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Inequality

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‘Twas Austerity That Did It.

“Yes, the victorious campaign to leave the European Union won on the basis of xenophobia and the demonization of immigrants. For anyone of a cosmopolitan bent it’s a terrible outcome…But if you tell people you know what’s best for them for years and years while their prospects wither and their lives are immiserated, at some point you should expect some kind of reaction.”

In the Prospect, David Dayen explains how deficit-witch-hunting and hubris paved the way for Brexit. particularly David Cameron and the Tories’ “general belief in expansionary austerity, that you could cut your way to prosperity. For those that don’t recall, this led to the brink of a triple-dip recession, and terrible growth numbers for years and years…What Leave offers, a toxic stew of isolation and racism, isn’t any good either. But when elites spend this long doing nothing for large swathes of the population, they’re willing to listen to anyone with a different idea.”

Since the UK’s faceplant last week, there’s been some talk (and. for some, wishful thinking) that Brexit is the prelude to Trump, fact-free appeals and all, and lord knows we spent far too much time of late playing the austerity game also. But I’ll stand by my “nope, not gonna happen” prediction here: The UK electorate is 90% white, America’s is one-third non-white — That’s a big difference, and the same sorts of nativist appeals just aren’t going to play here anymore — which I am very thankful for.

Still, Brexit is another sterling example of how, when people are justifiably angry about being screwed over, many of them may not vote in their best interests. And it’s emblematic of one of the more insightful comments I’ve heard recently about 2016 (and unfortunately I can’t figure out where I first saw it): When you have Latin American levels of inequality, you’ll end up with Latin American politics.

Then the Rich Got Richer.

“Through midcentury, when times were good economically, most of the benefits trickled down to the bottom 90 percent of households. Then came the Reagan era and actual trickle-down economics. Suddenly, the benefits started sticking with the rich. Since 2001, the top 10 percent have enjoyed virtually all of the gains.”

As making the rounds of late, a devastating graph of rising income inequality in America, “post-trickle-down”. “This isn’t a totally new story. But it is a vivid and visceral illustration of what we’ve basically known to be true for a while.”

Along the same lines, Mother Jones is posting a new chart on income inequality every day this week. “In the past few years, we’ve heard a lot about overtaxed ‘job creators’ and freeloading ‘takers.’ But consider this: As the income rates for the wealthiest have plunged, their incomes have shot up.”

If it’s any consolation, presumptive 45th president Hillary Clinton has recently talked to friends and donors in business about how to tackle income inequality without alienating businesses or castigating the wealthy.” Er…sorry, that’s not going to get it done.

The Middle, Sinking.

“Nostalgia is just about the only thing the middle class can still afford. That’s because median wealth is about 20 percent lower today, in inflation-adjusted dollars, than it was in 1984. Yes, that’s three lost decades.”

Wonkblog’s Matt O’Brien briefly surveys the downward pressure on our sinking middle class. “[I]t’s still a heckuva lot better than households in the bottom 25 percent, whose wealth never grew during the good times, and then plunged 60 percent during the bad ones. That’s because, for both the middle and working classes, real wages have been stagnant the past 30 years, and housing equity has taken a nosedive.”

A Wasted Opportunity. | So Now What?

“The task facing the makers of the Obama museum, however, will be pretty much exactly the opposite: how to document a time when America should have changed but didn’t. Its project will be to explain an age when every aspect of societal breakdown was out in the open and the old platitudes could no longer paper it over — when the meritocracy was clearly corrupt, when the financial system had devolved into organized thievery, when everyone knew that the politicians were bought and the worst criminals went unprosecuted and the middle class was in a state of collapse….It was a time when every thinking person could see that the reigning ideology had failed, that an epoch had ended, that the shitty consensus ideas of the 1980s had finally caved in — and when an unlikely champion arose from the mean streets of Chicago to keep the whole thing propped up nevertheless.”

In Salon, Thomas Frank laments the wasted opportunity of the Obama years. “Why, the visitors to his library will wonder, did the president do so little about rising inequality, the subject on which he gave so many rousing speeches? Why did he do nothing, or next to nothing, about the crazy high price of a college education, the Great Good Thing that he has said, time and again, determines our personal as well as national success? Why didn’t he propose a proper healthcare program instead of the confusing jumble we got? Why not a proper stimulus package? Why didn’t he break up the banks? Or the agribusiness giants, for that matter?”

Frank’s piece is definitely a bit overwritten, with its “mausoleum of hope” and all. That being said, I’m on board with his central thesis, as I’ve said several times before. (In fact, I was glad to see when fixing the old archives lately, that however hopey-changey I felt in 2008, I was more measured in my writing than I remembered, bringing up the ominous example of Herbert Hoover in my post-election post and wondering what the heck was going on within two weeks of Obama’s inauguration.)

Also, to get a sense of what a bad place our party is at these days, just look at Kevin Drum’s ridiculous response to this Tom Frank piece. Drum, mind you, is the official blogger of Mother Jones, named after the famous labor leader. And he writes: “It’s easy to recognize this as delusional…Because — duh — the hated neoliberal system worked. We didn’t have a second Great Depression. The Fed intervened, the banking system was saved, and a stimulus bill was passed…As for Obama, could he have done more? I suppose he probably could have, but it’s a close call.”

A close call? C’mon. As I responded on Twitter: “And all is for the best in the best of all possible worlds. This neoliberal horseshit would’ve made Mother Jones blanch. This piece sidesteps O’s GWOT record. 2. It ignores O’s penchant for starting negotiations where they should finish. 3. It presumes filibuster reform impossible. 4. It ignores that financial crisis response grew inequality. And so on.”

And, remember: This fatalistic “Americans are all centrists anyway, Obama did all he could” shrug is coming from the house blogger of one of our foremost progressive journals. It’s pathetic. This is yet another example of we progressive Democrats no longer having the courage of our convictions.

See also this very worthwhile Salon piece on Zephyr Teachout’s challenge to notorious douchebag Andrew Cuomo, by my friend and colleague Matt Stoller, which talks about this exact same phenomenon.

“The basic theory of the ‘New Democrat’ model of governance is that Wall Street and multinational corporate elites produce wealth through the creation of innovative financial practices and technology, and that Democrats should then help middle class and poor citizens by taxing this wealth, and then using some of it to support progressive social programs…This method of running the economy has become so accepted among Democratic leaders that writers like New York Times columnist Paul Krugman and Vox writer Matthew Yglesias now argue that there simply is no alternative…

“There is a hunger in the Democratic Party for making the party serve the interest of regular voters, not the rich. In 2008, liberal Democrats decisively broke from the Clinton legacy and voted for Barack Obama, with his mantra of hope and change. Obama, however, stocked his administration with Clinton administration officials like Larry Summers, Tim Geithner and Janet Yellen. A joke going around Democratic circles after the election was that ‘Those supporting Obama got a president, those supporting Clinton got a job.’ Obama broke with the Clinton name, but brought the Clinton intellectual legacy, and Clinton’s Wall Street-backed machine, into governance…”

“The potentially transformative message of the Teachout-Wu campaign is that the problem is not solely one of personalities or tactical political approaches. Rather it is that the New Democrat model itself, and the Democratic party establishment, is fundamentally at odds with the party’s traditional liberalism…Teachout and Wu are trying to place the citizen at the center of policy. They do that through their proposals for public financing, for antitrust, for social insurance, infrastructure and labor.”

Without vision, the people perish. If we ever want to see the real and positive change that Americans were promised back in 2008, we progressives have to stop acting like we have no other option than to fall into line behind the leftiest of the centrists and clap harder for every occasional, diluted-to-all-hell scrap they throw our way. There’s more to life than Rockefeller Republicanism, and it’s not like we don’t have excellent historical templates to borrow from. We need to dream bigger, stop thinking the status quo is all there is, and push back.

Are Zephyr Teachout and Tim Wu going to knock out Andrew Cuomo, a guy who’s quite obviously the poster child for everything that’s wrong with our party? Alas, probably not. But one does not always fight because there is hope of winning. And New York in 2014 is as a good a place as any to start the long uphill slog of taking back our party.

Update: Right on cue, the NYT delves into Andrew Cuomo’s hobbling of the state ethics commission. “[A] three-month examination by The New York Times found that the governor’s office deeply compromised the panel’s work, objecting whenever the commission focused on groups with ties to Mr. Cuomo or on issues that might reflect poorly on him.”More here.

Meanwhile, Blake Zeff thinks Cuomo may have met his match in US Attorney Preet Bharara. “[Bharara] has not only taken possession of the files from the corruption-fighting Moreland Commission that Cuomo recently closed down as part of a budget deal, but has also publicly floated the possibility of investigating the governor’s alleged meddling in its investigations.”

The New Gilded Age.

“[This] is, as I hope I’ve made clear, an awesome work. At a time when the concentration of wealth and income in the hands of a few has resurfaced as a central political issue, Piketty doesn’t just offer invaluable documentation of what is happening, with unmatched historical depth. He also offers what amounts to a unified field theory of inequality, one that integrates economic growth, the distribution of income between capital and labor, and the distribution of wealth and income among individuals into a single frame.”

In the NYRB, and in very related news, Paul Krugman sings the praises of Thomas Piketty’s new magnum opus, Capital in the 21st Century. “This is a book that will change both the way we think about society and the way we do economics…Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.”

As a counterpoint of sorts, CEPR’s Dean Baker — neither a Pollyanna nor a conservative — argues Piketty has picked up some of Marx’s bad habits, and finds the book too deterministic and despairing by far:

“[T]here are serious grounds for challenging Piketty’s vision of the future…the book [suffers from a] lack of attentiveness to institutional detail…In the past, progressive change advanced by getting some segment of capitalists to side with progressives against retrograde sectors. In the current context this likely means getting large segments of the business community to beat up on financial capital…[T]he point is that capitalism is far more dynamic and flexible than the way Piketty presents it in this book. Given that we will likely be stuck with it long into the future, that is good news.”

Update: Galbraith weighs in. “[This] is a weighty book, replete with good information on the flows of income, transfers of wealth, and the distribution of financial resources in some of the world’s wealthiest countries…Yet he does not provide a very sound guide to policy. And despite its great ambitions, his book is not the accomplished work of high theory that its title, length, and reception (so far) suggest.”

Ryan: Still Clownshoes.

“[S]everal economists and social scientists contacted on Monday had reactions ranging from bemusement to anger at Ryan’s report, claiming that he either misunderstood or misrepresented their research…The Columbia researchers found that, using their model of the SPM, the poverty rate fell from 26 percent in 1967 to 15 percent in 2012. Ryan only cites data from 1969 onward, ignoring a full 36 percent of the decline.”

Still Clownshoes: Republican Serious Person™ Paul Ryan’s attempt to get super-serial about policy research turns out disastrously, as multiple authors he cites in his new anti-War on Poverty screed say that he’s misrepresented their work. “In my experience, usually you use all of the available data. There’s no justification given. It’s unfortunate because it really understates the progress we’ve made in reducing poverty.”

The above pic of the learned statesman in question via Mansplaining Paul Ryan dot tumblr dot com. Also, I see Jonathan Chait has already gone there, but this is the obvious movie reference here:

Rolling in the Deep.

“The Deep State is the big story of our time. It is the red thread that runs through the war on terrorism, the financialization and deindustrialization of the American economy, the rise of a plutocratic social structure and political dysfunction. Washington is the headquarters of the Deep State, and its time in the sun as a rival to Rome, Constantinople or London may be term-limited by its overweening sense of self-importance and its habit, as Winwood Reade said of Rome, to ‘live upon its principal till ruin stared it in the face.’ ‘Living upon its principal,’ in this case, means that the Deep State has been extracting value from the American people in vampire-like fashion.”

In very related news, and in a somewhat overwritten but otherwise worthy piece, former GOP Congressional staffer Mike Lofgren summarizes the problem of America’s Deep State (a term Lofgren did not coin, borrowed from Turkey.) Think the military-industrial complex, now infused with financial sector/Pete Peterson-style rent-seeking. “[This] is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day.”

With Friends Like These.

“If the reporter’s own mother was losing $90 of foods a month out of an already-meager allotment, or the reporter’s son or daughter, I very much doubt that reporter would describe that loss as merely symbolic. I don’t know that reporter thinks their own breakfast, their own lunch, or their own dinner is merely symbolic. This is real money coming out of the grocery carts of real families.”

In Salon, former USDA official Joel Berg reads the riot act to lazy journalists and spineless Dems over the soon-to-pass Farm Bill, which cuts Food Stamps for the poor while expanding crop insurance subsidies for wealthy farms. “It infuriates me, that we live in a country with tens of thousands of actual loopholes that benefit the ultra-rich, [whereas] this is a provision authorized by law, perfectly legal, perfectly sensible, that governors of both parties have utilized…[Calling Food Stamp cuts “closing a loophole” is] basically a fabricated excuse. And it’s a smokescreen to obfuscate the fact that they’re taking food away from hungry families.”

Berg goes on: “George W. Bush proposed a billion dollars in cuts to SNAP, and virtually all these people were aghast at how horrible it is. For them to then turn around and justify cuts that are [eight] times as large as what George W. Bush proposed is a little hard to swallow. I do think our political system is basically evil versus spineless now.”

This. It’s the same dynamic you see on the NSA, on the Grand Bargain, and on countless other issues. And this is why I hard to find it to take so many Dems seriously anymore. Here’s the bill passage pablum from Senate Ag Chair Debbie Stabenow: “Congress is on the verge of taking bipartisan action that will create jobs and help reduce the deficit. This is not your father’s Farm Bill. It implements major reforms and ends unnecessary subsidies…Congress can pass a bipartisan bill that helps take us into the future and beyond the policies of the past.” And here’s the missing subtext: “Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) has received more contributions from the crop production industry than any other senator.”

Ain’t no use jiving, ain’t no use joking. Everything is broken, and we need to stop enabling it or it will never, ever get better.

Those Socialists at Goldman Sachs.

“U.S. businesses have never had it so good. Corporate cash piles have never been bigger, either in dollar terms or as a share of the economy. The labor market, meanwhile, is still millions of jobs short of where it was before the global financial crisis first erupted over six years ago. Coincidence? Not in the slightest.”

Karl Marx? Try Goldman Sachs. Their chief economist, Jan Hatzius, recently argued that “strength (in profits) is directly related to the weakness in hourly wages. In fact, 2012 saw the highest corporate profits and lowest wages and salaries ever recorded, as a percentage of GDP. But, please, let’s hear more whining and ridiculously overheated Holocaust metaphors from the top 0.1%.

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