State of the Union 2014: Obama Offers Action, Not Apologies

Jan 29, 2014Jeff Madrick

The president promised to do what he can without Congress, even if it isn't much.

From a political point of view, President Obama gave one of the best speeches of his presidency last night. In this, his fifth State of the Union Address, he avoided all apologies. No word about the slow progress on cutting unemployment, or the failure of the healthcare.gov rollout, or the inability to pass gun control, or the extreme excess of government intrusion on America privacy.

The president promised to do what he can without Congress, even if it isn't much.

From a political point of view, President Obama gave one of the best speeches of his presidency last night. In this, his fifth State of the Union Address, he avoided all apologies. No word about the slow progress on cutting unemployment, or the failure of the healthcare.gov rollout, or the inability to pass gun control, or the extreme excess of government intrusion on America privacy.

His tone was resolute and optimistic, and he struck many progressive chords. He made a nation that is down feel up. President Obama in particular made a strong case for a higher minimum wage. Commentators like David Brooks have pooh-poohed this because it wouldn’t raise that many families above the poverty line. This is the height of insensitivity. The poverty line is desperately low in America. But more than half the benefit would go to families that earn $40,000 or less, families in which one of its members will get a raise—usually an adult—if the minimum wage is raised. That’s a family, not an individual. And the higher minimum wage bumps up wages just above it.

Any idea that Americans are getting paid what they deserve, which is the assumption the Brookses of the world make, is a triumph of utopian insensitivity.

President Obama gave a shoutout to Senator Tom Harkin, who is leading the campaign for a $10.10 minimum wage in Congress. We are proud to say that Senator Harkin was our keynote speaker at the Bernard L. Schwartz Rediscovering Government Initiative's jobs emergency conference last year.  

But as I say, the president didn’t dwell in the realm of apology. He will raise pay for those on federal contracts. He talked about equal pay for women. He wants an immigration bill. He implied that inequality cannot be tolerated at this level in America. He would offer subsidies for business to bring jobs home.

All these struck optimistic notes. But he avoided the policies that really need doing. Sequestration has to be ended and government spending pumped up to get unemployment lower at a faster pace. But he did not talk about fiscal stimulus. He would live within the bounds of the austerity economics he helped bring about, even if he was not nearly as responsible for it as the Republicans.

He did not talk much about fixes to Obamacare but made clear it is helping millions already. This may sound like rhetoric, but it is critical. Too few realize how beneficial the new plan is—which has partly been Obama’s fault. He has avoided talking much about it. Last night he came out swinging, justifiably so. But it needs some fixes, and eventually a public option.

The headline is that Obama says he will do what he can with or without a recalcitrant Congress. The truth is he can’t do much. But for a president who has not taken the battle to the members on the Hill, this speech was a triumph and long in coming. He put Congress on the spot. He should keep using the bully pulpit, unafraid to do so, because he is right and they are mostly wrong. 

Jeff Madrick is a Senior Fellow at the Roosevelt Institute and Director of the Bernard L. Schwartz Rediscovering Government Initiative.

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Daily Digest - January 29: The State of Our Union Depends on Our Communities

Jan 29, 2014Rachel Goldfarb

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Student-Run Group to Evaluate Cornell-Community Relations (Ithaca Journal)

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Student-Run Group to Evaluate Cornell-Community Relations (Ithaca Journal)

D. W. Nutt speaks with Roosevelt Institute Associate Director of Networked Initiatives Alan Smith and Roosevelt Institute | Campus Network Cornell chapter president Matthew Clausen about the launch of Rethinking Communities, an initiative examining the ways that Cornell and its peers contribute to local economies.

  • Roosevelt Take: Alan discusses the theory behind the project, which focuses on driving change to economic and social policy at the hyper-local level.

State of the Union: Right on Wages, Wrong on Trade (The Nation)

John Nichols writes that the president's calls for free trade weakened another excellent discussion of income inequality and how to fix it. Back in 2008 on the campaign trail, Obama tied trade deals to growing inequality, and Nichols says that's still true.

Obama: Time for Congress to Get Out of the Way (MSNBC)

Suzy Khimm argues that the State of the Union emphasized the ways that Congress is blocking even the policies that both parties agree on. The president's willingness to work around Congress, as with his executive order raising the minimum wage for federal contractors, could be key.

Kain Colter Starts Union Movement (ESPN)

Tom Farrey reports on the Northwestern University football team's first steps toward collective bargaining. On Tuesday, they filed a petition and unions cards with the National Labor Relations Board, becoming the first college athletes to attempt to unionize.

Newark Passes The Country’s Eighth Paid Sick Leave Law (ThinkProgress)

Bryce Covert reports on the newest in a wave of paid sick leave laws, which the mayor of Newark, NJ has promised to sign. This is the second municipality in New Jersey to mandate paid sick leave, which she says puts more pressure on statewide lawmakers.

New on Next New Deal

It's Time to Raise Wages: Local Leaders Should Follow the President's Example

Roosevelt Institute Associate Director of Networked Initiatives Alan Smith urges anchor institutions, like universities or hospitals, to consider ways that they can quickly improve their economic impact, like paying a living wage and requiring contractors to do the same.

Republican Alternative to Obamacare: Pay More, Get Less, Put the Insurance Companies Back in Charge

Roosevelt Institute Senior Fellow Richard Kirsch says that the introduction of a GOP plan for replacing Obamacare gives Democrats a moment of opportunity. Comparing this plan to the Affordable Care Act demonstrates the ways the Republican plan will harm the health care system.

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Daily Digest - January 28: What Tonight's Speech Will Have, and What It Needs

Jan 28, 2014Rachel Goldfarb

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"Full Employment": The Two Words Obama Needs to Say Tonight (TNR)

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"Full Employment": The Two Words Obama Needs to Say Tonight (TNR)

Roosevelt Institute Fellow Mike Konczal argues for the return of full employment as a concept that refers to government responsibility for greater prosperity. Including it in the State of the Union address would highlight the best way to deal with economic inequality today.

Time Warner Cable Sale Will Cost Us All (Bloomberg View)

Roosevelt Institute Fellow Susan Crawford writes that if Charter Communications buys Time Warner Cable, the result will be decreased competition, increased profits, and higher prices for consumers, but no better product than before.

Obama to Raise Minimum Wage Under Federal Contractors (NYT)

Peter Baker reports that the president plans to sign an executive order requiring workers under federal contractors to be paid at least $10.10 per hour. Obama will highlight this order in tonight's State of the Union, which he used last year to call for a higher minimum wage for all.

Why Is the American Dream Dead in the South? (The Atlantic)

Matthew O'Brien considers the geography of the American Dream by looking at the differences in economic mobility across the country. Among the reasons he lists for these differences are segregation, social capital, and inequality.

The Liberal Case for a Basic Income (BINews)

Almaz Zelleke responds to Max Sawicky's guest post on Next New Deal, which presented a liberal case against a universal basic income. Zelleke argues that the universal and unconditional nature of a basic income marks its importance in the liberal project.

The People’s Bank (TAP)

Abby Rapoport looks at the history of the Bank of North Dakota, the state-run financial institution that helped keep the local economy afloat during the Great Recession. She also looks at proposals to start similar banks as other states try to learn from North Dakota.

GOP Offers Obamacare Replacement — and It’s a Mess (Salon)

Brian Beutler reports on the Republicans' first real plan to replace the Affordable Care Act. Beutler suggests that the GOP plan, which is far more regressive and requires major cuts to Medicaid, ignores the shift from health insurance as a privilege to health insurance as a guarantee.

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Daily Digest - January 24: Four Big Reasons Financial Reform Isn't Finished

Jan 24, 2014Rachel Goldfarb

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Washington Has Not Defeated Wall Street. Yet. (TNR)

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Washington Has Not Defeated Wall Street. Yet. (TNR)

Roosevelt Institute Fellow Mike Konczal writes that for all that Dodd-Frank accomplished, financial reform isn't done yet. He lays out four areas in particular where this fight is ongoing, and the solutions aren't quite clear: enforcement, Too Big to Fail, the mortgage market, and shadow banking.

The Populist Imperative (NYT)

Paul Krugman writes in favor of a focus on inequality in the State of the Union next week, because that rhetoric connects voters to macroeconomic issues. He argues that while some people may want more explicit discussion of jobs, the issues are interconnected.

Most Republicans Think Poverty Caused by Laziness, New Poll Finds (MSNBC)

Morgan Whitaker reports on the results of a new Pew poll on poverty. The poll shows that Americans recognize the growth of economic inequality in recent years, but a majority of Republicans think that if poor people put in more effort, they wouldn't be poor.

When Companies Break the Law and People Pay: The Scary Lesson of the Google Bus (Salon)

Julia Carrie Wong uses the Google Bus in San Francisco as a prime example of the ways that large corporations are allowed to flout laws that carry harsh penalties for individuals. The fine for blocking a bus stop is $271, but Google gets to pay San Francisco just $1 per stop used.

Big Money Doesn't Just Corrupt Politics. It Also Corrupts People (PolicyShop)

David Callahan argues that when public servants with relatively low government salaries spend so much of their time with wealthy lobbyists, corruption isn't so surprising. He suggests limiting lobbyists' access as one solution, but also calls for higher salaries for government officials.

WSJ Can't Figure Out Why Hiring Lags When Factories Are Not Humming (Beat the Press)

Dean Baker calls out the Wall Street Journal for a recent piece that questions why manufacturing isn't hiring when the industry is doing better. Data shows that factories are still functioning far below their capacity in the U.S., so Baker wonders why the Journal is asking that question.

Guatemala Factory Supplying Walmart and Other US Retailers Stole $6 Million From Workers (The Nation)

Steven Hsieh reports on the results of an Institute for Global Labor and Human Rights investigation into the wage theft at an Alianza Fashion factory in Guatemala. When retailers were asked about the wage theft, some blamed the middle men in the manufacturing chain.

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Daily Digest - January 21: Both Major Parties are a Work in Progress

Jan 21, 2014Rachel Goldfarb

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Independent Conservatives Growing (The Kudlow Report)

Roosevelt Institute Fellow Dorian Warren says the GOP must consider independents' views during the primary process. Otherwise, Tea Party primary challenges against moderate incumbents will result in general election candidates whom independents will never support.

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Independent Conservatives Growing (The Kudlow Report)

Roosevelt Institute Fellow Dorian Warren says the GOP must consider independents' views during the primary process. Otherwise, Tea Party primary challenges against moderate incumbents will result in general election candidates whom independents will never support.

Change in the Air (Harper's Magazine)

Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick writes about the shift in Democratic politics that led to the election of progressives like New York City's new mayor, Bill de Blasio. He considers this proof that voters are paying attention to how long many elected officials have ignored rising inequality. This article is behind a paywall.

The Sunday Show with Philip Maldari (KPFA)

Jeff Madrick discusses the rise of inequality in the U.S., with a focus on the data. He touches on unemployment, individual and household wages, part-time work, increased productivity without increased wages, and more.

Back to the Digital Drawing Board (NYT)

Roosevelt Institute Fellow Susan Crawford argues that the circuit court ruling that eliminated the Federal Communications Commission's existing net neutrality rules offers an opportunity to declare the Internet a "common carrier," which would require equal service for all.

Class Divide on Campus: Adjunct Professors Fight for Better Pay, Benefits (NBC News)

Former Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz looks at the struggle of adjunct professors, who are paid poverty wages for jobs that require advanced degrees, and how their tenured peers have or have not been supportive of their push for changes.

Deficit Scolds Are Holding the Unemployed Hostage (NY Mag)

Jonathan Chait writes that by insisting that short-term stimulus, like extending unemployment insurance, absolutely must be offset by deficit reduction, the deficit scolds are doing far more to support gridlock than to create the political changes they want.

A Housing Relief Program with Policies That 'throw people into the grinder' (The Guardian)

David Dayen reports on the failure of one of the biggest housing relief programs in the country, Hardest-Hit, which was created in 2010 to provide foreclosure relief. The program's poor implementation has caused serious problems for homeowners seeking help.

Wall Street Group Aggressively Lobbied a Federal Agency to Thwart Eminent Domain Plans (The Nation)

Alexis Goldstein reports that Wall Street directly lobbied a key staffer at the Federal Housing Finance Agency, which has since threatened legal action against localities that attempt to use eminent domain to rescue underwater homeowners.

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Obama's 'Promise Zones' Have Potential if They Include Anchor Institutions

Jan 10, 2014Joelle Gamble

Efforts to promote economic development must shift to the local level, but they can't overlook some of the biggest players in these communities.

Efforts to promote economic development must shift to the local level, but they can't overlook some of the biggest players in these communities.

At a press conference yesterday, President Obama told the story of his time organizing in Chicago and highlighted the work local communities do to support their neighbors and prepare them to be contributors to the economy. This renewed emphasis on the importance of localities accompanied the President’s announcement of five “Promise Zones,” specially designated communities that will receive increased federal resources and coordinating support in their efforts to develop economically. This announcement comes as welcome news to advocates for equal economy opportunity in the United States, but the approach seems to be constrained by an overly narrow definition of community stakeholders.

According to the White House, the Promise Zones, which will be established in Los Angeles, San Antonio, Philadelphia, southeastern Kentucky, and the Choctaw Nation of Oklahoma, will focus on replacing distressed housing, reducing crime rates, increasing student high school graduation prospects, and stimulating economic growth via tax incentives. As I’ve written before, the ineffectiveness of the modern United States Congress has made federal legislation to address rising inequality a pipe dream. Thus, the local level is the new battleground for tackling pressing economic challenges such as these.

However, questions still remain as to whether these new Promise Zones take the best possible approach to generating sustainable economic development. At this point, information provided by the Department of Housing and Urban Development and the White House focuses primarily on the usual community stakeholders: businesses, K-12 programs, the local government, etc. Given the financial constraints many localities and school districts are facing and the natural limitations of tax incentives, it would behoove the administration to widen the scope of the policies they implement in pursuit of growth.

Anchor institutions, such as universities and hospitals, are an untapped source of job growth, financial investments, intellectual capital, and community support. Hospitals and universities spend over $1 trillion a year and employ 8 percent of the total U.S. labor force. My colleague Alan Smith recently wrote about the work that the Roosevelt Institute is doing to analyze the local impact of these anchor institutions through its new Rethinking Communities initiative.

Identifying and engaging with anchor institutions would not be difficult. For example, local governments could recommend the allocation of federal grants to universities and hospitals that make targeted hiring efforts in particularly distressed portions of the Promise Zone communities.

Shifting responsibility for economic development away from the dysfunctional legislative branch and toward our local communities will require us to think more broadly about what community means and what kinds of actors shape it. With this challenge in mind, Promise Zones would benefit greatly from the incorporation of anchor institutions in their strategies for promoting long-term growth and economic opportunity.

Joelle Gamble is the Roosevelt Institute | Campus Network's National Field Strategist.

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The Bernard L. Schwartz Rediscovering Government Initiative: Building on the Successes of 2013 in the New Year

Jan 6, 2014Jeff Madrick

The Rediscovering Government Initiative takes a look back and a look ahead...

The Rediscovering Government Initiative takes a look back and a look ahead...

The Bernard L. Schwartz Rediscovering Government Initiative had an active and rewarding second year. Our programs continue to be directed toward broadening the public discourse on the purposes of government, and in particular, countering the ideological anti-government attitudes that have so influenced discourse about public policies since the 1970s. We believe that many of America’s most challenging problems are a consequence of the neglect and misuse of government.

In 2013, we emphasized job creation. The facts are stark: America has a 7 percent unemployment rate four years into a recovery. It has a record-low employment-to-population ratio, especially for young workers. A record number of workers have been unemployed for more than six months.

In addition, the large majority of jobs created in the recovery have been low-wage jobs. As a result, typical household income is no higher than it was more than a decade ago. Unequal and stagnating incomes cannot be separated from the jobs crisis. There is concern that weak job markets are now a long-term reality.

To us, this is not just a jobs crisis. It is a full-fledged jobs emergency.

We also pursued other programs related to government and the perpetuation of the New Deal legacy of Franklin and Eleanor Roosevelt.

Here are a few of the 2013 successes we plan to build on in 2014:

A Conference: A Bold Approach to the Jobs Emergency

The crown jewel of our 2013 efforts was a June conference in Washington, D.C., which we called “A Bold Approach to the Jobs Emergency.” Our keynote speakers, Senator Tom Harkin (D-IA), Former Federal Reserve Vice Chairman Alan Blinder, and Congresswoman Jan Schakowsky (D-IL), addressed the jobs emergency from a variety of viewpoints to a jam-packed auditorium.

At the conference, we held seven separate panels on solutions to the jobs emergency. These included fiscal stimulus, public-private infrastructure projects, financial regulations to encourage jobs, improved education, raising the minimum wage, labor law reform, and local political advocacy programs.

Our panelists represented a diversity of backgrounds and perspectives, and included Ai-Jen Poo of the National Domestic Workers Alliance, Federal Reserve Board Governor Sarah Bloom Raskin, Gar Alperovitz of the Democracy Collaborative, Dean Baker of the Center for Economic and Policy Research, Damon Silver of the AFL-CIO, and Maya Wiley of the Center for Social Inclusion, along with Roosevelt Institute Fellows Dorian Warren, Annette Bernhardt, Richard Kirsch, and Mike Konczal.

The video and transcripts of the proceedings, along with summaries of the key points made in each panel, are available on our website.

A Report: “A Bold Approach to the Jobs Emergency: 15 Policy Ideas”

Despite a pessimistic and persistent refrain that government cannot solve America’s jobs problems, we learned from the many experts at our jobs conference that there are multiple ways to return to full employment. Based on these and other ideas we researched over the course of 2013, we will publish a report in January outlining 15 bold ideas to deal with the jobs emergency. Our report amounts to a call for renewed optimism about how we can solve this central economic problem.

A New Book: Myths of Government

In 2013, UC Press offered the Initiative a book contract, based on the essays presented by several participants at our Washington, D.C. conference on the purpose of government in summer 2012. Myths of Government will include contributions from Lane Kenworthy of the University of Arizona, Peter Lindert of the University of California at Davis, Jon Bakija of Williams College, and Rediscovering Government Director Jeff Madrick. The book debunks major economic claims that government’s role must be limited if economic growth and the standard of living are to be improved. To the contrary, it shows that constructive government policies are critical to the future of the economy and a rising standard of living for all.

Other Public Events

Here are a few of the public events we held:

-- In April, we hosted Mark Levitan and Moe Magali of the New York City Center for Economic Opportunity to discuss the staggering 30 percent youth unemployment rate in New York City and the job creation programs that the city government is implementing to mitigate this problem.

--In August, in New Orleans, we gathered leading local experts on youth unemployment, including Amy Barad of the Cowen Institute for Public Education Initiative, Cherie LaCour-Duckworth of the Urban League of Greater New Orleans, Lauren Bierbaum of Partnership for Youth Development, and Jerome Jupiter of the Youth Empowerment Project, to discuss strategies to reconnect the 6.7 million young people nationwide who are both out of work and out of school. Jeff Madrick wrote about the gathering in his monthly Harper’s magazine column, and Program Manager Nell Abernathy wrote a comprehensive post on the subject of youth unemployment for the Roosevelt Institute’s blog, Next New Deal. Jeff Madrick was interviewed on NPR’s Marketplace on these issues.  Roosevelt Institute | Pipeline, our nationwide network of young progressive professionals, co-hosted the event.

--In September, we hosted a panel in New York City entitled “Inequality: The Next Mayor’s Challenge.” Local experts outlined policies the mayor’s office could enact to fight rising inequality. The panel included David Jones of the Community Services Society, NYU professor Lawrence Aber, Maya Wiley of the Center for Social Inclusion, Tsedeye Gebreselassie of the National Employment Law Project, and James Parrot of the Fiscal Policy Institute.

--In October, as part of our commitment to updating the Roosevelts’ New Deal legacy, we partnered with the Frances Perkins Center in Portland, Maine to host a discussion on the changing attitudes of Americans toward government and how to keep the New Deal’s spirit alive. The event highlighted Perkins’s role as the FDR adviser most responsible for Social Security. Participants included Ai-Jen Poo, Sally Greenberg of the National Consumers League, and Jeff Madrick.

--Also in October, Jeff Madrick participated in “Progressivism in America: Past, Present, and Future,” a conference in Dublin, Ireland hosted by the Roosevelt Institute and University College Dublin’s Clinton Institute for American Studies. Madrick contributed an essay on the future of progressivism to be published in 2014.

Publications

Throughout the year, the Rediscovering Government staff published a range of longer-form essays and blogs that reflected the central themes of the Initiative.

The subjects we focused on most closely are listed below.

Youth Unemployment:

The Real Lost Generation, by Jeff Madrick for Harper’s Magazine

Tragedy as a Generation for US Youth, Jeff Madrick with David Brancaccio for Marketplace on NPR

How Can We Help America’s Opportunity Youth? Five Lessons Learned in New Orleans, by Nell Abernathy for Next New Deal

Fiscal Policy and Public Investment:

America Is Having the Wrong Fiscal Argument, by Jeff Madrick for Harper’s Magazine

Simpson-Bowles Consensus isn’t Common Sense. It’s Nonsense, by Jeff Madrick for Next New Deal

The Truth About the GOP's Phony Shutdown Offer, by Jeff Madrick for Next New Deal

Social Security:

No Need to Cut the Little that Recipients Get, by Jeff Madrick for The New York Times

Good News on the Deficit Makes Social Security Cuts Even Worse, by Jeff Madrick for Next New Deal

Monetary Policy:

A Bit of Good News, by Jeff Madrick for Harper’s Magazine

Summers’ View on Monetary Policy Not So Hidden, by Jeff Madrick for Next New Deal

It Would be Tragic to Raise Rates Now, by Jeff Madrick for U.S. News & World Report

Unemployment Benefits:

Conservatives and Progressives Agree: Congress Should Not Cut Unemployment Benefits, by Nell Abernathy for Next New Deal

Looking Ahead: 2014 

In 2014, we will continue to develop and promote ideas about the positive role of government in the U.S. in general as well as how government can and should improve employment opportunities for all Americans. We specifically plan to host public events and commission papers on three key strategies for improved employment and GDP growth: the minimum wage, infrastructure investment, and government support of research and development.

In addition, we will increasingly focus our efforts on reducing the number of children living in poverty in America, arguably America’s greatest social problem and a major contributor to inequality and stagnating wages. In June, we will host a conference in Washington, D.C. that will bring together top policymakers and advocates to promote an agenda for fighting child poverty and reducing inequality overall.

In September, Alfred A. Knopf will publish Jeff Madrick’s new book, Seven Bad Ideas; How Economists Damaged America and the World. Its theme is related to the neglect of government, and much of the contents of the book reflect issues and ideas pursued by Rediscovering Government. 

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Looking to 2014: The Emerging Movement for the Next New Deal

Jan 2, 2014Richard Kirsch

The rise of a new progressive organizing is cause to believe that economic reform and a shift toward broadly shared prosperity are within reach.

The rise of a new progressive organizing is cause to believe that economic reform and a shift toward broadly shared prosperity are within reach.

Thomas Edsall, who now is capping off his long career writing insightfully about the relationship between economics and public opinion as a blogger for The New York Times, concluded a piece in late December by saying, “Progressives are now dependent on the fragile possibility that inequality and socioeconomic immobility will push the social order to the breaking point and force the political system to respond.”

Edsall’s bleak prognosis raises the biggest question facing not only progressives, but the future of our democracy: is the political system in the United States capable of responding to the escalating crisis of stagnant wages, shrinking benefits, dissolving economic opportunity, and disappearing hopes of living anything that resembles the American Dream?

It is a question I ask myself every day. But I reach a different conclusion than Edsall, because for all his powers of observation, he misses the role that people play in changing history. I see a growing movement of Americans organized by progressives who are not waiting for the social order to break, but are instead forcing the political system to respond.

Edsall reaches his conclusion by way of two commentators, my colleague Mike Konczal at the Roosevelt Institute and Harvard economist Ben Friedman. Konczal’s analysis of the quandary is cogent, as he provided “a two part description of the liberal state” in a 2011 post:

#1 you would have the government maintaining full employment, empowering workers and giving them more bargaining power, and #2 you would have a safety net for those who fell through the cracks… I think it is safe to say that liberals have abandoned #1 and doubled-down on #2… Without a strong middle and working class you don’t have natural constituencies ready to fight and defend the implementation and maintenance of a safety net and public goods. The welfare state is one part, complementing full employment, of empowering people and balancing power in a financial capitalist society.

Friedman’s contribution is to point out, as Edsall summarizes, that “during hard times people become less altruistic and more inclined to see the poor as undeserving.” Friedman says that when people are squeezed economically, rather than identifying with those still worse off, they “enter a period of retreat and retrenchment.” That is certainly what we are seeing now, with the government cutting unemployment benefits, food stamps, and a much larger swath of the safety net in a shrinking budget.

On the other hand, Friedman says times of broadly-shared prosperity encourage “greater generosity toward those who, through some combination of natural circumstance, market forces and sheer luck, have been left behind.”

When we look at the big periods of progressive change in the 20th century through this lens, we can ask, are we more similar to the soaring post-World War II middle class that led to the Great Society, or to the wrecked economy that led to the New Deal? After the Great Recession, that’s a no-brainer.

So is Edsall then correct in concluding that the only way to get to the next New Deal is waiting for another disintegration of the economy like we saw after the Great Depression? Or is even that a misreading of New Deal history, in which decades of building a movement of working people laid the groundwork for the New Deal laws that established the right to organize unions, fair labor standards like a minimum wage, and social insurance programs like Social Security and unemployment compensation?

If we have to wait, we’re in big trouble, because as we saw in 2008, we are much less likely to see another collapse like the Great Depression thanks to the progressive accomplishments of the 20th century. The aggressive use of the Federal Reserve and banking regulations prevented a total collapse of the financial system. The safety net – food stamps, Medicaid, etc. – and the social insurance programs of unemployment insurance, Social Security, and Medicare prevented widespread destitution. These measures allowed us to have a Great Recession rather than a second Great Depression.  

But the Great Recession also deepened the three-decade-long trend of families seeing their incomes and lifestyles squeezed by stagnant wages, eroding benefits, and the rising costs of gateways to opportunity. As a result, we are seeing an escalation of the path to the next New Deal: organizing people to demand that we create a 21st century economy of broadly-shared opportunity and prosperity.

The past year saw the explosion of organized fast food workers, from a handful of community-supported walk-outs demanding higher wages a year ago to actions involving thousands of workers and supporters in some 130 cities in December. The growing movement earned national as well as local news coverage.

Less visible, but deeper, is the emergence of new forms of worker organizing, taking place largely outside of traditional unions and the national labor law, known generally as the workers’ center movement. Domestic workers, through the National Domestic Workers Union, have won passage of laws giving them new labor protections in California and New York. Tomato pickers in Florida, under the banner of the Coalition of Immokalee Workers, have won higher wages by building consumer pressure against the supermarkets and restaurant chains that buy the crops they pick. Immigrant and low-wage workers around the country, at workers’ centers that are part of the National Day Laborers Organizing Network, have resisted wage theft and won basic protections in day labor and construction. The examples go on and are analogous to the emergence of the labor movement in the late 19th and early 20th centuries.

The long-simmering pressure for raising the minimum wage is now becoming a national political force, with Democrats embracing the issue. The passage of a $15 minimum wage in Sea-Tac, outside of Seattle, will be a harbinger of more local actions to define a minimum wage in ways that make sense for people’s lives, not some political calculation about what’s possible.

In New York City, City Council Speaker Christine Quinn’s reluctance to support paid sick days, siding with the business community, destroyed her support among the progressive base, paving the way for the election of Bill de Blasio, who rose both on his progressive platform and as the result of a decades-long base-building project in the city. These contests will continue to escalate, as we’ve seen in Philadelphia, where a Democratic mayor has twice vetoed a paid sick day ordinance approved by the City Council. As they do, Democrats who take the Quinn route will find themselves on the sidelines with her.

Cultural and demographic trends are encouraging, too. While the progressive politics of the growing numbers of the young, single women, and Latinos have garnered notice, another hopeful trend is that among non-college-educated whites, one of the most conservative groups in the country, the young are much more progressive than their older counterparts. Pope Francis has become an instant hero not just by easing back on his church’s focus on sex, but by directly challenging trickle-down economics.

In all this, history will look at President Obama as a transitional figure. He has pledged to make income inequality the defining issue of the day, but he still chooses a low-wage Amazon warehouse as a venue to address the issue. He still seeks to reconcile the destruction of the middle class with the rise of Wall Street.

Wall Street and K Street and the U.S. Chamber of Commerce, all greasing the system while stoking resentment of “the takers” and people of color, in a nation with a deep “it’s up to me and my family alone” streak, remain huge obstacles to building an America that works for all. The change we are making will take time.

What gives me hope is that, for all its flaws, we still live in a nation where popular will can make change. And we have a history of creating change from below and then electing leaders who, like FDR, drilled into the deep well of hope that has given life to the best of America, from the Revolution, through the Civil War, the Progressive era, the New Deal, the Civil Rights Movement, and the Great Society.

Earlier this week, on the last day of 2013, I called up Mike Konczal and asked him to reflect on Edsall’s dark conclusion. Here’s what he told me: “I’m more optimistic than I was when I wrote that piece two years ago. People are agitating, building new infrastructure. Issues like the minimum wage are gaining prominence. We’re seeing mobilizing among non-traditional workers like day-care workers.”

It is up to us to make history. Let’s get to work in 2014. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

2014 banner image via Shutterstock.com

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Daily Digest - December 23: It's Hard to Trust in Systemic Economic Inequality

Dec 23, 2013Rachel Goldfarb

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In No One We Trust (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that the behavior of banks leading up to the financial crisis and rising inequality have eroded Americans' trust in a fair economy. Stiglitz says that trust must be rebuilt through stronger regulations.

Click here to receive the Daily Digest via email.

In No One We Trust (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that the behavior of banks leading up to the financial crisis and rising inequality have eroded Americans' trust in a fair economy. Stiglitz says that trust must be rebuilt through stronger regulations.

It’s Still Too Early for Congress to Stop Worrying About Unemployment (WaPo)

Roosevelt Institute Fellow Mike Konczal looks at data that demonstrates that the labor market hasn't fully recovered from the financial crisis. Mike says that policymakers have moved on from unemployment despite the data, but that doesn't mean the crisis is over.

Is the Economy in Good Shape–or Not? (MSNBC)

Timothy Noah considers the theory that long-term news about the economy demonstrates "secular stagnation," which could mean that the recovery won't last or is weaker than expected. GDP growth should reveal whether the slow recovery is a short-term or long-term problem.

Deserving vs. Undeserving Poor — for the Love of God, Here We Go Again (Washington Monthly)

Kathleen Geier looks at recent discussion of poverty by policymakers, journalists, and researchers. She concludes that those who divide the poor into "good" and "bad" groups are ignoring the structural causes of poverty, which can be fought through existing anti-poverty programs.

Wall Street Unlocks Profits From Distress With Rental Revolution (Bloomberg News)

Heather Perlberg and John Gittelsohn report on the new hot market on Wall Street: rental homes, and corresponding securities. These investors' high cash bids beat out individual prospective homeowners, which is a problem when a house is a key way to build family wealth.

Goldman Real-Estate Play Skirts Volcker Ban (WSJ)

Craig Karmin and Justin Baer explain how Goldman Sachs is working around the Volcker rule's prohibition on banks owning more than 3 percent of a private equity portfolio. The rule doesn't apply to real estate, which creates an opening for highly concentrated and potentially risky investments.

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A Silicon Valley CEO's Words Can't Hurt the Poor, But Government Can Help Them

Dec 18, 2013Nell Abernathy

Greg Gopman's callous comments about San Francisco's homeless demonstrate why we need government to support the most vulnerable Americans.

Greg Gopman's callous comments about San Francisco's homeless demonstrate why we need government to support the most vulnerable Americans.

So yet another Silicon Valley innovator is in trouble for publicly ranting about the horrifying experience of having to share San Francisco’s streets with our nation’s tired, poor, and huddled masses. Last week, AngelHack CEO Greg Gopman wondered why San Francisco’s homeless have the temerity to wander into civilized parts of the city. He wrote on his Facebook page, “You can preach compassion, equality, and be the biggest lover in the world, but there is an area of town for degenerates and an area of town for the working class. There is nothing positive gained from having them so close to us. It's a burden and a liability having them so close to us.”

The Internet went into a full-throttle shame-fest and forced Gopman to apologize on his Facebook page. Maybe I am jaded, but my indignation is a little less acute than some. Mostly, I don’t find arrogance and corruption on the part of industry leaders to be very novel. (To be fair, I’m not much surprised by arrogance and corruption on the part of think tank academics, non-profit do-gooders, or politicians either.)

Don’t econ textbooks tell us that our world is one comprised of individuals maximizing their own best interest? Why should any of us be surprised that techie X’s interest is to avoid homeless people or that banker Z’s interest is to get a really big bonus? While I vehemently oppose Gopman’s sentiments, I know that I am more likely to spend Wednesday night on my couch watching Nashville than working in a soup kitchen, so, you know, glass house and stones and all.

What this whole incident does underscore is the absolute need for a public sphere where we join together in service of something larger than our own petty interests. Through our government we can choose to live in a city and state and country where we are guided by more than our most self-serving of instincts. This is what so much of American anti-government rhetoric misses. The rules we choose to codify as “government” do not need to proscribe our freedom; rather, they can free us from the constraints of Lord of the Flies-like living.

This is a debate that could bring us back to Locke and Hobbes and even get us speaking in Greek, so instead I’ll stick to a few points.

1) Mr. Gopman is not unique in his dismissal of poverty in his neighborhood. Americans have demonstrated a remarkable ability to dismiss poverty in our country. Of the world’s top 35 richest countries, the U.S. is second only to Romania in child poverty. And just last week, Andrea Elliot at the New York Times put a face to the grim statistics with her meticulously reported series “Invisible Child.”

2) The belief that visionary entrepreneurs or privately funded non-profits can reduce poverty has not produced tangible evidence of success. The optimism from Silicon Valley that technology can save the world is perhaps best encapsulated by George Packer’s July New Yorker piece on the tech community’s political culture and Dave Eggers’ dystopian novel The Circle. We hear the same argument from Wall Street about the value of accessible capital; who can forget when Lloyd Blankfein claimed to be “doing God’s work”?  Indeed, finance and technology are powerful tools to improve lives, but who uses them and how they are used are important questions.

Keep in mind that despite the enormous increases in technology capacity and availability of credit, the official U.S. poverty rate has shifted from 14 percent in 1964 to 15 percent in 2012.  A new Columbia University study released last week measured American poverty according to location and transfers, and found the poverty rate in fact dropped from 26 percent in 1967 to 16 percent in 2012.  How did this drop occur? The researchers attributed the gains largely to government transfers.

3) The third false idea so often repeated is that the government cannot effectively do anything to help people. And as much as I wish the Department of Health and Human Services had turned to Mr. Gopman and his friends to build Healthcare.gov, I’m not ready to turn my back on government’s efficacy at tackling any or all public goals.

Let’s think of a few things that government has done that Mr. Gopman and the Silicon Valley crowd might appreciate. There’s the taxpayer-funded state college he attended, the government roads he drives on, the big bridges he probably crosses to get in and out of San Francisco, the public safety services he relies on to keep him from being mugged, the legal system he most likely employs to protect his company, and the cheap loans he may have benefited from thanks to remarkably low interest rates and inflation.

But let’s ignore all that and just focus on his bread and butter, technological innovation, which, Mr. Gopman and his friends may be surprised to learn, has been driven largely by government-funded research in basic science. Take the iPhone, for example. It took the genius of Steve Jobs to imagine and design the product, but it also took decades of government research to develop the components an iPhone needs to function. In a recent book, The Entreprenuerial State, Mariana Mazzucato traces the iPhone's roots to the defense researchers who developed the Internet, GPS, and the voice activation programs that served as Siri’s prototype. Public universities and labs funded by government dollars developed HTML and touch screens. Before going public, Apple even benefited from a $500,000 loan from the federal government’s Small Business Administration.

And for those who believe the private sector could have done it better, perhaps you will take the word of the American Energy Innovation Council, led by Bill Gates and Jeff Immelt. “When firms make investments in basic science or R&D, they create knowledge spillovers that benefit society as a whole, as well as other firms. Those other firms get a free ride on their competitors’ R&D investment. Because it is difficult for any individual firm to monetize all the benefits of these types of investments, the private sector has tended to systematically under-invest in R&D relative to the potential gains to society — even where a market for the desired technology exists.”

There is a time and a place for rugged individualism.  But I am grateful that I am dependent neither on the good will of Mr. Gopman nor the good will of any other rational self-interested individual for the common services I consume. Rather, I am relieved to rely on the good will of the public, that amorphous body in which we can all project our ambitions for a world more just and more free than one guided by the anarchy of our impulses.

Nell Abernathy is the Project Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

 

Golden Gate Bridge image via Shutterstock.com 

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