’m really not 21 years old anymore: I pushed my hands too hard, and now I need to give them a serious break. I’ll be back in about two weeks.
At this weeks’s annual gathering of professional economists, there was a panel on “the political economy of the US debt and deficits.” Aside from Alan Blinder, the panelists – all prominent economists – nattered on about how deficits were destroying the country, we need to cut Social Security and Medicare, etc. At the end of the panel presentations, Mark Weisbrot jumped in.
I called attention to Blinder’s presentation of the long-term budget problem as almost completely a problem of the rising price of healthcare. I pointed out that you could take any country with a life expectancy greater than ours – including the other high-income countries – and put their per capita healthcare costs into our budget, and the long-term budget deficit would turn into a surplus.
My question was simple: are Americans so inherently different from other nationalities that we can’t have similar healthcare costs? And if not, then why are we talking about long-term budget problems – instead of how to fix our healthcare system?
Damn good question. Their replies were what you would expect:
None of the panelists offered a serious answer to this question. Auerbach, the moderator, said that other countries have rising healthcare costs, too. And some of the others said or implied that healthcare costs were rising at an unsustainable pace worldwide.
But this is nonsense. The United States pays about twice as much per person for healthcare as other high-income countries – and still leaves 50 million people uninsured. This is a result of a dysfunctional healthcare system that has had healthcare prices rising much faster than those of other high-income countries for decades.
As Mark explains, what they were really saying is that we have to stomp grandma instead of reining in insurance companies and big Pharma.
What the budget hawks are basically telling us is that we must assume that insurance and pharmaceutical companies will have a veto over the provisions of healthcare reform for decades to come. And that, therefore, we must find other ways to make up for these excessive costs, including cutting social security and other government spending, and pushing us into higher rates of poverty and inequality than we already have.
Yay for economists!
At some point I will start writing again in complete sentences and paragraphs. But right now I’m better off doing little brain dumps. Here are the pieces/principles that make up “We Have More Power to Create a Just Economy Than We Think We Do.”
1) Everyone Should Have a Real Say
Best way to ensure economy works for everyone is for everyone to have a real say
Vs 1% making decisions in the background
Vs Blanche Dubois’ depending on the kindness of strangers
Best form of “Real Say”? What’s the right mix of individual (choose a car), together (make mass transit an option), groups (Parklets)? No right answer: depends on trial and error (see Part 2 of the framework)
2) Stack the Odds in Favor of the Good Guys
“Market Failure” VS Rise of modern consumer-based, credit-based economy
Ask bigger, deeper questions
As a counter to “it’s all corrupt so in between as little as possible”
Liberals/lefties can’t just say “all corporations are evil”
3) You Can’t Succeed Until It’s Politically Sustainable
Need to reinforce the system (e.g., Wall Street reform: second the laws were passed, started fighting to gut it)
More regulators vs Movement Perspective
Institutions: build power, foster engagement & mobilization
Your individual actions can increase/decrease % of folks who get engaged
4) Spiderman’s Dad: With Great Power Comes Great Responsibility
Create spaces to foster real conversation
Hard to have a real conversation if you think you will get stepped on
Checks & Balances
Ron Paul and other conservatives have been arguing that Keynesian-style stimulating the economy is a waste of money – so much of what we buy is made overseas that we don’t get much bang for the buck. Is that true? Paul Krugman says no:
Barry Ritholtz sends us to a San Francisco Fed paper from last summer that makes a point on which many people seem confused: despite globalization and all that, the bulk of a consumer dollar spent in America falls on American-produced goods and services…
Why? For one thing, most consumer spending is on services, few of which are really tradable. For another, even if the thing you buy in WalMart says “Made in China”, the price includes a lot of US value-added in the form of transportation and retailing costs…. we’re still a country where about 85 cents of your consumer dollar is spent at home, one way or another.
Good to know!
Here’s the latest attempt to sum up my framework:
If our economy isn’t “natural” and wasn’t inevitable, then what? What is the alternative that would actually work?
We have more power to create a just economy than we think we do – but only if we embrace the limits of our power.
We have more power than we think we do to create an economy that works for everyone – but only if we embrace the limits of our power.
Although the wording still needs work, an overarching theme is starting to emerge – embracing our power and its limits. And that’s a sign that something’s starting to gel.
Another nice example of how to do a protest with style, courtesy of the fabulous boys and girls of SF Pride at Work:
Here’s a little more about SF Pride at Work:
San Francisco Pride at Work is an organization of queers for economic and social justice. We are the LGBTQ arm of the labor movement, actively campaigning to protect workers’ rights to organize and defending queer justice in the workplace. Our group also organizes to build tenant power in San Francisco, to ward off the gentrification of queer neighborhoods and stop the displacement of communities. We participate in coalitions to resist attacks on immigrant communities in hopes that our city will one day be a safe place for all people, and we have also instigated groundbreaking protests for transgender rights. SF Pride at Work stands up for the rights of all workers, tenants, immigrants and queers in the spirit of the union movement’s historic motto: An Injury to One is An Injury to All.
Once upon a time, there was a company called Sears. Many years ago ago – 1989 to be precise – it threatened to dump Princess Illinois and run off with another state unless it was given a tidy sum ($170 million). Princess Illinois forked over the dough, and there was much rejoicing throughout the land. Last year, Sears decided it was time to ask for another sum. And as soon as Princess Illinois agreed? The folks at Good Jobs First tell the rest of the story:
Gov. Pat Quinn’s signature had barely dried on the Illinois legislature’s lavish new tax-break deal to retain Sears Holding Corp.’s headquarters when the company announced store closures and layoffs. The deal, valued at up to $275 million in property and income tax breaks, was signed into law on December 16. Yet on December 27, the company announced that it would close between 100 and 120 Kmart and Sears stores.
Cynically, we note that the initial list of 80 closures does not include any Illinois stores, nor have any headquarters layoffs been announced… yet. But with Sears still losing market share, and reporting another decline in same-store sales (down 5.2% late 2011 over late 2010), how safe can Illinois jobs be?
And Illinois isn’t alone. There is a basic problem with giving in to extortion:
as we forecast in our blog of last August: when a company is ailing and it asks for a tax break, the wisdom of the plant-closings movement tells us: tax avoidance can be one form of disinvestment, another early warning sign of job loss.
Put another way: if a company doesn’t see a future in the community or the state, why should it keep investing in the schools or roads or universities?
Of course, recognizing this fact is one thing, getting politicians – who care about how many jobs they can tout right now – to do anything about it is a whole different story. For more on the subject, check out Good Jobs First’s website or their valuable blog, Clawback.
After hearing a talk by civil rights veteran Robert Moses about the possibility of transforming the DC school system using a similar style of community organizing to the one he and other SNCC members used in the Mississippi Delta, I’ve been reading a book he cowrote, Radical Equations: Civil Rights from Mississippi to the Algebra Project, about an organizing project he helped develop to change the way math is taught in inner-city schools. In the book, there’s a great quote about the difference between education researchers and Ella Baker-style community organizers:
Working in the tradition of Ella Baker, the community organizer seeking an innovative breakthrough in education will use the principle of “cast down your bucket where you are.” The organizer becomes part of the community, learning from it, becoming aware of its strengths, resources, concerns, and ways of doing business. The organizer does not have a complete answer in advance – the researcher’s detailed comprehensive plans for remedying a perceived problem. The organizer wants to construct a solution with the community. He or she understands that the community’s everyday concerns can be transformed into broader questions of general import. The form of these questions and actions that follow from them are not always known in advance. I did not know that my concern for [his daughter] Maisha’s math education would lead to the Algebra Project’s raising questions about ability grouping, effective teaching for the children of color, experiential learning, and community participation in educational decision-making. I pulled these issues up flycast at my bucket. Finally, unlike the researcher, the organizer helps community members air their opinions, question one another, and then build consensus, a process that usually takes a great amount of time to complete.
This is a long journey and not a linear progression. It is a journey with zigs and zags, a process of push and pull, if you are successful in some classrooms, that gives you an opening to approach the community. In order to get into all the classrooms, however – to all the students – we need the community’s political commitment and clout. You have to work both sides of the street at the same time. You have to learn how to move effectively in all arenas. I have thought of the Algebra Project as a young child who is trying to stand up and teetering and falling down a little, then getting back up, falling down a little, and getting back up again.… It doesn’t really matter how many times young children fall down, they keep getting up, attempting to walk. Probably part of the reason that happens is that they have a lot of people around them who are walking. (pp. 112-3)
I’m not sure how this ties back to my framework. Clearly it’s got something to do with how you think about power and shaping the economy from a Movement Perspective, but beyond that I can’t put the connection in the words. But it feels like there’s something important in what he’s saying that goes beyond community organizing, that ties back in a deep and powerful way to how we should think about the economy. So for now, I’ll just let it simmer on the back burner.
At the end of 2011, the Congressional Research Service put out a report on whether the gap between the rich and everyone else was shrinking or growing. The bottom line:
Inflation-adjusted average after-tax income grew by 25% between 1996 and 2006 (the last year for which individual income tax data is publicly available). This average increase, however, obscures a great deal of variation. The poorest 20% of tax filers experienced a 6% reduction in income while the top 0.1% of tax filers saw their income almost double. Tax filers in the middle of the income distribution experienced about a 10% increase in income…
Income inequality, as measured by the Gini coefficient, increased between 1996 and 2006; this is true for both before-tax and after-tax income. Before-tax income inequality increased from 0.532 to 0.582 between 1996 and 2006—a 9% increase. After-tax income inequality increased by 11% between 1996 and 2006.
Why did inequality go up? A little because of salaries and taxes, but mostly because rich folks made more off of investments.
While earnings inequality increased between 1996 and 2006, this was not the major source of increasing income inequality over this period. Capital gains and dividends were a larger share of total income in 2006 than in 1996 (especially for high-income taxpayers) and were more unequally distributed in 2006 than in 1996. Changes in capital gains and dividends were the largest contributor to the increase in the overall income inequality. Taxes were less progressive in 2006 than in 1996, and consequently, tax policy also contributed to the increase in income inequality between 1996 and 2006. But overall income inequality would likely have increased even in the absence of tax policy changes.
For tax filers with income below the 80th percentile (i.e., the bottom 80%), the major source of income is from wages and salaries, which accounted for 82% of total income in both 1996 and 2006. The share from capital income (that is, capital gains, dividends, and business income) was very small in 1996 (about 4%) and fell to less than 3% in 2006. The share from retirement income (from pensions and IRAs) and other income (such as Social Security, unemployment compensation, and interest income) increased slightly between 1996 and 2006. The situation at the top of the income distribution is very different. For the top 20%, wages and salaries make up a smaller share of total income (60% in 1996) and this share fell by 10 percentage points between 1996 and 2006 to 50%. The share from capital income increased over this period, especially from capital gains and dividends. The situation is even more different for the top 0.1% of tax filers—wages and salaries account for about 20% of total income, with the share falling from 23% in 1996 to less than 19% by 2006. In both years, about half of the total income of the top 0.1% comes from capital gains and dividends; the share from capital gains and dividends increased by 6 percentage points between 1996 and 2006.
So when Romney and other Republicans talk about cutting capital gains taxes, they are talking about cutting taxes on 80% of the very rich’s income.
SGEP sees its work centered in working with the communities most affected by the economic crisis—women, African Americans, immigrants, youth and poor whites. We are working on not just getting a piece of the pie but developing cooperative business and making our own pies.
The folks who attended the Southern Grassroots Economy Project were from cooperatives or cooperative networks all across the South. And as you would expect from a founding conference held in the Appalachians at the Highlander Research and Education Center, they’re trying to do so in a way that is also focused on movement building.
Given the South’s rich history of cooperatives and fighting for social justice, it’ll be interesting to see what they’re able to pull off. Stay tuned for more info in the spring, when they’re getting together again in Epes, Alabama, at the Rural Training Center of The Federation of Southern Cooperatives.