Wall 1, Stiglitz & Chang 0

As part of figuring out where to go next, I’ve been rereading two of my favorite liberal economists: Joseph Stiglitz and Ha-Joon Chang. It hasn’t help me move any further, but it has cheered me up. Because they aren’t doing much better against the Wall than I am.

In Econ 101land, markets are the most efficient way to organize the economy. In the last decade or so, the assumptions propping up this belief have been ripped to shreds. As Stiglitz recently summed it up:

economies are not necessarily efficient, stable or self-correcting.
In Stiglitz’s The Price of Inequality and Cambridge University economist Ha Joon Chang’s delightful 23 Things They Don’t Tell You About Capitalism, the authors take the complex economic arguments and evidence that’ve shredded these assumptions and spoon them out in bite sized chunks that go down easy.

Both books do a great job of kicking Exon101′s butt. But if Econ101 is about as accurate as Apple’s maps when they first came out, Stiglitz and Chang don’t do much better. Sure, they’ve got their list of places we should visit. It’s the same list — Top 10 Spots for Revitalizing and Renewing Economies on the Rocks — you’ve seen on most liberal blogs. But what are the rules that explain why visit these destinations and not others? How do we get there, and what do we do if the path to them is blocked or we get lost? S&C don’t have an app for that.

Neither do I. At least now I know I’m in good company.

Republican North Carolinians for Big Government: the Telsa Edition

From North Carolina, a reminder of just how little anyone in office believes in a “free market.” The Republican Party in North Carolina has more power than they have had in decades, and they’re using it to stomp on just about everything liberals have ever fought for, all in the name of less government. But when it comes to buying cars? That’s a whole different story.

Last week, North Carolina’s Senate Commerce Committee unanimously approved a law that would ban car companies from selling their cars directly to consumers. Tesla, the electric car company, doesn’t want to work through dealerships. And the North Carolina Automobile Dealers Association isn’t happy.

it’s not Tesla per se that worries the dealers. It’s the precedent. The prospect threatens the livelihood of North Carolina’s 7,000 licensed dealers, who invest millions in building big lots and showrooms to efficiently move product, say supporters of the bill.
“We care about the franchise system,” said Robert Glaser, president of the N.C. Automobile Dealers Association. “The whole point of the retail system is to protect the consumer.”

The local dealer is the customer’s point of contact on malfunctions, defects and recalls, Glaser said. Automakers are designers, manufacturers and wholesalers that remain largely invisible to the car buyers, he said.

Apparently, Robert “Chairman Mao” Glaser doesn’t trust consumers to decide by themselves whether they want to use dealers for that – Big Government is going to get to decide for them.

But it’s not just about taking away consumers’ freedom.

“You tell me they’re gonna support the little leagues and the YMCA?” Glaser asked, directing his glance at the Tesla contingent milling about a few feet away in the legislative building.

Because Lord knows, that’s what a “free market” is all about – companies competing to show politicians who will sacrifice more of their profits to support whatever causes the politicians care about.

Although the bill passed unanimously, not everybody is entirely comfortable with it. Before he voted for it, Sen. Josh Stein of Wake County got assurances that the bill would be “fine-tuned.”

Stein considers Tesla a startup that should be exempt from the state’s dealership provisions until it becomes big enough to be considered a competitor.

Way to go with keeping government out of meddling with “the market,” Josh!

The article points out another state also has laws blocking direct auto sales to the public. Which commie pinko state would that be? Texas.

Headbanging: Head 0, Wall 1

After banging & banging my head against a wall, I’ve finally figured something out: the problem isn’t my will, the problem is the wall. Trying to frame my theory around our power to intervene in the economy vs. the limits to our power isn’t going to work.

I don’t know what will work. But figuring out that this approach won’t work is a step in the right direction.

A Refinement of What I Don’t Know

I haven’t posted for a couple of weeks. Partly that’s because work has been crazy. But part of it is that I’m still banging my head against the theory wall – and the wall is winning. Here’s where I am at.

I’ve got the start – I can pretty fluently explain how the way we think about the economy hides/obscures how much we intervene.

I’ve got the part about power and justice – if our society is intervening so much, who gets to decide how we intervene & who benefits?

Where I’m still stuck: taking ownership of the power we have and dealing with the limits to our power (i.e., We’re Not As Smart As We Think We Are). I know it’s important, and when other theories don’t include it it feels to me like something’s missing. But I don’t know why it’s interesting and nonobvious.

So the question I need to answer is:
Why is it crucial that when we think about how & who gets to shape the economy, we think about:
– Taking ownership
– Dealing with the limits of what we can do

For example:
– what if you don’t include it? What problems does that cause?
– Why does it bother me when it isn’t included in other folks’ theories/arguments?

Stay tuned…

Is Tackling Climate Change Too Expensive? Not Compared to the Iraq War

Is doing something serious about climate change too expensive? Using some number crunching by wind analyst Paul Gipe, Grist’s David Roberts says no:

The total cost of the Iraq War, including future costs to care for veterans, is $2.2 trillion. If we include the interest we have to pay on the debt we used to finance the war, that figure rises to $3.9 trillion by 2053….

So what could that get us? Gipe gets deep into the weeds on renewables cost and yields, but here’s the top-line conclusion:

If we had invested the $2.2 trillion in wind and solar, the US would be generating 21% of its electricity with renewable energy. If we had invested the $3.9 trillion that the war in Iraq will ultimately cost, we would generate nearly 40% of our electricity with new renewables. Combined with the 10% of supply from existing hydroelectricity, the US could have surpassed 50% of total renewables in supply.

He notes that his estimates are extremely conservative, and with some reasonable amendments, that 40 percent figure could easily become 60 percent.

So, let’s call it half. For the price of the Iraq War, the U.S. could have gotten halfway to a fully renewable power supply.

Now, imagine if someone had proposed, in 2003, spending $2.2 trillion of public money over the next 10 years on renewable energy. My God, the outrage! The wailing and rending of garments! It would have been scorned, mocked, dismissed outright by VSPs across the land. Such investments in the nation’s future are too expensive; it would bankrupt us; we would never recover.

And yet, the country survived spending that much on the Iraq War. The economy is growing again; the debt is shrinking. And that’s with $2.2 trillion almost entirely flushed down the toilet, to virtually no long-term benefit. The same money spent on renewables would have produced massive returns in energy security and resilience, new industries and jobs, and an international reputation as a courageous humanitarian leader (rather than a belligerent, lying warmonger).

Next time you hear that responding to climate change is too expensive, ask, compared to what?

And that’s not including the lives lost in the Iraq war — both Americans and Iraqis – vs the lives that could be saved by responding to climate change.

Why Social Democracy Stalled Out: Not Enough Incrementalism (of the Right Type)

Recently I was at a party where I got into an argument with a fellow lefty about why Europe has gone from being the place that inspires liberals & lefties to say, “why can’t we be like them?” to Austerity ‘R Us. He gave a typical US lefty answer: the European strategy of incrementalism, of gradually trying to tame & transform capitalism, had lost its radical edge and had become more and more focused on an being a good steward of the status quo rather than trying to build a more just society. I think he’s wrong. European Social Democracy didn’t stall because it was too incrementalist. It stalled because their incrementalism stopped at the border.

There’s a lot you can do in one country to improve the lives of the people who live there. But sooner or later you’re going to bump up against the limits set by our global economy. Either everybody else is going to rise up, or you’re going to get dragged down.

As European Social Democrats and radicals rebuilt their countries after World War II, they didn’t completely neglect the rest of the world. Through the UN and nonprofits, they spent modest sums of money on helping the global poor. And some expressed their solidarity with the downtrodden and Third World revolutionaries. But as export-oriented manufacturing spread –first to Japan and Mexico, then South Korea, and China and Vietnam and elsewhere – they didn’t use their considerable economic and political power to increase their fellow workers’ wages & power on the job.

Europeans had three weapons at their disposal. First, they could use their clout to increase the power of autonomous, democratic unions in the Second and Third Worlds, including helping to pay for a ton of organizers (like factory workers, organizer pay was a lot cheaper overseas than in Europe). By building strong global alliances between First World and Second and Third World unions and building strong European public support for workers’ struggles overseas, they could’ve tilted the odds in favor of Third World union organizing.

Second, as Europe recovered from World War II it became an enormously influential export market. If Second World corporations wanted to be players in this market, they had to play by Europe’s rules – and those rules could have required ever increasing standards for Second World worker pay & power. And if European social Democrats used their market clout to raise the bar globally, American progressives would have undoubtedly joined in, creating more than enough market pressure to change the game in the Second World.

Finally, as European corporations build up their presence overseas, European unionists and consumers could have pressured them to help raise standards overseas. In many European countries, unions used to have an anonymous amount of influence over the corporations in key industries, including in some cases having seats on the board. They also had the power of public opinion. There’s no reason they couldn’t have aggressively used that power, not only in pushing these corporations to act as progressively abroad as they did at home but also to push aggressively to create ever-increasing global standards in these industries (i.e., Stacking the Deck in Favor of the Good Guys).

None of this would’ve changed the global economy overnight. But over the long haul this kind of global incrementalism could’ve radically transformed the game. It would mean a better life for millions of people around the globe and given them a real say in shaping their destinies. It would have radically slowed down the loss of European manufacturing jobs. And it would’ve made it harder for big corporations and the rich to play countries against one another and to push for austerity.

It’s not surprising that European progressives didn’t follow this path. Nationalism is a very, very powerful force; it’s a hell of a lot easier to say “workers of the world unite” than to actually live it. The Small Is Beautiful strain running throughout progressivism also made many lefties suspicious of operating at the kind of scale would take to pull this off. It was way, way out of their comfort zone. And following this path would’ve required European progressives to let go of their version of the racist “noble savage” myth; it was a lot easier to romanticize El Salvador peasants then it was to really connect with a worker in a South Korea auto plant.

Progressives in European social democracies did face hard limits. But it wasn’t the limit of incrementalism that did them in.

Getting at “So What?”

I may have figured out where I’m getting stuck. Here’s how I’ve been framing the question I’m trying to answer:

Since the economy is not natural or inevitable,
since it is deeply and profoundly shaped by the decisions our society makes,
how do we try to give everyone a real say in how we shape our economy
while embracing/coming to terms with the fact that we can’t ultimately control the economy, that We’re Not As Smart as We Think We Are?

Although the language is a little raggedy, the first part of the question basically feels right. But the second part? The “while embracing/coming to terms with”? It’s not passing the “so what?” test. I think there is an answer to “so what” lurking somewhere below the surface, but I don’t know what it is.

After banging my head on it for a bit, one thing’s become clear: I’m not going to have an answer – or at least answer I think is strong enough to take on the road – anytime soon. It may be because this is a hard question to answer. Or it may be because I haven’t gotten to the real question yet. But at least I’ve found this major stuck point, so that’s progress.