Why the NYU Community Is Coming Together to Demand Reform

Aug 28, 2015Eugenia Kim

College students across the country are rallying around issues ranging from rising student debt to divestment to sexual assault. These movements become stronger with each new campus group that adds its voice to the national collective, demonstrating that there is power in numbers. Yet while it is important to highlight national problems at the university level, these student groups would also benefit from collaborating to address problems within institutions.

College students across the country are rallying around issues ranging from rising student debt to divestment to sexual assault. These movements become stronger with each new campus group that adds its voice to the national collective, demonstrating that there is power in numbers. Yet while it is important to highlight national problems at the university level, these student groups would also benefit from collaborating to address problems within institutions. What if we took each campus in isolation and asked whether and why that campus’s student groups were dissatisfied with their school’s administration?  

At the Roosevelt Institute @ New York University, we launched a Rethinking Communities project advocating for NYU to be a responsible anchor institution by investing $500,000 in two local community development banks. NYU has subsequently denied our request, citing an internal policy that it has refused to show us. This process has taken two years.

We have tried being conciliatory, working within NYU’s policies and bureaucracy. Meanwhile, NYU Divest has been working for years to be able to ask our Board of Trustees to divest from the fossil fuel industry, and has supplemented these efforts with demonstrations and protests. The Student Labor Action Movement (SLAM), frustrated with university bureaucracy, has launched multiple campaigns against the administration to promote social justice, from sit-ins to protests. These are only a handful of student groups at NYU working to create a change in our university’s policies, representative of the various tactics employed to get the university to acknowledge our presence—to simply listen.

Small contingents of dissatisfied student groups have formed, each focused on their own very specific issues. While these siloed groups may contribute to national causes, they remain small student groups with little power against a large bureaucracy and administration.

After struggling for years individually, we have formed a coalition, Whose NYU?, to create spaces where faculty, student groups, and community members can harness the collective power that we have built. We come together because we embrace learning from one another, sharing tactics, skills, and relationships. Our purpose is not to oppose authority but to demand a voice, a seat at the table. Disparate student groups are uniting with faculty and community groups to express their dissatisfaction with our administration, and engaging with union and community members who feel bullied by NYU’s administrative decisions.

On September 1, 2015, this coalition of student groups, faculty, and community members will gather in Washington Square Park to demonstrate our collective solidarity and strength in numbers. Our use of myriad organizing tactics across a range of issues, policy proposals, and requests demonstrates that the problem lies not with us, but with an administration that is neither representative nor responsive to the people whose voices most need to be heard—its students, faculty, and community.

How can an administration that purports to act on our behalf know what is in our best interests if it does not listen to us? Indeed, how can it be wedded to scholarship, teaching, and research, as it promises on every campus tour, informational brochure, and school website? We are denied information about the institution of which we are a part. We have unanswered emails and blown-off meetings when we ask for help. We are not allowed in the room for major decisions about the university or even told when or where these decisions are made. The result is a student and alumni body that is struggling with unforeseen fees, faculty who are tired of being pushed around, and a community that is being pushed out with NYU’s expansion plans and rising costs because of NYU’s real estate monopoly. The current decision-makers at NYU have failed to deliver on the necessary ingredients of a quality education: transparency, good governance, and academic collaboration between administrative departments and students.

If you are a resident of New York City frustrated with rising housing prices, please come to our rally. If you are one of countless college students across the country graduating with debt, please come to our rally. If you believe that colleges and universities should be beholden to their mission of creating a space for academic scholarship and transparency, please come to our rally. We believe in the power of building movements not by lifting up one voice or cause but by standing together and highlighting the intersectionality of all our issues. I hope you will believe with us on Tuesday, September 1, and show that we are stronger together.

Eugenia Kim is a member of the Roosevelt Institute @ New York University and the Rethinking Communities Brain Trust.

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Why Mayor de Blasio's Broadband Push Needs to Go Further—and Faster

Aug 27, 2015Matt LazoRobert Godfried

On July 16, Mayor Bill de Blasio announced a new initiative to bring free broadband service to 16,000 New Yorkers living in five public housing developments in the boroughs of Brooklyn, Queens, and the Bronx.

On July 16, Mayor Bill de Blasio announced a new initiative to bring free broadband service to 16,000 New Yorkers living in five public housing developments in the boroughs of Brooklyn, Queens, and the Bronx. In partnership with President Obama’s ConnectHome initiative, the de Blasio administration has committed an investment of up to $10 million dollars for five New York City Housing Authority (NYCHA) developments. Earlier this year they pledged $70 million to provide free and low-cost internet service for low-income communities. They will start with a demonstration project in the NYCHA’s Queensbridge North and South Houses, which together make up the largest public housing development in the nation.

This is a groundbreaking and forward-thinking policy and one for which Moustafa  Elshaabiny and I advocated in 10 Ideas for Equal Justice, an undergraduate policy journal published by the Roosevelt Institute. We found that low-income New Yorkers find it difficult to access job opportunities, information resources, and vital social communications such as email and Facebook. They rely on public services such as libraries or a number of NYCHA- and nonprofit-run programs, such as Broadband Technology Opportunities Program and Digital Vans, to obtain Internet access. However, these services are usually time-limited or temporary and are often only available from 10 a.m. to 4 p.m, directly conflicting with the less-than-flexible work schedules of low-income residents. Therefore we called on the NYCHA to mandate that Internet service be provided for all residents of NYCHA Housing Developments via the Housing Quality Standards being implemented by the de Blasio administration.

De Blasio’s policy aims to bring “Internet service of at least 25 Mbps [Megabits per second] for all residents” to the five targeted developments. His administration is setting the minimum according to the FCC Broadband Speed Benchmark. While this is an ambitious goal for a community that previously had no broadband access, it is not enough. It is important to note that there is no clarification as to whether the 25 Mbps is per resident or per household. Furthermore, this minimum service is far below the city’s average of 56 Mbps. While de Blasio stated that residents can pay for faster speeds, this undermines his goal of promoting internet equity at a minimum or free cost to low-income residents. In fact, de Blasio has emphasized that low-income residents cannot afford even a basic home broadband plan, hence his plan to provide it for free. It seems counterintuitive to suggest they can choose to pay for an upgrade.

In my 10 Ideas entry, we called on the NYCHA to collaborate with the New York City Department of Information Technology and Telecommunications to determine the appropriate bandwidth requirement.Tenants would have the opportunity to directly communicate their digital needs, such as daily hours needed for online homework, to NYCHA. NYCHA can also hold open forums or conduct surveys to better understand tenant’s broadband width need.  This method would be superior to that currently being used by the de Blasio administration, as it would allow residents to determine what bandwidth actually meets their needs.

Another concern with the plan laid out by the de Blasio administration is that although Sprint is named as the provider, the specifics of the contract have not yet been made clear. As a result, we don’t know how the city plans to finance the continuous service cost, or how it will insure that Sprint maintains the broadband infrastructure and services. The contract should incorporate safeguards against broadband service deterioration and regulations that encourage keeping up to date with the latest broadband services demand.

In the modern age, internet access is the great equalizer. Yet the Department of Information Technology and Telecommunications reported that 36 percent of households below the poverty line do not have Internet access at home. Our city leaders now recognize that this contributes to a “homework gap” and economic immobility, as low-income residents rely on limited public services for job searches and educational resources. In other words, the internet is a critical service, not a luxury. We must recognize as a society that we cannot address inequality without first bridging this digital divide.

Matt Lazo is the Policy Change coordinator for Roosevelt @ CCNY and a 10 Ideas author. Robert Godfried is a member of Roosevelt @ Columbia and Roosevelt's 2015 Summer Institute.

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Four Crazy Economic Ideas You Might Hear at Tonight’s GOP Primary Debate

Aug 6, 2015Roosevelt Institute

The Republican presidential candidates will have their first televised debate of the 2016 cycle tonight. Here's what they're likely to say about the economy:

1. Cutting taxes on big corporations and top earners is the best way to grow the economy.

The Republican presidential candidates will have their first televised debate of the 2016 cycle tonight. Here's what they're likely to say about the economy:

1. Cutting taxes on big corporations and top earners is the best way to grow the economy.

All the candidates on stage tonight at the GOP primary debate will express some flavor of “trickle-down economics”—the failed idea that low taxes for the most well-off is the best policy for economic growth. Through a series of policies implemented over the past 35 years, we have already tried this tax-cutting strategy—in fact, some would say we are still in the midst of a 35-year trickle-down experiment—and as a result economic growth and business investment have slowed while inequality has risen.

To defend their position, Republican candidates will point out that America’s nominal corporate tax rate is among the highest in the world, but this is misleading. American corporations pay an effective tax rate of just 12 percent. Such a low rate could be justified if corporations were using the proceeds to fund productive investment, but the evidence does not support a connection between lower tax rates and higher investment. Today, U.S. corporations are holding more than $2 trillion sitting in offshore tax shelters, and a growing body of research shows that excess profits are used to enrich shareholders rather than improve a company’s long-term prospects for success.

Taxes on top incomes have fallen precipitously, from nearly 70 percent in 1980 to 39 percent today. While top earners have benefited from lower rates and a growing share of deductions and have captured nearly all of the economic gains of the recovery, median wages and family incomes have stagnated.

Thirty-five years of evidence is clear: the main result of cutting taxes at the top and for big corporations is more inequality, not more economic growth.

2. Supply-side policies will make the economy grow at 4 percent and solve America’s economic problems.

Jeb Bush and Chris Christie pledged to boost the economy to 4 percent growth. Historically, the United States has grown at an average annual rate of 2.9 percent, typically only growing above this trend when the economy is coming out of recession.

As we’ve seen, growth is not synonymous with broadly rising economic wellbeing. U.S. economic growth from 1979 to 2007 certainly benefited the top 1 percent of households, who saw incomes increase by 275 percent; however, compensation for the median households increased just 15 percent over this time—largely because families are working more hours, not because wages are broadly rising. 

The deck is stacked against candidates pledging 4 percent growth: The Congressional Budget Office forecasts that U.S. growth will slow to 2.1 percent by the end of the decade as the native-born labor force ages and shrinks. Not only is a 4 percent growth goal unprecedented in advanced economies like the U.S., but there is no credible way to reach 4 percent without building a more inclusive economy.

3. The United States is nearing a Greek-style debt crisis and needs more spending cuts.

The United States is not Greece. Greece’s main pitfalls were being part of a fundamentally flawed European monetary union, combined with Europe’s fundamentally flawed policy response to the financial crisis: sharp public spending cuts that plunged Greece’s economy into a tailspin, causing it to contract by 25 percent, and ballooned the debt burden, which is on track to exceed 170 percent of GDP by 2022.

Yes, the United States has debt, but at an eminently manageable level. And unlike Greece, which does not control the euro, the United States issues government bonds in a currency over which it has monetary policy control. More importantly, it matters a lot what we spend borrowed money on: war and tax cuts for corporations and the wealthy, or investments in education, infrastructure, and science that would strengthen our long-run potential for growth.

4. The Affordable Care Act and Dodd-Frank financial reform are crippling the economy and must be repealed.

A well-functioning economy needs healthy people to drive innovation and growth and a well-functioning financial system that efficiently channels savings into investment without causing systemic crises. Before the Affordable Care Act (ACA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act, America lacked for both.

The ACA extended health care to 16 million people and lowered health costs for those with public and private insurance. Repealing the ACA would cast millions out from the health care system, raise health care costs across the board, kill the hallmark improvements that ended restrictions on people with pre-existing health conditions, and increase federal budget deficits by $137 billion.

Americans are still suffering the hangover of the financial crisis and housing market collapse that led to $8 trillion in lost household wealth, double-digit unemployment, and a taxpayer-subsidized bailout of the world’s largest financial institutions. Five years after Dodd-Frank, many new rules intended to prevent such a catastrophe from happening again are still yet to be implemented due to rampant opposition, such as the rule for corporations to publish CEO pay ratios.

Photo by Gage Skidmore

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Bush Didn't Misspeak: The GOP Wants to Dismantle Reproductive Health Programs

Aug 5, 2015Andrea Flynn

Last night Jeb Bush made a slip of the tongue that let us know just where he stands on reproductive health. “I’m not sure we need half a billion dollars for women’s health issues,” he said at an event in Nashville. In a way, he’s right: We actually need much more than half a billion dollars to fully meet the need for publicly funded reproductive health services.

Last night Jeb Bush made a slip of the tongue that let us know just where he stands on reproductive health. “I’m not sure we need half a billion dollars for women’s health issues,” he said at an event in Nashville. In a way, he’s right: We actually need much more than half a billion dollars to fully meet the need for publicly funded reproductive health services. Bush has since backtracked on his comment, which came on the heels of Senate Republicans’ failed attempt to defund Planned Parenthood, but we should not be fooled. His remarks and the recent furor that led to said defunding attempt are a clear illustration of the resentment GOP lawmakers and candidates have for our nation’s reproductive health programs, and reflect their resolve to diminish them.

It’s important to consider Bush’s remarks and the attacks on Planned Parenthood in the political context of the past four years. As Elizabeth Warren indicated in her impassioned speech before the Senate this week, over the past five years Republican state lawmakers have passed nearly 300 new restrictions on reproductive health access. In the first quarter of 2015, lawmakers in 43 states introduced a total of 332 provisions to restrict abortion access, which is increasingly out of reach for women throughout the country. Republicans have voted more than 50 times to repeal the Affordable Care Act (ACA), which has dramatically improved women’s health coverage and access. In the fall of 2013, the party orchestrated a costly government shutdown motivated by their opposition to the ACA’s contraceptive mandate. And in June, House Republicans proposed eliminating funding for Title X, the federal family planning program.

When conservatives talk about “women’s health” funding, they aren’t talking about funding for abortion. Federal law already prohibits public dollars from being spent on abortion or abortion-related care. They’re talking about funding for family planning and other reproductive health services (pregnancy counseling, cancer screenings, STD treatment, etc.), which mainly comes through Medicaid and Title X, two programs that are consistently in conservative crosshairs.

There are no two ways about it: Funding for public reproductive health programs is far below where it should be. Today funding for Title X is 70 percent lower than it was in 1980 (accounting for inflation). If funding for this program had kept up with inflation over the last 35 years, the current funding level would be $941.5 million. In 2015, Congress appropriated $286.5 million for Title X (down from $317 million in 2010).

Congress approved these funding decreases (and Republican senators have proposed even further cuts while their House colleagues have proposed complete elimination of Title X) despite a growing need for services. The Guttmacher Institute reports that between 2000 and 2010, the number of women who needed publicly funded contraceptive services and supplies grew by 17 percent and by 2013 had grown by an additional 5 percent (an additional 918,000 women). Guttmacher attributes this to an increase in the proportion of adult women who are poor or low-income; the current U.S. public family planning program is only able to serve approximately 42 percent of those in need. Turns out “half a billion” isn’t quite enough.

"Title X-funded health centers provide essential preventive care to millions of women and men across the country and are often the only source of health care they receive all year," said Clare Coleman, President and CEO of the National Family Planning & Reproductive Health Association. "The network of publicly funded family planning providers has long been underfunded despite a growing need for these vital services."

Title X-funded clinics—of which some, but not all, are Planned Parenthood providers—are the backbone of the nation’s reproductive health care system, ensuring that low-income individuals, young people, immigrants, and women of color are able to access affordable, quality reproductive health services. Every year, nearly 5 million individuals rely on these providers for birth control, breast and cervical cancer screenings, pregnancy testing, and a range of other preventive services. In 2012, Title X clinics helped women avert 1.1 million unintended pregnancies that would have otherwise resulted in 527,000 unplanned births and 363,000 abortions. In addition to the extraordinary health benefits, Title X is smart economics. It’s estimated that every dollar invested in family planning yields a taxpayer savings of $7.09, and that Title X-funded clinics save more than $5 billion annually in pubic spending.  

Conservative lawmakers have spent much more time in recent years finding ways to restrict access basic health care than they have solving the actual problems that plague women and families like pay inequity, low wages, weak worker protections, and a lack of work–family benefits. If recent events are any indication, they’re not going to veer from that course now. Jeb Bush’s recent remarks, the hoopla over Planned Parenthood, and the relentless assault on reproductive health and rights is a clear reminder of where issues central to women and families fall on the priority list of conservative lawmakers: dead last.

Andrea Flynn is a Fellow at the Roosevelt Institute. Follow her on Twitter at @dreaflynn.

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Planned Parenthood Vote Highlights the GOP's Broken Moral Compass

Aug 4, 2015Andrea Flynn

Senate Republicans failed yesterday to advance a bill that would have defunded Planned Parenthood, but their crusade against the organization and others like it is far from over.

Senate Republicans failed yesterday to advance a bill that would have defunded Planned Parenthood, but their crusade against the organization and others like it is far from over. Speaking in support of the legislation she sponsored, Iowa Senator Joni Ernst said the Planned Parenthood videos have “shaken the moral compass of our country." But given that members of the “pro-life” party are willing to shut down the government over reproductive health access even as they ignore and exacerbate the actual crises that threaten our families and communities, we must question the alignment of the compass they’re following.

The video saga has now been proven to be complete nonsense. Two state investigations have cleared Planned Parenthood of any wrongdoing. Planned Parenthood is not, as the video’s editors portrayed, harvesting fetal tissue for profit, and their donation of such tissue and their compensation for related costs is, it turns out, perfectly legal. In fact, some of the senators leading this crusade (including Mitch McConnell) signed the very piece of 1993 legislation that legalized tissue donation. There are a number of issues shaking the moral compass of this country, but Planned Parenthood is not one of them.

Child poverty should shake our moral compass. Today, 22 percent of all children live in poverty, including 40 percent of Black children, and almost half live in low-income families. The U.S. child poverty rate is higher than all but one other OECD country. Poor children are more likely to drop out and perform poorly in school, to have developmental delays, and to experience behavioral, physical, and socioemotional problems. Yet conservatives still love to hate on the safety net programs that help keep these kids and their families afloat. In recent years, they have threated to cut funding for SNAP (food stamps) and WIC (the supplemental nutrition program that serves nearly 10 million low-income women and children) and have opposed legislation that would make it more affordable for low-income kids to go to college.

Maternal mortality should shake our moral compass. Today, more U.S. women die in childbirth and from pregnancy-related causes than at almost any point in the last 25 years, and the U.S. is one of only seven countries to see its maternal mortality rate increase over the last decade. Black women are three to four times more likely to die from pregnancy-related causes than white women, and in some communities experience a maternal mortality rate equal to that in some Sub-Saharan African countries. But instead of expanding access to quality, affordable, and comprehensive health care, conservatives are busy closing clinics that predominantly serve women of color, low-income women, and young women. They remain steadfast in their refusal to participate in Medicaid expansion under the Affordable Care Act (ACA), which would extend coverage and care to millions more low-income women. And they are still intent on repealing the ACA in its entirety, despite the fact that it has brought coverage to more than 16 million individuals.

Structural racism should shake our moral compass. The conservatives accusing Planned Parenthood of devaluing human life have been pretty quiet on the systemic violence and discrimination against communities of color. Where’s the outrage over Sandra Bland, Freddie Gray, Trayvon Martin, and the countless others who have died at the hands of law enforcement? Where’s the outrage from the supposed “pro-family” party over the school-to-prison pipeline that has torn apart families and communities across the country? Where’s the outrage over our imbalanced and unjust criminal justice system? Where is the space for these lives under the conservative pro-life umbrella?

Pay inequity should shake our moral compass. The gender pay gap in the United States is alive and well, with women still making 78 percent of the earnings of white men (Black and Latina women make 64 and 56 percent, respectively). This gap results in a significant loss of income for women and their families over the life cycle and contributes to the high rates of poverty among women and single mothers as well as children. If equal pay were realized, it would mean a raise for nearly 60 percent of U.S. women and two-thirds of single mothers. The increase in earnings would expand access to health care, food and housing security, and educational opportunities, and would have countless long-term benefits for children. But GOP senators have voted four times since 2012 to block the Paycheck Fairness Act, which would make it easier for employees to identify and address pay inequities. They are also consistently opposed to raising the minimum wage, a move that would benefit more than one-fifth of all children in the United States.

Income inequality—today greater than at any point since the Great Depression—should shake our moral compass. Thanks to our broken economic rules, the incomes of the top 1 percent increased by as much as 200 percent over the past 30 years while the net worth of the poorest Americans has decreased and stagnant wages and increased debt have pushed more middle-class families into poverty. After the 2008 recession, millions of Americans lost their homes, their jobs and their health care, and they are still struggling to regain their footing. The vast majority of Americans now believe a middle-class lifestyle is well beyond their reach. Yet conservatives continue to support the very policies that got us here in the first place: tax cuts for the wealthy; the erosion of unions and labor protections; and corporate structures that encourage a short-term focus on stock prices instead of long-term investments in growth and innovation.

The inability of individuals to access basic health services should shake our moral compass. Conservatives insist their efforts would not actually impact health access, because Planned Parenthood’s funding would simply be reallocated to other providers. But there are not actually enough providers to fill the void that would be left by Planned Parenthood. As Senator Patty Murray said, “you can’t pour a bucket of water into a cup.” Even with Planned Parenthood and the gains of the ACA, conservative laws have left women across this country reeling. We need more Planned Parenthoods and more of their sister clinics, not fewer.

Conservatives insist they care about the health of women and their families, but their actions indicate otherwise. They have proposed the elimination of Title X, the nation’s only program dedicated to providing family planning care and services. They are threatening—for the third time in four years—to shut down the federal government over reproductive health funding. They continue to support legislation that is closing clinics across the country, cutting access not only to abortion but also to basic preventive health services. The list goes on. This party is more interested in advancing its antiquated, harmful agenda than it is in the health of women—and men, young people, immigrants, trans folks, and low-income families—who rely on Planned Parenthood and other such providers. Their moral compass needs a good shaking up. 

Andrea Flynn is a Fellow at the Roosevelt Institute. Follow her on Twitter at @dreaflynn.

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Introducing Our Latest Report: Defining Financialization

Jul 27, 2015Mike Konczal

We’re releasing a new report today as part of the Roosevelt Institute’s Financialization Project: Definining Financialization.

Following the well-received Disgorge The Cash, this is really the foundational paper that outlines a working definition of financialization, some of the leading concerns, worries, and research topics in each area, and a plan for future research and action. Since this is what we are building from, we’d love feedback.

Prior to this, I couldn’t find a definition of financialization broad enough to account for several different trends and accessible enough for a general, nonacademic audience. So we set out to create our own solid definition of financialization that can serve as the foundation for future research and policy. That definition includes four core elements: savings, power, wealth, and society. Put another way, financialization is the growth of the financial sector, its increased power over the real economy, the explosion in the power of wealth, and the reduction of all of society to the realm of finance.

Each of these four elements is essential, and together they tell a story about the way the economy has worked, and how it hasn’t, over the past 35 years. This enables us to understand the daunting challenges involved in reforming the financial sector, document the influence of finance over society and the economy as a whole, and clarify how finance has compounded inequality and insecurity while creating an economy that works for fewer people.

Savings: The financial sector is responsible for taking our savings and putting it toward economically productive uses. However, this sector has grown larger, more profitable, and less efficient over the past 35 years. Its goal of providing needed capital to citizens and businesses has been forgotten amid an explosion of toxic mortgage deals and the predatory pursuit of excessive fees. Beyond wasting financial resources, the sector also draws talent and energy away from more productive fields. These changes constitute the first part of our definition of financialization.

Power: Perhaps more importantly, financialization is also about the increasing control and power of finance over our productive economy and traditional businesses. The recent intellectual, ideological, and legal revolutions that have pushed CEOs to prioritize the transfer of cash to shareholders over regular, important investment in productive expansion need to be understood as part of the expansion of finance.

These historically high payouts drain resources away from productive investment. But beyond investment, there are broader worries about firms that are too dominated by the short-term interests of shareholders. These dynamics increase inequality and have a negative impact on innovation. Firms only interested in shareholder returns may be less inclined to take on the long-term, risky investment in innovation that is crucial to growth. This has spillover effects on growth and wages that can create serious long-term problems for our economy. This also makes full employment more difficult to achieve, as the delinking of corporate investment from financing has posed a serious challenge for monetary policy.

Wealth: Wealth inequality has increased dramatically in the past 35 years, and financialization includes the ways in which our laws and regulations have been overhauled to protect and expand the interests of those earning income from their wealth at the expense of everyone else. Together, these factors dramatically redistribute power and wealth upward. They also put the less wealthy at a significant disadvantage.

More important than simply creating and expanding wealth claims, policy has prioritized wealth claims over competing claims on the economy, from labor to debtors to the public. This isn’t just about increasing the power of wealth; it’s about rewriting the rules of the economy to decrease the power of everyone else.

Society: Finally, following the business professor Gerald Davis, we focus on how financialization has brought about a “portfolio society,” one in which “entire categories of social life have been securitized, turned into a kind of capital” or an investment to be managed. We now view our education and labor as “human capital,” and we imagine every person as a little corporation set to manage his or her own investments. In this view, public functions and responsibilities are mere services that should be run for profit or privatized, or both.

This way of thinking results in a radical reworking of society. Social insurance once provided across society is now deemphasized in favor of individual market solutions; for example, students take on an ever-increasing amount of debt to educate themselves. Public functions are increasingly privatized and paid for through fees, creating potential rent-seeking enterprises and further redistributing income and wealth upward. This inequality spiral saps our democracy and our ability to collectively address the nation’s greatest problems.

We have a lot of future work coming from this set of definitions, including a policy agenda and FAQ on short-termism in the near future. I hope you check this out!

Follow or contact the Rortybomb blog:
 
  

 

We’re releasing a new report today as part of the Roosevelt Institute’s Financialization Project: Definining Financialization.

Following the well-received Disgorge The Cash, this is really the foundational paper that outlines a working definition of financialization, some of the leading concerns, worries, and research topics in each area, and a plan for future research and action. Since this is what we are building from, we’d love feedback.

Prior to this, I couldn’t find a definition of financialization broad enough to account for several different trends and accessible enough for a general, nonacademic audience. So we set out to create our own solid definition of financialization that can serve as the foundation for future research and policy. That definition includes four core elements: savings, power, wealth, and society. Put another way, financialization is the growth of the financial sector, its increased power over the real economy, the explosion in the power of wealth, and the reduction of all of society to the realm of finance.

Each of these four elements is essential, and together they tell a story about the way the economy has worked, and how it hasn’t, over the past 35 years. This enables us to understand the daunting challenges involved in reforming the financial sector, document the influence of finance over society and the economy as a whole, and clarify how finance has compounded inequality and insecurity while creating an economy that works for fewer people.

Savings: The financial sector is responsible for taking our savings and putting it toward economically productive uses. However, this sector has grown larger, more profitable, and less efficient over the past 35 years. Its goal of providing needed capital to citizens and businesses has been forgotten amid an explosion of toxic mortgage deals and the predatory pursuit of excessive fees. Beyond wasting financial resources, the sector also draws talent and energy away from more productive fields. These changes constitute the first part of our definition of financialization.

Power: Perhaps more importantly, financialization is also about the increasing control and power of finance over our productive economy and traditional businesses. The recent intellectual, ideological, and legal revolutions that have pushed CEOs to prioritize the transfer of cash to shareholders over regular, important investment in productive expansion need to be understood as part of the expansion of finance.

These historically high payouts drain resources away from productive investment. But beyond investment, there are broader worries about firms that are too dominated by the short-term interests of shareholders. These dynamics increase inequality and have a negative impact on innovation. Firms only interested in shareholder returns may be less inclined to take on the long-term, risky investment in innovation that is crucial to growth. This has spillover effects on growth and wages that can create serious long-term problems for our economy. This also makes full employment more difficult to achieve, as the delinking of corporate investment from financing has posed a serious challenge for monetary policy.

Wealth: Wealth inequality has increased dramatically in the past 35 years, and financialization includes the ways in which our laws and regulations have been overhauled to protect and expand the interests of those earning income from their wealth at the expense of everyone else. Together, these factors dramatically redistribute power and wealth upward. They also put the less wealthy at a significant disadvantage.

More important than simply creating and expanding wealth claims, policy has prioritized wealth claims over competing claims on the economy, from labor to debtors to the public. This isn’t just about increasing the power of wealth; it’s about rewriting the rules of the economy to decrease the power of everyone else.

Society: Finally, following the business professor Gerald Davis, we focus on how financialization has brought about a “portfolio society,” one in which “entire categories of social life have been securitized, turned into a kind of capital” or an investment to be managed. We now view our education and labor as “human capital,” and we imagine every person as a little corporation set to manage his or her own investments. In this view, public functions and responsibilities are mere services that should be run for profit or privatized, or both.

This way of thinking results in a radical reworking of society. Social insurance once provided across society is now deemphasized in favor of individual market solutions; for example, students take on an ever-increasing amount of debt to educate themselves. Public functions are increasingly privatized and paid for through fees, creating potential rent-seeking enterprises and further redistributing income and wealth upward. This inequality spiral saps our democracy and our ability to collectively address the nation’s greatest problems.

We have a lot of future work coming from this set of definitions, including a policy agenda and FAQ on short-termism in the near future. I hope you check this out!

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At Vox, Dodd-Frank at 5

Jul 27, 2015Mike Konczal

In honor of Dodd-Frank's fifth birthday party last week, I wrote a 4,000 word summary of the major accomplishments of the financial reform act. It includes what is working as well as what is stalled, what needs to be amplified and what isn't yet tackled. There's a focus on the CFPB, derivatives, capital, and ending Too Big To Fail. It's aimed at both readers with little background as well as people with some familiarity, so I hope you check it out and share.

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In honor of Dodd-Frank's fifth birthday party last week, I wrote a 4,000 word summary of the major accomplishments of the financial reform act. It includes what is working as well as what is stalled, what needs to be amplified and what isn't yet tackled. There's a focus on the CFPB, derivatives, capital, and ending Too Big To Fail. It's aimed at both readers with little background as well as people with some familiarity, so I hope you check it out and share.

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Hillary Clinton's Economic Agenda is Good for Women, But Should Be Even Bolder

Jul 16, 2015Andrea Flynn

Hillary Clinton gave her first major economic policy address earlier this week and outlined her goals for lifting wages for the middle class, expanding social services, and addressing growing economic inequality. She said that an important ingredient to strong economic growth is women’s workforce participation, and promised to knock down many of the barriers that hold women—and our economy—back.

Hillary Clinton gave her first major economic policy address earlier this week and outlined her goals for lifting wages for the middle class, expanding social services, and addressing growing economic inequality. She said that an important ingredient to strong economic growth is women’s workforce participation, and promised to knock down many of the barriers that hold women—and our economy—back. But she failed to mention one issue that is critical to the economic wellbeing of women and their families: access to reproductive health care. 

It was encouraging to hear Clinton acknowledge the important role that women play in the U.S. economy. After all, women’s entrance into the workforce in the 1970s and 1980s is credited with driving a fifth of GDP growth. But over the past 15 years, their participation in the labor market has declined from 60 to 57 percent, not a major decline but certainly a trend in the wrong direction. The U.S. now ranks 19th out of 24 advanced countries on this measure. America’s dismal status can be blamed in large part on the lack of generous and sensible work and family polices we see in other OECD countries. These include paid sick leave, paid family leave, and affordable child care. Another factor is the stubborn wage gap that disadvantages women—and particularly women of color—throughout their working lives and beyond. Clinton indicated that addressing these inequities is a primary focus of her economic agenda. Doing so would significantly improve the lives millions of women and their families. 

But we must do all that and more. Without access to comprehensive, quality, and affordable health care, including the full spectrum of reproductive health care—maternal health care, family planning, and abortion care—women and their families will not be able to take full advantage of the economic opportunities available to them.

I’m not worried that Hillary isn’t going to be a strong supporter of reproductive rights. In her Roosevelt Island campaign launch, she called out Republicans who “shame and blame women, rather than respect our right to make our own reproductive health decisions.” Her campaign sharply criticized House Republicans for passing a 20-week abortion ban earlier this year, saying, "Politicians should not interfere with personal medical decisions, which should be left to a woman, her family and her faith, in consultation with her doctor or health care provider." Historically, she has been an advocate for reproductive rights in both domestic and international policy.

But it would be powerful if she could also articulate reproductive health as a critical component of economic security, as we at the Roosevelt Institute did in our recent blueprint for reversing economic inequality. Voters understand reproductive health as an economic issue. New polling from Virginia shows that 64 percent of voters there believe that a woman’s financial stability is dependent on her ability to control whether and when she has children, and 68 percent believe laws that make it harder to access abortion can have a negative impact on woman’s financial security. Polling conducted in New York and Pennsylvania showed similar results.

This isn’t just a matter of opinion; the evidence illustrates that reproductive health access has economic benefits for families. Studies have shown links between family planning access and greater educational and professional opportunities for women, as well as increased earnings over women’s lifetimes. Women report that using birth control has allowed them to better take care of themselves and their families, to stay in school, to support themselves financially, and to get or keep a job and pursue a career. And when women don’t have access to reproductive health care, they are economically disadvantaged. Take the results of the recent Turnaway Study, which has shown that women who seek but are denied an abortion are three times as likely as those who access the procedure to end up below the federal poverty line two years later.

In light of these findings, a progressive economic agenda will be incomplete if it does not include access to comprehensive reproductive health care. Lack of access to those services has significant health and economic costs. Women of color, immigrant women, and poor women all experience higher rates of chronic disease, unintended pregnancy, and lower life expectancy than women with higher incomes. U.S. women of color are 3–4 times more likely than white women to die of pregnancy-related causes, and infants born to those women are 2.4 times more likely than those born to white women to die in their first year of life. In some regions of the United States, the maternal mortality rate among Black women is comparable to that in some Sub-Saharan African countries. These disparities impact women’s quality of life. They inhibit these women’s ability to care for themselves and their families, to play an active role in their communities, and to participate in the workforce and achieve economic security. There is no more important time than now to advocate for a broader progressive agenda. Attacks on reproductive health access are at an all-time high and access to basic health services is being rolled back at a rapid rate.

The right and ability to make decisions about our bodies is a fundamental building block of our social and economic wellbeing. We can’t expect people to separate the physical, social, and economic demands and stresses they experience. Are women supposed to worry about their need for an abortion without worrying about the job they might lose if they take a day off to get one? Do they stress over needing to put food on the table for their kids without also worrying about how they will pay for birth control, student loans, and rent? No. For the vast majority of people in this country, life is messy and complicated and overwhelming, and everyday families have no choice but to juggle each of these issues simultaneously.

Progressives know that. Now is the time for them to put forth an economic agenda that will address all aspects of our economic wellbeing—not just those that have historically been politically palatable. 

Andrea Flynn is a Fellow at the Roosevelt Institute. Follow her on Twitter at @dreaflynn.

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Beyond Fairness: Skyrocketing CEO Pay Is Bad for Our Economy

Jul 16, 2015Susan Holmberg

Next week marks the 5th anniversary of the Dodd-Frank Wall Street Reform and Protection Act. While the law has made some solid strides toward regulating Wall Street (with the creation of the Consumer Financial Protection Bureau arguably the most potent and popular), there is still much work to be done, particularly in the realm of CEO pay reform.

Next week marks the 5th anniversary of the Dodd-Frank Wall Street Reform and Protection Act. While the law has made some solid strides toward regulating Wall Street (with the creation of the Consumer Financial Protection Bureau arguably the most potent and popular), there is still much work to be done, particularly in the realm of CEO pay reform.

From 1978 to 2014, executive compensation at American firms rose 997 percent, compared with a sluggish 10.9 percent growth in worker compensation over the same period.

While CEO pay continues its determined ascent up a seemingly limitless mountain of stock options and other performance pay, the SEC has yet to implement all of the Dodd-Frank rules designed to reform CEO pay practices. The Say-on-Pay provision, which allows shareholders an advisory vote on proposed executive compensation packages, has been in effect since 2011, and Section 954—the clawbacks provision—should soon be finalized. But the SEC continues to delay the disclosure rule on CEO–worker pay gaps, as well as a few other key provisions.

This raises a few obvious questions: Why is it so important to urge the SEC to implement these CEO pay reform rules? Does it really matter how much CEOs are paid? Isn’t this debate really just about people being jealous of, for example, former Oracle chief Larry Ellison and his Hawaiian island?

Hardly. We have to stop talking about the CEO pay issue in terms of fairness, which usually leads to accusations of envy. This conversation just doesn’t get us very far. The truth is that skyrocketing CEO pay is terrible for our economy for two reasons, as we explain in the infographic below.

To elaborate, the problems are as follows:

1. How CEOs Are Paid

The current trend in how CEOs are paid, particularly with stock options, creates a range of economic problems. Several studies show that equity-heavy pay, because it makes executives very wealthy very quickly, distorts CEOs’ incentives, inducing them to take on too much risk. Instead of bearing this risk themselves, they shift it onto the rest of society, as we saw during the financial crisis. This model also encourages executives to behave fraudulently, as in the backdating scandals of a decade ago, and lessens their motivation to invest in their businesses. In addition, according to economist William Lazonick, in order to issue stock options to top executives while avoiding the dilution of their stock, corporations often divert funds to stock buybacks rather than spending on research and development, capital investment, increased wages, or new hiring. To top it all off, these pay packages cost taxpayers billions of dollars due to the performance pay tax loophole instituted by President Clinton.

2. How Much CEOs Are Paid

In addition to its problematic structure, the sheer volume of CEO pay creates an array of economic problems. A handful of high-profile economists—Thomas Piketty, Joseph Stiglitz, and Robert Reich, to name a few—have begun to make the case that a high degree of economic inequality precipitates financial instability because it leads to, for example, a decline in consumer demand, which has tremendous spillover effects in terms of investment, job creation, and tax revenue, not to mention social instability.

The growth of executive pay is a core driver of America’s rising economic inequality. According to the Economic Policy Institute, “[e]xecutives, and workers in finance, accounted for 58 percent of the expansion of income for the top 1 percent and 67 percent of the increase in income for the top 0.1 percent from 1979 to 2005.” Another calculation by economists Ian Dew-Becker and Robert Gordon finds that the large increase in the share of the top .01 percent is mostly explained by the incomes of superstars and CEOs.

Dodd-Frank’s anniversary should remind us that we still have a long way to go to rein in ever-increasing CEO pay, including instituting key provisions like the CEO–worker pay gap. If we move the CEO pay debate beyond the rhetoric of fairness and envy to a conversation about its costs, we could galvanize the public around this issue. The evidence is clear: skyrocketing CEO pay is not just an ethical problem; it’s also simply bad economics.

Susan Holmberg is Director of Research and a Fellow at the Roosevelt Institute.

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On Paleo and Faith in Government

Jul 15, 2015Mike Konczal

Our Rewriting the Rules report is in the news as part of a debate over the more liberal push in economic thinking. Matt Yglesias argues that this report and the new agenda “reverse the neoliberal formula.” He coins the term “new paleoliberalism” to describe it. David Brooks adds to this, arguing that said paleoliberalism displays “a naïve faith” in government. I want to respond to these three points in turn.

First, Yglesias says the new agenda breaks with the consensus. The old consensus, to him, was that “[t]he main way the government can impact the pre-tax distribution of income is by providing high-quality education,” and if that fails, “progressive taxes should fund redistributive programs to produce a better outcome.”

I think focusing on a new consensus is correct, but I’d think about it a different way. For us, the old consensus was built around two economic folk theories: that as an economy matures, inequality will decrease and all incomes will go up; and that any efforts to combat inequality have a serious negative impact on growth. (It’s not clear whether Kuznets or Okin, respectively, would have agreed with the extreme versions of their arguments that became this consensus.)

The new liberal economic consensus has three elements. To start, you can’t really distinguish between pre-and-post tax income the way these old arguments do. The market structures that determine final income, including taxes, also are a serious determinant of market income. This is pretty obvious if you say it in English: The rules of the economy matter. But this gets lost in the consistent idealization of abstract, perfect markets.

Also, in a world without perfect markets, efforts to fight inequality have fewer strict tradeoffs than people imagined, especially at the margins. We certainly see this internationally, with a wide variety of efforts to change the distribution of income and no obvious impact on growth. As a result, as economies grow, inequality can do any number of things—but it is a choice determined by the market.



Not Paleo

The second question is whether the new liberal consensus is “paleo.” Inasmuch as the term means nostalgia, recycling old theories, and is bordering on revanchist, I like to think it is not.

The focus is very much a reaction to the facts on the ground, including a financial system that isn’t working to channel good investments, new forms of monopoly power, lack of institutions that support the working lives of women, a criminal justice system that has become too punitive, full employment in a period of weak demand, and so on.

The tools remain those that Franklin Roosevelt formalized: a mixed economy, a regulatory state, and social insurance as the bedrock of a thriving economy. Those are the right tools to build on. But how those tools are deployed changes with the times.

There is a strain of liberal thinking that imagines we can wish the labor movement of the 1940s or the 1890s back into existence. Our report has a detailed labor section that I think is really important. But it doesn’t simply imagine we can recreate an economy that no longer exists. Instead, it builds from where we are now.

As a third point, David Brooks, talking about Clinton but mentioning the same liberal economic consensus as Yglesias, asks if we have too much “unchastened faith in the power of government,” a faith that is “epistemologically naïve.”

What strikes me about this argument is that the Republicans have no less faith in the power of government. They have faith that the government can privatize social insurance in a way that won’t involve weaker security and higher costs. They have faith that if the government gives employers wage subsidies for poorer workers, employers won’t simply pocket them in wage bargaining. They have faith, against evidence, that the government having no taxes on capital will cause a boom in private investment. They have faith that the government cutting taxes will more than make up the lost revenue. Their faith leads them to conflate building a robust civil society and economic security with laissez-faire economics.

You could say that this is a faith in “the market.” Yet rules and institutions will always shape markets; the nature of rules is what determines what the economy will look like. The transfer of power to employers and owners isn’t “less government” in any real sense of the term. Structuring markets to give employers and owners more power based on a faith that this will usher in more prosperity is not just naïve; the past few decades have shown it to be a failure.

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Our Rewriting the Rules report is in the news as part of a debate over the more liberal push in economic thinking. Matt Yglesias argues that this report and the new agenda “reverse the neoliberal formula.” He coins the term “new paleoliberalism” to describe it. David Brooks adds to this, arguing that said paleoliberalism displays “a naïve faith” in government. I want to respond to these three points in turn.

First, Yglesias says the new agenda breaks with the consensus. The old consensus, to him, was that “[t]he main way the government can impact the pre-tax distribution of income is by providing high-quality education,” and if that fails, “progressive taxes should fund redistributive programs to produce a better outcome.”

I think focusing on a new consensus is correct, but I’d think about it a different way. For us, the old consensus was built around two economic folk theories: that as an economy matures, inequality will decrease and all incomes will go up; and that any efforts to combat inequality have a serious negative impact on growth. (It’s not clear whether Kuznets or Okin, respectively, would have agreed with the extreme versions of their arguments that became this consensus.)

The new liberal economic consensus has three elements. To start, you can’t really distinguish between pre-and-post tax income the way these old arguments do. The market structures that determine final income, including taxes, also are a serious determinant of market income. This is pretty obvious if you say it in English: The rules of the economy matter. But this gets lost in the consistent idealization of abstract, perfect markets.

Also, in a world without perfect markets, efforts to fight inequality have fewer strict tradeoffs than people imagined, especially at the margins. We certainly see this internationally, with a wide variety of efforts to change the distribution of income and no obvious impact on growth. As a result, as economies grow, inequality can do any number of things—but it is a choice determined by the market.



Not Paleo

The second question is whether the new liberal consensus is “paleo.” Inasmuch as the term means nostalgia, recycling old theories, and is bordering on revanchist, I like to think it is not.

The focus is very much a reaction to the facts on the ground, including a financial system that isn’t working to channel good investments, new forms of monopoly power, lack of institutions that support the working lives of women, a criminal justice system that has become too punitive, full employment in a period of weak demand, and so on.

The tools remain those that Franklin Roosevelt formalized: a mixed economy, a regulatory state, and social insurance as the bedrock of a thriving economy. Those are the right tools to build on. But how those tools are deployed changes with the times.

There is a strain of liberal thinking that imagines we can wish the labor movement of the 1940s or the 1890s back into existence. Our report has a detailed labor section that I think is really important. But it doesn’t simply imagine we can recreate an economy that no longer exists. Instead, it builds from where we are now.

As a third point, David Brooks, talking about Clinton but mentioning the same liberal economic consensus as Yglesias, asks if we have too much “unchastened faith in the power of government,” a faith that is “epistemologically naïve.”

What strikes me about this argument is that the Republicans have no less faith in the power of government. They have faith that the government can privatize social insurance in a way that won’t involve weaker security and higher costs. They have faith that if the government gives employers wage subsidies for poorer workers, employers won’t simply pocket them in wage bargaining. They have faith, against evidence, that the government having no taxes on capital will cause a boom in private investment. They have faith that the government cutting taxes will more than make up the lost revenue. Their faith leads them to conflate building a robust civil society and economic security with laissez-faire economics.

You could say that this is a faith in “the market.” Yet rules and institutions will always shape markets; the nature of rules is what determines what the economy will look like. The transfer of power to employers and owners isn’t “less government” in any real sense of the term. Structuring markets to give employers and owners more power based on a faith that this will usher in more prosperity is not just naïve; the past few decades have shown it to be a failure.

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