Liberalism Unlimited? Finding the Boundaries of Policy is What We're All About

Jan 13, 2012Mark Schmitt

Liberals aren't seeking a limitless welfare state, but the right balance between competing approaches.

Liberals aren't seeking a limitless welfare state, but the right balance between competing approaches.

Breakthrough Journal, which I predicted would offer a significant contribution to the political debate when it launched last summer, has doubled down on expectations by publishing a companion to their challenging  "Modernizing Liberalism" article from the first issue with "Modernizing Conservatism" by the Reagan biographer and AEI scholar Steven Hayward. The path forward for the country won't be found just by identifying some middle ground between two unyielding ideologies or some magical third way. It will be found by creating some real conversation among people who are fully engaged in reevaluating the future of their own assumptions.

The editors of Breakthrough invited my comments on Hayward's essay, which I tried to offer in a respectful spirit, although of course I'm not a conservative and conservatives don't need my advice. Hayward's main point was that conservatives should back down from the "starve the beast" strategy of cutting taxes and hoping that government will shrink as a result and acknowledge that they aren't going to crush liberalism forever. But before conservatives can make those compromises (which seem more like common sense than compromise), Hayward insists that liberals would have to back down from our aspiration to extend the "welfare state" to infinity.

I had a couple of comments on Hayward's first points, which you can read at the site, but the main point of disagreement, particularly in his reply to me, had to do with the question of whether liberalism's aspirations for the welfare state are limitless. This is worth digging into at length because it's quickly becoming a major theme on the right. William Voegeli of the Claremont Institute has written an entire book, which Hayward draws on extensively, contending that liberalism knows no limits, that for us progress is "Never Enough." It's the central premise of Mitt Romney's new stump speech, which argues that Obama's "entitlement society" economic policies have as their goal "equality of outcomes," rather than "equality of opportunity," and won't stop until they (we) achieve that radical leveling. This is the central charge in the economic culture war: As Hayward puts it, "the absence of any principled limit to the reach of egalitarianism is implicit -- and occasionally explicit -- in modern liberalism. The insatiable egalitarian impulse is only held in check by practical politics, not by any discernible principle."

Here's Hayward's killer piece of evidence: That liberals once talked about "comparable worth" -- that is, a system to adjust pay scales to reduce discrimination based on job classifications. "The idea almost made the 1984 Democratic platform," he says. That's it? An idea that didn't make it into a party platform 28 years ago proves that we're boundless egalitarians? (Actually, it was endorsed in the 1984 platform, and several states were implementing comparable worth standards for public employee job classifications without controversy. But it died such a quick death that most people under 40 have probably never heard of the idea.)

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It's really a pretty good example of where liberalism finds its limits, and why the process of finding those boundaries makes liberalism such a vital and adaptive political philosophy. Employment discrimination was and is a real problem, and formal job classification systems that systematically underpaid women were part of it. The market wasn't getting rid of this discrimination any more than the market eliminated racial discrimination before the Civil Rights Act of 1964. A number of ideas were on the table, some of which worked. (Collective bargaining turned out to be a good way to fix discriminatory job classifications.) Ultimately, most liberals decided that a formal, government-mandated system of classifying the "worth" of different occupational categories across the private sector would be a solution worse than the problem. (I remember that being my view, even as a naïve college student at the time.) Liberalism is always about finding the right boundary between market and state, public and private, fairness and liberty. The process of considering and rejecting an idea like comparable worth is the process of finding that boundary.

Hayward would say that's not a "principled" limit. A principled limit presumably would be obvious and not argued about. But what's the principled limit to libertarian conservatism? Is it the minimal "watchman state"? I know that in practice most conservatives don't go that far, but why not? Part of the answer is "practical politics," as Hayward says of liberalism. But what's wrong with practical politics? In a functioning democracy (which ours, in which money plays a huge role and institutional quirks such as the filibuster play an outsized role, is not), ordinary politics -- elections, debates, fights over values, legislative struggles -- are a perfectly valid or even ideal way of defining the limits of the governing party's philosophy. We even internalize the limits of practical politics. For example, I've never been a supporter of single-payer health care, and most of the liberal wonks I know haven't been either. If pressed on the point by one of the few single-payer supporters I know, I can't give a very good answer on policy grounds. I understand that single-payer would be fairer, more efficient, and would lift the burden of health insurance costs from employers. But it's never going to happen and so I don't waste much time or energy on it. That's a limitation on my aspirations imposed by practical politics, but it's no less real a limit.

Egalitarianism (of opportunity) is one element of liberalism, but it's not the only one. Democratic practice is part of it, too, so the limits of practical politics are real -- not just the way we achieve other social goals, but an end in themselves. It's why making democracy work better is more than just a process concern. At the end of my comments on Hayward's essay, I suggested that the key to "modernizing conservatism" would be for conservatives to rejoin the democratic process, to get over the all-or-nothing impulse that led them to opt out of the health care debate entirely, or to attempt "nullification," to use James Fallows' word, of laws already passed. Hayward, like Romney, is basically saying that no real debate or compromise will ever be possible, that we face a pure clash of irreconcilable worldviews. That's simply not true of modern liberalism, and it shouldn't be true of conservatism either.

Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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What Was Missing in Kansas: the Greatest Generation's Political Power

Dec 12, 2011Harvey J. Kaye

fdr-we-need-you-150President Obama's speech recognized the progressive values of his grandparents' generation, but not the democratic action that put those values into practice.

fdr-we-need-you-150President Obama's speech recognized the progressive values of his grandparents' generation, but not the democratic action that put those values into practice.

President Obama speaks proudly and often of his grandparents and their generation -- the men and women who confronted and beat the Great Depression and fascism. But for all of his words of admiration and affection, he has yet to show that he truly understands what made the Greatest Generation truly great. His remarks last Tuesday in Osawatomie, Kansas reflected a common misconception of what their struggles, labors, and achievements entailed and what they have to say to us today.

Seeking to regain the political initiative from Republicans, Obama went to Kansas not only to present his ideas on how we might reinvigorate the American economy, but also to reiterate his commitment to enabling Americans to pursue and realize the nation's historic purpose and promise. He specifically chose Osawatomie because it was there, 101 years ago, that the former president and Republican-turned-progressive Teddy Roosevelt delivered his famous "New Nationalism" speech. As Obama noted, it was in that speech that TR said, "Our country...means nothing unless it means the triumph of a real democracy...of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him."

Progressives welcomed President Obama's speech. Washington Post columnist E.J. Dionne wrote, "It was, at once, a clear philosophical rationale for his presidency, a straightforward narrative explaining the causes of the nation's travails, and a coherent plan of battle against a radicalized conservatism." Progressive editor Matt Rothschild exclaimed, "I wish Obama would go to Kansas more often. His speech... was unlike any I've ever heard him give. He finally embraced progressivism."

Undeniably, Obama made some strong points in his remarks. He finally pointed his presidential finger at the "greed" of bankers and "irresponsibility" of regulators and all that they have wrought. He spoke of the gross inequality that has come to mark American life and how it has corrupted our democracy. And he insisted that government has an important role to play not only in responding to the continuing joblessness and suffering, but also in addressing the ever intensifying inequality and declining opportunity we have experienced.

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Nevertheless, elements of the president's Kansas speech make me doubt that he fully grasps what needs to be done and how to do it. My reservations stem from the way he spoke of his grandparents -- and my parents -- and their generation. Before he quoted Teddy Roosevelt, Obama said:

My grandparents served during World War II. He was a soldier in Patton's Army; she was a worker on a bomber assembly line. And together, they shared the optimism of a nation that triumphed over the Great Depression and over fascism. They believed in an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried -- no matter who you were, no matter where you came from, no matter how you started out... And these values gave rise to the largest middle class and the strongest economy that the world has ever known.

All this is true. But like many who praise the Greatest Generation's values, the president left out the most critical, progressive, and democratic, if not inspiring, part of the story.

The men and women who saved the nation from economic destruction and political tyranny, and went on to create the middle class and turn the United States into the strongest and most prosperous nation on earth, didn't do so simply by having the right values and working hard to achieve them. They did so by electing and re-electing Franklin Delano Roosevelt. They chose a leader who not only believed in them, but also rallied and engaged them directly in progressive initiatives and struggles of recovery, reconstruction, and reform.

They undertook these labors against historical expectations, in the face of powerful conservative, reactionary, and corporate opposition, and despite their own terrible faults and failings. In the process, they subjected big business to public account and regulation, empowered the federal government to address the needs of working people, organized labor unions, fought for their rights, reconstituted the "We" in "We the People," established a Social Security system, rebuilt the nation's public infrastructure, and improved the environment. They did so, that is, by harnessing the powers of democratic government and in the process making America freer, more equal, and more democratic than ever before.

We should honor our parents and grandparents from the Greatest Generation. The best way for us to show our appreciation is to live out their politics.

Harvey J. Kaye is the Ben & Joyce Rosenberg Professor of Democracy and Justice Studies at the University of Wisconsin-Green Bay and the author of Thomas Paine and the Promise of America. He is currently writing The Four Freedoms and the Promise of America. Follow him on Twitter @HarveyJKaye.

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A Feast for the 1%, a Famine for the One Third

Nov 23, 2011David B. Woolner

As we celebrate this Thanksgiving, we should remember that 100 million of our fellow citizens are struggling to get by.

[H]ere is the challenge to our democracy: In this nation I see tens of millions of its citizens -- a substantial part of its whole population -- who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life.

I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.

As we celebrate this Thanksgiving, we should remember that 100 million of our fellow citizens are struggling to get by.

[H]ere is the challenge to our democracy: In this nation I see tens of millions of its citizens -- a substantial part of its whole population -- who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life.

I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.

I see millions whose daily lives in city and on farm continue under conditions labeled indecent by a so-called polite society half a century ago.

I see millions denied education, recreation, and the opportunity to better their lot and the lot of their children.

I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions.

I see one-third of a nation ill-housed, ill-clad, ill-nourished.

-Franklin D. Roosevelt, January 20, 1937

Nearly three quarters of a century ago, Franklin Roosevelt rededicated himself and his administration to the creation of an America where the government and the people alike would strive to eliminate the destructive and unjust disparities of wealth that had wrought such great economic hardship that they threatened to undermine the very essence of our democracy. Thanks to this commitment, generations of Americans embraced the idea that, as President Obama once said, "in this country, hard work and responsibility should be rewarded by some measure of security and fair play."

But in a disturbing article published earlier this week, the New York Times took note of the growing number of Americans whose hard work and responsibility have not brought them the measure of economic security they deserve. Struggling with incomes that stand just above the poverty line, they are labeled the "near poor." This diverse group of individuals and families lives paycheck to paycheck under the constant threat of economic ruin, often working multiple jobs at low wages that have remained stagnant for decades. According to data that has yet to be published by the Census Bureau, the number of "near poor" in the United States has risen to 51 million individuals, which, as the Times reports, places approximately 100 million people, or one in three Americans, "either in poverty or in the fretful zone just above it."

The fact that one in three Americans now lives in poverty or just above the poverty line provides us with another distressing link between the Great Recession and the Great Depression. It harkens back to Franklin Roosevelt's Second Inaugural Address, when, after noting the nation's economic progress since the beginning of his first term, he challenged the American people to do better and join him in an effort to "paint out" from our national canvas the sight of "one third of a nation ill-housed, ill-clad, ill-nourished."

It was true, Roosevelt said, that since the day of his fist inauguration, the country had made great strides in reversing the downward economic spiral that had gripped the nation in paralyzing fear. Faced with an unprecedented economic catastrophe, the people of the republic had dedicated themselves "to the fulfillment of a vision -- to speed the time when there would be for all the people that security and peace essential to the pursuit of happiness." But, he went on, "our covenant with ourselves did not stop there. Instinctively we recognized a deeper need -- the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization."

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In that purpose, he continued:

...we have been helped by achievements of mind and spirit... We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays. We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world.

This new understanding undermines the old admiration of worldly success as such. We are beginning to abandon our tolerance of the abuse of power by those who betray for profit the elementary decencies of life.

It is odd that in this time of Thanksgiving, one hears little about the millions of Americans trapped in or threatened by poverty or the need to fashion a society where the "elementary decencies of life" -- a job with a decent wage, access to health care and higher education -- are within the reach of all. It is even more perplexing that in a time of serious economic depravity, the focal point of our all-but-dysfunctional Congress is not how "to find through government the instrument of our united purpose" but how to obstruct the very sort of structural reforms needed to help average Americans secure better lives for themselves and their children.

Part of this stems from the blind faith that free market fundamentalists have falsely promoted as the solution to all of our problems and from the inordinate amount of money that now flows from Wall Street to Washington, creating a new Gilded Age where the 400 wealthiest individuals in the United States possess more wealth than the bottom 150 million combined. But another part of it stems from our own misguided perception of what constitutes wealth and progress. In this second Gilded Age, wealth and progress have come to mean one and the same thing -- the acquisition of an inordinate amount of capital or other assets by an individual, often obtained through mere financial transactions.

For Roosevelt, however -- and for much of his generation -- the definition of wealth and progress was much more in keeping with the spirit of Thanksgiving. "Happiness," as FDR famously said in his First Inaugural Address, "lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort." Four years later, he added that the "test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."

For the 100 million citizens of our nation now struggling to keep a roof over their heads and food on the table, these words sadly offer little comfort, for it appears we have abandoned the noble effort of the Depression generation to paint the specter of poverty out of our national canvas.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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The Real Media Bias: The Police Force's Disproportionate Power

Nov 22, 2011John Stoehr

occupy-journalTo say Occupy Wall Street has "clashed" with police is to pretend they have equal power and weaponry.

occupy-journalTo say Occupy Wall Street has "clashed" with police is to pretend they have equal power and weaponry.

Brian Stelter wrote last weekend about the news coverage of Occupy Wall Street and of its 1,000 or so offshoots here and abroad. Stelter reports that the Pew Center's new survey found that OWS captured just 10 percent of national news coverage (presumably liberal, moderate, and conservative media combined) starting in October. Coverage fizzled to 1 percent until last Tuesday, when the NYPD prepared to muscle protesters out of Zuccotti Park. No surprise: At that point, news coverage soared.

With a few exceptions, the general tendency has been to ignore OWS. It doesn't have obvious leaders or an obvious agenda, both of which make it hard to understand if you don't put in the effort. So it gets a pass from most newsrooms -- unless the cops get involved. Then you have a story that lends itself to the genre of news writing. It has characters, conflict, chronology, drama. Every reporter wants to cover such news. But it's this habit of waiting for the cops that leads me to my point.

The media has a bias, but not the one everyone talks about. The media's bias favors cops.

This has always been true. Journalists need access to power. Those in power provide information that cannot be obtained otherwise. Reporters trade access for favorable coverage. The best reporters succeed without compromising their integrity. But most of this means interacting with everyday, run-of-the-mill manifestations of power, and for most journalists, and Americans generally, that means law enforcement.

Media's natural tendency is to sympathize with the police. They are the good guys, criminals the bad guys. And I think this is the right presumption until facts compel us to think otherwise. But I also think this habit of deference is so ingrained in the minds of journalists that even when it's very obvious that the cops are the bad guys in a story, the media still can't avoid false equivalency.

False equivalency is a term coined by James Fallows. It has other names. Eric Alterman calls it on-the-one-handism. Paul Krugman calls it the cult of balance. In any case, it means the journalistic convention of representing two sides of a story equally, no matter how unequal they may in fact be. For Krugman, this means putting Republicans and Democrats on the same plane, even though Tea Party Republicans have been far more radical than Democrats. For the media coverage of OWS demonstrations, this means portraying non-violent civil disobedience as if it were the same as outright acts of police violence.

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By far the most exasperating example I can think of is contained in one word: "clash." Google this: "protesters clash with police." Many of those links will lead you to stories with pictures of cops armed with rifles and batons, wearing body armor and face shields, and squaring off with unarmed and peaceful protesters. In many of those photographs, you will see cops blasting pepper spray into the faces of Americans whose only crime appears to be exercising an inalienable right. Pepper spray is one of those "non-lethal" weapons, like rubber bullets and sonic grenades, that have come into widespread use in the past 15 years. You'd think police would deploy them sparingly, only in cases in which officer safety is endangered. But OWS has revealed what observers have known for some time - that police, with the approval of courts, have used them increasingly to intimidate, coerce, and terrorize crowds. What else explains the horrible stories of police officers casually pepper-spraying an expectant mother, an 84-year-old woman, and hundreds of students at UC Davis?

These are not conflicts between rivals of equal proportion, as "clash" connotes. These are incidents of police violence and media should start calling then what they are. With so much amateur video out there, the media has little choice but to set aside convention, examine bias, and report what's happening.

Worse, the type of police violence used against protesters appears to be institutionalized. According to the Associated Press, what we saw at UC Davis -- a campus police officer, who did not appear in any way to be in danger, casually doused students who were peacefully protesting -- is considered "fairly standard police procedure." Though the UC Davis chief was put on leave and the chancellor has called for a review, that doesn't address how police forces nationwide have become increasingly militarized, according to Norm Stamper, former Seattle police chief. As he writes in The Nation, "It's showing in cities everywhere: the NYPD 'white shirt' coating innocent people with pepper spray, the arrests of two student journalists at Occupy Atlanta, the declaration of public property as off-limits and the arrests of protesters for 'trespass.'"

And let's not forget the two dozen journalists arrested during the evacuation of Zuccotti Park. Some have said the media landscape has changed so much that cops can't tell who's a professional reporter and who's an amateur. That's why they ended up arresting reporters and photographers. But another reason for so many arrests is that the cops are increasingly militarized and indifferent to the First Amendment.

If this were a war zone, the OWS protesters would be called innocents or victims of war. Police violence would be described as a crackdown, a suppression. As it is, protesters are "clashing" with police, as if they have anywhere near comparable weaponry to what the police have. As if they have weapons at all. Most are just engaging in acts of civil disobedience. Perhaps, with enough people being traumatized by this violence, the media will start talking about the police in terms that actually convey the experiences of those who "clash" with them.

John Stoehr is the editor of the New Haven Advocate and a lecturer at Yale University.

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Dorian Warren: Police Brutality is Reigniting the Occupy Movement

Nov 22, 2011Dorian Warren

The shocking police brutality at UC Davis last week was just the latest example of authorities reacting to the Occupy movement with violent contempt. But as Roosevelt Institute Fellow Dorian Warren tells CNN's Don Lemon, these overbearing attempts to silence protesters might only be helping their cause. "Every time there's a lull in the protests, there's a spark of something that happens, usually police brutality of some kind, that gets people energized again and gets them motivated and recommitted to the Occupy movement," Dorian says.

The shocking police brutality at UC Davis last week was just the latest example of authorities reacting to the Occupy movement with violent contempt. But as Roosevelt Institute Fellow Dorian Warren tells CNN's Don Lemon, these overbearing attempts to silence protesters might only be helping their cause. "Every time there's a lull in the protests, there's a spark of something that happens, usually police brutality of some kind, that gets people energized again and gets them motivated and recommitted to the Occupy movement," Dorian says.

As for the police's actions, Dorian thinks the public will agree that the blithe use of pepper spray is "not very different from firehoses, frankly." And though Mayor Bloomberg seemed to score a major victory by evicting protesters from their home base at Zuccotti Park, Dorian believes that being untethered from a specific location or organizational hierarchy may actually work in the movement's favor. He argues that this nullifies complaints about conditions at the parks and "makes it so that there aren't any particular targets that opponents of Occupy can really focus in on." Ultimately, these crackdowns may simply be giving the movement an opportunity to prove its power and durability.

For more of Dorian's take on the Occupy movement, check out his early reflection on what's driving the protests and his analysis of their populist message, co-authored with Joe Lowndes for Dissent.

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John Deutch's Four Steps Toward a Functioning U.S. Energy Policy

Nov 21, 2011

Roosevelt Institute Senior Fellow Bo Cutter has brought a lot of top thinkers together to discuss what the Next American Economy should look like. But it's hard to imagine future economic policy without also figuring out energy policy. As Bo's latest guest points out, American energy policy has largely failed. John Deutch, professor at MIT and former Director of Central Intelligence, explains how "we have not had an energy policy for 40 years" and why "it is a hard slog to improve this." In this excerpt, he lays out four key steps to making real progress:

John Deutch :: [excerpt] from Roosevelt Institute on Vimeo.

Roosevelt Institute Senior Fellow Bo Cutter has brought a lot of top thinkers together to discuss what the Next American Economy should look like. But it's hard to imagine future economic policy without also figuring out energy policy. As Bo's latest guest points out, American energy policy has largely failed. John Deutch, professor at MIT and former Director of Central Intelligence, explains how "we have not had an energy policy for 40 years" and why "it is a hard slog to improve this." In this excerpt, he lays out four key steps to making real progress:

John Deutch :: [excerpt] from Roosevelt Institute on Vimeo.

His imperatives to get us on the right track:

1. Something must be done to "integrat[e] domestic and international policy in the White House." Energy issues can't be fixed solely within our own borders.

2. In order to have a "coherent voice following energy" at the federal level, we must "establish a single energy commission between the House and the Senate in the place of the dozens and dozens who fool around in it."

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3. "There should be a rule adopted both by Congress and the [OMB]... to say no proposal goes in unless you attach to it a serious analysis of its projected costs and benefits." Without this, he says, "you don't have the basis for a discussion with Congress."

4. "You have to do something about personnel to get good people" working on these policies, he concludes.

Above all, he says, "You have to make people understand that if we don't change this system, things are not going to get better." And that could be disastrous for the economy and the planet.

Watch the full discussion:

John Deutch :: lecture from Roosevelt Institute on Vimeo.

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Taking Back the Right to Vote

Nov 21, 2011Dante Barry

By passing voter ID laws, conservative legislatures are denying the franchise to those who have fought hardest for it.

By passing voter ID laws, conservative legislatures are denying the franchise to those who have fought hardest for it.

Last week, I participated in the New Organizing Institute BlackRoots NewMedia BootCamp. I had the privilege of joining 31 organizers representing communities of color from across the country to be trained in online organizing. As part of the training, each organizer was placed on a team to develop an online fictional campaign over the course of the week. For this boot camp, we developed a campaign around the issue of voter suppression.

My team took on a situation where the fictional "State X" legislature was considering a plan that would require the state's voters to present two forms of identification in order to protect against voter fraud. The state senator who represented my team's community was on the fence as he recognized that his rural constituency would have difficulty obtaining the additional identification.

Sadly, this scenario reflects a regressive trend that is all too real. Since 1920, the United States has expanded voting rights in three significant ways: the Nineteenth Amendment, which granted women the right to vote; the Voting Rights Act of 1965, which ended racial barriers to voting; and the Twenty-Sixth Amendment, which lowered the voting age to 18. Now, conservative legislatures throughout the U.S. are passing voter identification laws that disenfranchise women, young people, and communities of color. 

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FDR once said, "We are trying to construct a more inclusive society. We are going to make a country in which no one is left out." I am a Millennial and at least 24 percent of the voting age population in 2012 will be under 30 years old. Approximately 14 million adults between the ages of 18 and 29 will be enrolled in degree-granting institutions in 2012. But instead of trying to bring these potential young voters to the polls, legislators are making every effort to turn them away. In states such as Indiana, voters must present photo identification with an expiration date issued by the state or U.S. government. This prevents students who are attending private institutions from using their school identification. Legislators claim that such laws are intended to prevent voter fraud; however, there is little evidence that voter fraud is a problem in the United States.

Houses have been burned down; families have been torn apart; people have fought, gone to jail, and died for the right to vote. Voting provides the opportunity to decide, and that is powerful. Suppressing voters and denying them the power to decide excludes them from the political and policymaking process. We need to take back that power and make our voting system more inclusive.

I'd like to extend special thanks and recognition to the #blackroots11 team. You can follow the campaign on Facebook and Twitter.

Dante Barry is the Roosevelt Institute | Campus Network's Chapter Services Coordinator and Summer Academy Coordinator.

Image via Getty

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Why Atlas Shrugged

Nov 18, 2011Bruce Judson

ayn-randAyn Rand's Objectivism glorified wealth-creators over moochers, but Wall Street traders might be surprised to learn which category they're in.

ayn-randAyn Rand's Objectivism glorified wealth-creators over moochers, but Wall Street traders might be surprised to learn which category they're in.

As the dysfunctional nature of our economy becomes increasingly apparent, the media is appropriately focusing on whether the ideas of economic thinkers from earlier eras can help to solve today's problems. Recently, NPR devoted a segment to the thinking of Ayn Rand.

The NPR segment quoted from an extensive television interview with her conducted by Mike Wallace in 1959, now available on YouTube.  As the segment noted, Rand is a hero to many Washington  politicians who advocate free markets. In the Wallace interview, Rand said, "I am opposed to all forms of control. I am for an absolute, laissez-faire, free, unregulated economy."

The Washington establishment has, in fact, misinterpreted what Rand valued and what she would advocate today.

At this moment, what's relevant to our nation is not  the laissez-faire policies Ayn Rand advocated in the late 1950s as an outgrowth of the philosophical system she called "Objectivism," but what the philosophy itself considered important, how these principles should be applied to our modern economy, and whether we believe implementing these ideas would aid the economy.

The central statement Rand stressed repeatedly in her interview with Wallace is that entrepreneurs and businessmen are the producers who create the goods and services that make our economy run. They deserve their wealth, are her heroes, and no one including the government has the right to take their property. As NPR notes, "In Atlas Shrugged, which Rand considered her masterpiece, the wealthy corporate producers are the engines of the American economy." In this fictional tale, the economy starts to stagnate when these producers go into hiding, leaving behind what she calls "the moochers."

In effect, an important aspect of Rand's philosophy supports the central tenet of a functioning capitalist economy: Those who create the greatest societal wealth should be the most highly compensated.

This is a fundamental notion in any capitalist economy. It underlies one aspect of the American Dream and also explains the historic admiration of the American people for rich people. In general (and before the Occupy Wall Street movement), the prevailing ethos in America has been that rich people deserve their wealth because they have created societal value for all of us. Indeed, I suspect the vast majority of the American people do not begrudge the wealth earned by successful, risk-taking innovators like Michael Dell, Jeff Bezos, the late Steve Jobs, or Ross Perot.

This leads to the conclusion that Rand's philosophy is only anti-regulation because it is ultra-supportive of the capitalist ideal: The people who create the most societal wealth should receive the benefits of this contribution.

From this perspective, Rand's philosophy points out that real capitalism is no longer enforced in America; not because of welfare programs, taxes, the social safety net, or government regulations, but for a very different reason: The highest paid people in America today create no real wealth for the society.

The financial industry, comprised of traders, hedge funds who exploit arbitrage opportunities, and "quants" who develop mathematical models to take advantage of minute inefficiencies in trading markets (for stocks, derivative securities of all types, commodities, and more) are now earning seemingly inestimable sums. Hedge fund owners earn billions of dollars annually while traders who earn less than several million dollars a year are not, by Wall Street standards, real successes. Yet they are all gambling in "a heads I win, tails you lose" game. The outcome of all their efforts are high profits, but little, if any, new societal wealth.

Real societal wealth is anything that enhances the lives of those in our society, starting with basics such as food, shelter and medicine, but also including almost any property a person can own or anything a person can experience, such as entertainment or greater convenience. Real wealth can be eaten, used, shared. or experienced.

Profits cannot be eaten and they do not provide shelter. As a consequence, it's essential to recognize that the creation of profits is often confused with the creation of real societal wealth. They are different. Profits are an accounting proxy we use for indicating whether wealth is created. But like all proxies, this one sometimes falls short. With regard to the financial industry, this proxy has failed the nation spectacularly.

The current issue of Foreign Affairs describes how a Wall Street firm spent $300 million to construct a fiber-optic cable connecting the Chicago Mercantile Exchange and the New York Stock Exchange to shave "three milliseconds off high-speed, high-volume automated trades-a big competitive advantage." And huge sums are now being spent to use technology to earn these profits. High frequency (i.e. computer-driven) trading is now estimated to account for 75 percent of all buying and selling of U.S. equities. Does any of this add to our societal wealth?

Some economists openly wonder whether our financial services sector actually destroys, instead of creating, societal wealth. In December 2008, Paul Krugman wrote in The New York Times (emphasis added):

The financial services industry has claimed an ever-growing share of the nation's income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it's not just a matter of money: the vast riches achieved by those who managed other people's money have had a corrupting effect on our society as a whole....

We're talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America's G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing - and it probably was - we're talking about $400 billion a year in waste, fraud and abuse.

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By 2009, Krugman noted that this view was now widely shared.

Yes, many financial economists have concluded that high speed trading and hedge fund arbitrage add to the efficiency of these markets. But I wonder if they have quantified the value to our society of these benefits and compared them to the very real costs. As far as I know, they have not. It's my understanding that they have only looked at the isolated impact of these activities on markets -- not their overall impact on our society.

This system, with the highest rewards going to those who create nothing, is antithetical to a capitalist economy. We have turned the underlying premise behind our entire economic system on its head. Now, those who create little, if any, societal wealth receive the most wealth in return.

Moreover, the wealth now inappropriately channeled to Wall Street is harming our society in a myriad of ways: First, money inevitably leads to political power through donations, lobbying, access, and more. Inevitably, trading-related money is now further distorting our capitalist economy by influencing legislation for its own anti-capitalist benefits.

Second, in a society where success is often defined by income (for better or worse) the talent the nation desperately needs to create real wealth is instead sucked up by the financial system and dedicated to arbitrage and other zero-sum activities.

Third, the speculative investments of hedge funds and other trading entities can have a dangerous destabilizing impact on markets and the prices of essential commodities (such as food and energy), and create systematic risk for the economy as a whole. In February of this year, Bloomberg highlighted a federal government report that found that "[h]edge funds and insurers might threaten U.S. economic stability in a time of crisis."

Fourth, it's likely that billions of dollars of our nation's limited resources are spent each year on infrastructure with no real societal value, all of which could instead be spent for productive uses.

Fifth, pay scales throughout the society are thrown out of whack as other elites start to question whether they should be earning similar amounts.

Finally, the notion that all profits are good -- whether they create real societal wealth or not -- is consistently reinforced through the highly publicized example of Wall Street earnings and applied with the same harmful effects in other industries throughout the nation.

Ayn Rand would, I believe, argue that this absolute failure to enforce capitalist principles is exactly what she most feared: The emergence of a powerful group that produces nothing, yet manages to takes a large share of the societal wealth created by others. In her view, this inevitably leads a society to implode and self-destruct.

Yes, Rand did not believe in altruism or any type of social safety net, and I am not addressing this aspect of her "Objectivist" philosophy here. But it is worth noting that she opposed these programs for the same reason I am certain she would be horrified by the current channeling of wealth to financial firms: She believed that they were allocating the benefits of production away from the rightful beneficiaries. Whether we agree or not with these assertions, they are irrelevant to this discussion.

I do, however, feel comfortable asserting that if she returned today, Rand would consider eliminating the transfer of un-earned wealth to the financial sector to be a far greater and far more urgent priority than addressing her beliefs related to the social safety net.

Unless we address the destructive effects caused by making speculators and traders the highest earning class in our capitalist society, the economy will remain dysfunctional.  In effect, the nightmare that Rand's philosophy anticipated for our economy is increasingly real, but because of the financial industry, not the social safety net or taxes.

Here's a final thought: In Rand's Atlas Shrugged, the industrialists who create the real wealth of the society start to disappear as they go into hiding. The trains that make the society work, both literally and metaphorically, stop.

So I have developed what we can call the Ayn Rand test of value: If securities traders and quants at investment firms and hedge funds started to disappear in large numbers tomorrow, would the trains that comprise our economy and society run better or worse?

Bruce Judson is Entrepreneur-in-Residence at the Yale Entrepreneurial Institute and a former Senior Faculty Fellow at the Yale School of Management.

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Is Anemic Employment a Symptom of Hysteresis?

Nov 17, 2011Sander Tordoir

unemployed-150With unemployment at a sickly 9 percent, a renewed push for public service jobs may be just what the doctor ordered.

unemployed-150With unemployment at a sickly 9 percent, a renewed push for public service jobs may be just what the doctor ordered.

The Occupy movement has often been criticized for lacking an overarching political message. One of the roots of its discontentment is not so difficult to discern, though: the enduringly high level of under- and unemployment. While the popular debate on the level of unemployment is highly partisan, politicized, and unproductive, Occupy is telling us that we cannot lose sight of the personal cost of unemployment. It also merits a more serious study of why joblessness remains so high. While there are a wide variety of global macro-economic factors that are contributing to the sputtering economic recovery, one process that could be at play is often referred to as unemployment hysteresis. This term describes the way in which temporary shocks to employment levels can cause more long-lasting unemployment.

In 1986, Lawrence Summers and Olivier Blanchard wrote an influential paper in which they discussed some of the possible ways this process can occur. First and foremost, there can be a difference in bargaining power between the unemployed and the remaining workforce. Those who have retained their jobs can manage, through organized labor or simply through contractual stipulations, to prevent wages from declining in the bust cycle. As a result, the price of labor cannot decrease as aggregate demand is falling and therefore the demand for labor cannot increase. The employed can thereby effectively block the unemployed from the labor market. Furthermore, the remaining workforce may also bargain in such a way that when economic recovery sets in, their wages and productivity increase, and thus the recovery does not translate into increased employment but rather into increased payment for those already working.

Alongside the difference in bargaining power there is a second, though not mutually exclusive, reason for sustained unemployment. This has to do with the loss in skills of those who have become unemployed. Their knowledge and skills, especially if they are on the sideline for a fairly long period, become outdated, rendering them less appealing to employers.

A possible diagnosis of hysteresis has crucial policy implications. We may very well be dealing with an increase in unemployment that cannot be attributed to an increase in the natural rate of unemployment, but rather to a shock-induced structural increase. After all, it is unlikely that the natural unemployment of the United States, determined by its total production capacity including factors such as its population size, has changed dramatically in the course of the last three years. If this is so, then expansionary demand policy, on the condition that it is implemented well, may bring the unemployment level back down.

Indeed, there is some interesting tentative evidence that seems to point to hysteresis in the United States today. While it is hard to measure a loss in skill sets, it is possible to take a look at the development of wages versus the growth in GDP.

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Here, it seems that some of the high unemployment in the United States could potentially be attributed to the build-up of a wage differential. While output declined significantly in the recession of 2008-2009, wage levels did not decline accordingly, but stayed high.

So what we are seeing is a slightly dualistic labor market from which the large pool of unemployed people is excluded. With our political system incapable of providing the stimulus the economy needs, this calls for a grassroots public service employment plan across the country, with each community organizing its public service jobs according to its needs and goals. This would greatly benefit those who are locked out of the private labor market and the economy at large. Working in public service jobs tailored to their talents, knowledge, and interests, they can keep their skill sets up to date. We cannot afford to leave 9 percent of the labor force behind. The increase in employment from such a plan would stimulate demand in the private sector, reopening the labor market and paving the way for public workers to move into the private sector.

Furthermore, an embedded public service plan would constitute a form of an automatic stabilizer in boom and bust cycles -- absorbing labor in bad times and releasing labor in good times.

Governments traditionally face a nasty tradeoff when it comes to unemployment benefits. Paul Krugman argued that the reason Europe experienced high unemployment throughout the 1980s and early 1990s was that European states were providing compensation for the unemployed that was too high. With technological changes decreasing the wages of low-skilled jobs, they came too close to unemployment benefits, taking away the incentive to hold a job. In response, a government can decide to stop providing these benefits, thereby keeping employment levels high but increasing inequality in the process.

However, there is also a middle road that blunts some of the sharp edges of this tradeoff. If the benefits are connected to a public service job, and only to a public service job, then we can take care of the unemployed, reducing inequality, while simultaneously incentivizing them to work. With almost 10 percent of the American workforce ready, willing, and able to hold a job but unable to find one, public service employment would undoubtedly appeal to many.

Hysteresis is a disease with a cure. Despite earlier attempts to remedy this disease, with unemployment still at 9 percent, we cannot give up on public service employment. Perhaps we can learn from Occupy in that sense as well: do not give up too easily.

Sander Tordoir is a former Summer Academy Fellow for the Roosevelt Institute | Campus Network and remains involved with the Campus Network from Istanbul.

Reese Neader is the Roosevelt Institute | Campus Network's Policy Director.

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The Budget Chronicles: The Super Committee's Predestined Failure

Nov 16, 2011Bo Cutter

All signs point to empty political posturing without real solutions. And that was always the expected outcome.

All signs point to empty political posturing without real solutions. And that was always the expected outcome.

The super committee, set up after the debt limit debacle in early August, is due to report on November 23. This report is supposed to tell us how Congress will meet its self-inflicted requirement to reduce future deficits and the growth of the country's debt by at least $1.1 trillion over the next 10 years. If this goal is not met, then automatic cuts -- called sequestrations -- will go into effect, divided equally between domestic and defense expenditures. This report was actually due to the Congressional Budget Office well before now so that the CBO could score the proposals. But if you knew anything about congressional negotiating, you knew that would never happen; it was always doomed to be strung out until the last minute.

So what's the report going to propose?  Here is my handicapping of possible outcomes with commentary to follow:

1) Chances of a breakthrough and a major deal: 0 percent. There was never any chance of this. No member of the committee has anything close to the clout needed to move his or her party toward any kind of real deal.

2) Chances of a failure and the ensuing sequestration: 10 percent. This would be an awful result for the committee members and for Congress as a whole. I know that there is great pressure on the committee to avoid a failure. Embedded in my 10 percent estimate is some small chance of a modified failure, such as a decision to delay the report. But I cannot imagine the committee wants to prolong this agony.

3) Chances of a "kick the can down the road" minimum proposal filled to the brim with fake cuts, empty allocations, and meaningless two-step processes: 90 percent. The report will propose approximately $1 more than the absolute minimum combined with a maximum degree of fakery.

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To describe the "kick the can" option more completely: it will include a) a very small total of real deficit or debt reduction; b) maximum possible use of fake changes -- for example, counting currently planned troop reductions as defense cuts; c) broad, empty allocations -- other committees will be instructed to make cuts in very broadly specified areas (so no one is guilty of any actual reduction); d) I hear there is some chance of the return of an oldie but goodie -- the general fraud, waste, and abuse reduction; and e) a new maneuver -- the revenue increase two-step, by which a (small) revenue increase is stated with the actual tax changes assigned to the tax committees to decide upon next year.

One can be disappointed, but certainly not surprised. This super committee was, from its beginning, intended to produce this result. It is the Congressional version of the joke about the train car load of 10-year-old canned sardines: intended for trading, not for eating. Creating this committee was solely the way to get out of the debt limit/deficit debacle Congress created for itself. Yes, lots of people played their expected roles and presented to the committee. But no one who knows the town ever thought we would be any where else but right here.

The committee's report will then immediately become the vehicle for a much more satisfactory game of finger pointing, which will set an appropriate tone for the presidential campaign we are headed into. Some of the truest words ever spoken about pro football also apply to politics: Blain Francis Nye, Stanford graduate and tackle for the Dallas Cowboys, is credited with observing, "It's not who wins or loses, but who gets the blame."

But, to end on a positive note, there is some modest chance that events might force both sides toward a grand bargain immediately after the presidential elections in the period between November and Inauguration Day in January. No matter who wins, there is going to be a high sense of urgency to get this issue at least partially out of the way.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic presidents.

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