Voters Demand a Progressive Second Term Agenda

Nov 13, 2012Felicia Wong

As part of our series "A Rooseveltian Second Term Agenda," a call for progressives to seize the moment after Election Day.

As part of our series "A Rooseveltian Second Term Agenda," a call for progressives to seize the moment after Election Day.

Last week’s election results weren’t just a win for the president. Across the board, voters went to the polls and registered their support for progressive values, supporting needed tax increases, passing marriage equality for gay and lesbian Americans, and giving a candidate who ran on a platform of proactive government and a strong safety net a second term. The message was clear: despite an economy that continues to recover too slowly, the direction that progressives are taking the country in is the right one.

The polling we have done with Democracy Corps makes it plain – voters don’t want austerity or cuts in Medicare and Social Security. They want to fix the economy with long-term investments in infrastructure and a focus on jobs. And they want solutions – like raising taxes on the well-off and reforming the financial industry – that can raise the revenue to pay for it. As Hurricane Sandy made apparent, we need to update the country’s infrastructure, and we can put people back to work doing it.

So our job has just begun. Now is when we really have to roll up our sleeves and work to achieve an ambitious agenda. The politics won’t necessarily be much easier than they were over the last four years. But with a Democratic president, a Democratic majority in the Senate, and an electorate strongly behind us, progressives have an opportunity to seize over the next four years.

Over the next few weeks, Roosevelt Institute Fellows and staff will weigh in with their thoughts on what our national agenda should look like. While we might differ on some of the specifics, we all agree on basic values and goals: reducing inequality, creating jobs, kick-starting economic growth, building a community among the American people, and regaining trust in both the private sector through functioning markets and in the government and our political system.

On the eve of a second Obama term, and with some fundamental economic and political choices before us, we are proud to be in this historic moment together, Our goals are ambitious. We believe that our ideas can have real impact. As President Franklin Roosevelt put it 80 years ago, “The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation.” Nothing could be truer of our times. Progressives must lead the way.

Felicia Wong is President and CEO of the Roosevelt Institute.

Share This

Transition Tasks: Commit to a New Model of Economic Growth

Oct 31, 2012Bo Cutter

The global economy is heading toward a huge transformation. Can America rise to the challenge?

Neither of our two major political parties have at their cores a commitment  to economic growth. In his second term, President Obama has an extraordinary opportunity to grab the golden ring, make a genuine commitment to sustainable, equitable growth, and follow that up with a credible, plausible entrepreneurial growth model.

The global economy is heading toward a huge transformation. Can America rise to the challenge?

Neither of our two major political parties have at their cores a commitment  to economic growth. In his second term, President Obama has an extraordinary opportunity to grab the golden ring, make a genuine commitment to sustainable, equitable growth, and follow that up with a credible, plausible entrepreneurial growth model.

But aren't both parties pro-growth in their platforms and their various position statements? Of course they are. It's a necessary ritual of political life. But for both the left and the right, growth is a residual - it's what you're for, after you get everything else you want. Moreover, both parties are wedded to whole sets of client groups whose agendas don't include economic growth at all.

The right wants austerity, low taxes, budget surpluses, preferably no government but at the most a small and passive government, no abortion, a Christian nation, and no immigrants - all before it wants growth. There will certainly be those who argue that some of these elements are essential aspects of an economic growth strategy, but I've yet to see a serious and specific growth model from the right and I've heard nothing about equitable and sustainable growth. In any case, the problem is that you can't just get elements of this list; holding today's right-wing coalition together requires that you get the whole package.

The left favors large active government almost as a principle, rather than a tool for something. By far it's highest priority is the current social safety net, unchanged forever. It does not regard debt or deficits as issues that matter. It is deeply contemptuous and dismissive of business, suspicious of markets, and is far more concerned about income distribution than about income expansion. It is very concerned - as it should be - about the short- and long-term effects of unemployment and it wants a sustainable and equitable world but sees no particular connection between these good things and economic growth. As with the right, one searches in vain for any useful theory or model of long run growth in the writings of the left.

The central attitude toward growth of both party philosophies is similar to the foreman on the loading dock who said, regarding his company's attitude toward quality, "It's in the slogan, and the vice president talks quality at least four times a year. But the assistant vice president talks shipping cases several times a day."

Other than playing whack-a-mole with each other over the short-term growth rate right now, the view of both the left and right is that the economy is a perpetual motion machine that will just keep rumbling along. But it isn't. Not ever and particularly not now. 

Economies have rhythms. They don't just march along forever at some preordained rate of growth. Big economies respond over decades, generations, to big impulses: revolutions in the cost of power, or transportation, or information; revolutions in the applications of these big cost shifts. These impulses spread throughout an economy, driving higher rates of economic growth, and then, as they become pervasive, lose their force. America has experienced such impulses, or waves, at least five times in the last 200 years. We are in the end phase of one such impulse and the very early stages of the next.

The "golden era" of the 20th century between roughly in 1950, and 1980 represented the full flourishing, the height of one such era and growth impulse. In these 30 years, the economy was dominated by large companies, managerial capitalism, and a financial system that evolved to meet those particular needs. The success of this era importantly shaped our expectations, our sense of how the world works, our institutions, and our politics. But as successful as this era was, the most important thing to know about it now is that it is over. Both parties - and both America's left and right - believe or at least act as though it is returning again, it's just around the corner. And it's the other guy's fault that it hasn't rearrived yet.

But it's not coming back. One reason among others is that we will never again see a world in which our economy dominates the world's economy. Beginning in the 1970s, as colonial empires collapsed and economic philosophies were revolutionized, major new nation states entered the same world economy we were in along with billions of new workers and households. At first that represented a boost to us, but as the economic sophistication of these economies evolved this new world meant vast and hard structural shifts for us. As Michael Spence makes clear in his book "The Next Convergence," much of the structural change we see and don't like comes from this changing shape of the world. Falling manufacturing employment, the 20-year slowdown in income growth, a large piece of income inequality, and the polarization of our labor force are all due in part to the changing shape of the global economy. (Just to be clear, the other major factor in all of these structural shifts is technological change.) 

We can't do anything about the shape of the world, but we can figure out how to change and thrive in this new environment. Which means we have to have a new growth model.

Fortunately, another technological revolution is occurring now and all of the elements of a new growth model are coming together. The model plays to American strengths and is there for us develop - unless we choose to be stupid. The model will require entrepreneurial capitalism, independent capital, high levels of private sector investment, equally high levels of infrastructure investment, mayors who see their cities as platforms for growth, and an educational revolution. It requires us to see that technological change can, uniquely, work for us. I've called it an era of mass specialization; it can be much more equitable and environmentally sustainable than the golden era.

And here lies President Obama's second transition task and a huge opportunity. He has to start immediately making this new growth model clear and comprehensible to Americans. He has to offer the hope that there is more to the future than just a repeat of the trends of the past. And he has to begin to propose the public policies that will allow the next growth era to be born. But above all, this will require that President Obama sees equitable, sustainable growth as the core of his governing philosophy for the second term.  Two good places to start with would be to put his endorsement of Simson-Rivlin-Dominici-Bowles in the context of a focus on growth and to make this the theme of his January 2013 State of the Union.

President Obama told me once at a very small breakfast in New York - long before he was president - that he wanted to be a transformational president. I believe him, but I don't think he's achieved that yet. Here's the chance. What could be more transformational, and more truly progressive, than to change America's governing political philosophy, wrench our politics away from its infatuation with wedge issues and a return to the 1950s, and usher in a new era of growth? As I started by saying, the golden ring is out there and the merry-go-round is heading toward it. 

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.

Share This

Live at Dissent Magazine with "From Master Plan To No Plan"

Oct 24, 2012Mike Konczal

I have an article in the latest Dissent Magazine, co-written with Aaron Bady, titled "From Master Plan to No Plan: The Slow Death of Public Higher Education." It's now live and kicking off their newly redesigned webpage. It starts with Ronald Reagan in California in the 1960s, does a history of the creation and strengths of the University of California's Master Plan system and its dissembly, and ends with what John Aubrey Douglass calls the the Brazilian Effect. It's full of riot cops, occupations, moderate Republicans, thoughts on elasticities of supply, for-profit schools and more.

I have an article in the latest Dissent Magazine, co-written with Aaron Bady, titled "From Master Plan to No Plan: The Slow Death of Public Higher Education." It's now live and kicking off their newly redesigned webpage. It starts with Ronald Reagan in California in the 1960s, does a history of the creation and strengths of the University of California's Master Plan system and its dissembly, and ends with what John Aubrey Douglass calls the the Brazilian Effect. It's full of riot cops, occupations, moderate Republicans, thoughts on elasticities of supply, for-profit schools and more.

I hope this starts to move the conversation forward on higher education outside a specific focus on student debt, because that is likely to reach its limits outside a broader vision of what needs to be accomplished. Andy Kroll wrote a similar piece that went live earlier this month, so I think there's a lot of interest in this topic. In March, Catherine Rampell wrote about the Brazilian Effect in economix. Andrew Ross wrote a fantastic piece for Dissent's series on education on the aggressive expansion of NYU and other universities as part of a conscious urban planning framework, combining growth models based on the FIRE industires with those in the ICE (intellectual, cultural and educational) industries, which is an important part of the puzzle.

This may be my favorite written thing with my name on it and, as I've been given opportunities I wouldn't have had without public higher education, this political and economic battle means a lot to me. Hope you check it out.

 

Follow or contact the Rortybomb blog:
  

Share This

Still No Straight Answers on Social Security

Oct 12, 2012Tim Price

After two debates, progressives are left with more questions than answers about the fate of one of our most important social programs.

After two debates, progressives are left with more questions than answers about the fate of one of our most important social programs.

It’s been a few decades since then-House Speaker Tip O’Neill first referred to Social Security as “the third rail of American politics,” but judging from the way the candidates in this election have avoided the subject, it still has plenty of juice left. There was a brief dust-up last fall when Rick Perry claimed the program was a Ponzi scheme, but his subsequent flameout in the Republican primaries was so spectacular that the details were quickly forgotten. Since then, most of the focus has understandably been on Paul Ryan’s plan to turn Medicare’s guaranteed benefit into a voucher that grandma and grandpa can add to their coupon clippings. If we’re really lucky, sometimes we even get to debate the wisdom of dismantling Medicaid. But in the last two debates, the candidates have made statements about Social Security that raised more questions than they answered and suggested that the program’s future may be in doubt regardless of the election’s outcome.

Aside from the fact that President Obama seemed to have downed an entire bottle of Nyquil before his first debate with Mitt Romney, one of progressives’ biggest gripes about his performance concerned his decision to take Social Security off the table. “You know, I suspect that, on Social Security, we’ve got a somewhat similar position. Social Security is structurally sound,” Obama said last Wednesday, adding that “It’s going to have to be tweaked” but “the basic structure is sound.” That raises two questions: First, do they actually agree, or was Obama overcome by the spirit of compromise that sometimes compels him to give his opponents the benefit of the doubt when they’ve done nothing to earn it? Second, and perhaps even more importantly, exactly what sort of “tweaks” would the candidates support?

Sadly, we didn’t learn the answers to either of these questions, since moderator Jim Lehrer is allergic to follow-ups, but commentators on the left have hazarded a few guesses, and most of them aren’t very optimistic. Writing at The American Prospect, Robert Kuttner makes one of the stronger cases for why we should worry about Obama’s commitment to preserving Social Security benefits. He notes that Romney has pledged no changes to Social Security for those in or near retirement, which carries the unsubtle implication that everyone else is probably screwed. But Kuttner argues that instead of going on the attack, the Bowles-curious Obama “is softening up public opinion to accept very similar cuts” and “giving away what should be one of the clearest differences with Romney.” Dean Baker concurs that “tweak is a code word used by people who want to cut Social Security but lack the courage to say it explicitly.”

While it might be safer to assume the worst, it would be more charitable to read Obama’s comments as an acknowledgment that there are policy tweaks that would genuinely strengthen Social Security. Jeff Madrick provides a good overview of some ways we could extend the program’s solvency without reducing benefits or raising the retirement age. He also notes that Social Security is in no real danger and that fixing its finances is a fairly easy task, even though it’s often lumped in with Medicare and Medicaid as part of an all-encompassing “entitlement crisis.” But raising the cap on payroll taxes doesn’t seem to be the type of tweaking Romney has in mind, and even with no changes the program is projected to pay out full benefits for another 21 years. So why wouldn’t Obama choose to heighten the contrasts instead of conceding the argument before it’s begun?

That question only became more urgent at last night’s vice presidential debate, as Paul Ryan defended his support for privatization. Responding to moderator Martha Raddatz’s comment that “Medicare and Social Security are going broke” (they’re not), Ryan agreed that “these are indisputable facts” (see above) and argued that “if you reform these programs for my generation, people 54 and below, you can guarantee they don't change for people in or near retirement.” Well, that’s great for them, but what does it mean for the rest of us who were sort of planning on growing old one day?

Ryan, who once derided Social Security as a “collectivist system,” is the author of a failed plan that would have transferred some Social Security funds into private investment accounts (more on that in this great piece by Mike Konczal and Bryce Covert). Last night, Ryan again claimed that privatization would “let younger Americans have a voluntary choice of making their money work faster for them,” whatever that means. It’s certainly true that if his plan had come to fruition after he originally proposed it in 2004, their money would have disappeared a lot faster during the financial crisis. Luckily, that proposal became so toxic when President Bush tried to pass it that his own party wouldn’t allow it to come to a vote. That’s probably why Ryan took care to point out that Mitt Romney doesn’t support such a plan. Instead, Romney wants to “slowly raise the retirement age over time,” an extremely regressive policy that would disproportionately hurt the poor people who most depend on Social Security. What a relief.

Biden offered a much stronger contrast on Social Security than Obama did, but he still left some questions unresolved. He stated clearly and firmly that the Obama administration would not privatize Social Security, which is the least we can expect from a Democrat given that the public version is one of his party’s greatest legislative achievements. He also argued that “to cut the benefits for people without taking other action you could do to make it work is absolutely the wrong way,” which is more reassuring but still leaves the administration some wiggle room to accept cuts as part of a Grand Bargain™. It’s certainly a weaker promise than the one he made in August, when he told supporters, “I guarantee you, flat guarantee you, there will be no changes in Social Security” if President Obama is reelected. Thanks, Mr. Vice President, but is there any chance we can get that in writing?

If Social Security wasn’t so essential -- if it didn’t lift millions of elderly people out of poverty, offer peace of mind to all Americans in their retirement, or provide critical survivors benefits that Ryan acknowledges his own family received – it might be easier for progressives to accept this kind of hedging as part of the vagaries of messaging in an election year. But Social Security really is that important, and it has powerful allies arrayed against it in Washington who make little secret of their desire to take an axe to the program. It deserves to have an equally powerful and committed advocate defending it in the White House. It’s clear that Mitt Romney won’t fill that role, especially after he chose the architect of privatization as his running mate and heir apparent. Barack Obama still could, but progressives will have to convince him that there’s no room for ambiguity.

Tim Price is Deputy Editor of Next New Deal. Follow him on Twitter @txprice.

Share This

Larry Katz on the Real Reason Education is the Key to Economic Growth

Sep 25, 2012Bo Cutter

The expansion of the American education system produced 100 years of economic growth, but we need a new model to achieve a sustainable, equitable future.

The expansion of the American education system produced 100 years of economic growth, but we need a new model to achieve a sustainable, equitable future.

The Next American Economy breakfast seminars resumed last week with a discussion with Professor Larry Katz focusing on his and Professor Claudia Goldin's book, The Race Between Education and Technology. If you haven't read this book, there is a great deal about our economy you won't understand. If you don't read at least the introduction now that you've been told, shame on you.

Larry has several fundamental insights. (These are the ones I picked out; he might prefer to highlight others.)

First, at a minimum, 25 percent of our productivity growth -- and therefore our economic growth -- over the 100 years between 1870 and 1970 is due directly to increases in the average number of years of education of the American people. It is highly likely that the actual contribution of education is significantly greater; 25 percent is a minimum.

Second, during this period, economic growth was high and equality actually improved in America despite fundamental economic and technological change -- change every bit as great as the changes we have seen in the last 30 years. In other words, we have been here before. We dealt with the effects of technological change in the past through advances in education. There is no obvious reason we could not do so again.

Third, the fundamental educational change during this period was "the high school movement," a grassroots-driven movement that saw free, gender-neutral access to high school as critical to community success. 

Fourth, there has been no recent educational revolution similar in scope to the high school movement, and the big change that has occurred -- the growth of post-secondary education -- has not been free. Not coincidentally, the growth of educational attainment in America has slowed, economic growth has slowed, and inequality has risen. 

Finally, this slowdown in education is probably a more important factor in the stunning rise in inequality we've seen than the shift of income toward the top 1 percent, which has grabbed more of the headlines.

Based on this discussion with Larry, I conclude that the mantra of the next successful political movement in America should be sustainable, equitable growth, and that this is a plausible goal. 

I'll go further. A long period of relatively high economic growth is within our reach starting in a couple of years if we would get out of our own way. I've written a piece on this titled "An American Renaissance," which I'll send to anyone who asks.

But this is not a layup. If we are to grow more rapidly over the next 20 years than we did on the last 20, we have to have a productivity revolution. More of our growth will have to come from productivity -- about 80 percent in the next decade, as opposed to 35 percent to 50 percent in the last three decades. To keep growth constant with the last 3 decades, labor productivity will have to grow by about one-third. If none of this happens, the generation born during the last decade will experience about 60 percent of the per capita income growth as did the generation born in the '60s.

The single most important thing we could do to increase the rate of growth of productivity is to increase the level of educational attainment of Americans. But sustainable, equitable growth is not a goal either of our current parties cares much about. The current progressive movement's singular focus on income distribution is both misplaced and convenient. Misplaced because there are better, more available paths to take that would accomplish both more equity and more growth; convenient because this focus enables it to ignore all the real issues. The right's obsession with unfettered markets is even more nuts and completely ignores the economic history of how American growth actually happened.

A true next American revolution in education will not be a simple linear extension of our current system. It will involve a combination of lifelong learning and certification, a commitment to teaching students how to learn continually, an equally deep commitment to what Larry Katz calls contextual training, a renovation and invigoration of our community college system, the use of the web in unique, student-oriented, and user-friendly ways, and major long-term costs. I would guess $50 to $75 billion annually for a long time -- between one-third and one-half a percent of GDP.

 But our current plan, of course, is to do nothing meaningful. As I've said before, the two parties are on a course to gut most of the government in order to protect the entitlements and retain the worst features of our current tax system. As an example, the total of all of the non-personnel investments in the federal budget is now $310 billion, or 8 percent of the total federal budget and slightly less than 2 percent of GDP, and it will fall to $270 billion, or 5 percent of the total budget and about 1.5 percent of GDP, over the next 10 years. This is a plan to build a low-growth, unsustainable economy with growing inequality.

Not to belabor a point I've probably made too frequently, but the door is wide open for what one might call a new progressivism or a new conservative movement. The old right can then focus on its Brigadoon-like vision of a time when the market roamed free and unfettered. The old left can focus on income distribution. And the real work of building a workable society based on sustainable and equitable growth can be carried out by whoever decides to reach first for the prize.

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.

 

School classroom image via Shutterstock.com.

Share This

The Recession Ends. Then What?

Sep 24, 2012

It may be hard to imagine, but (we all hope, anyway) some day the recession and meager recovery period will come to an end. At that point, will the debates we're having now about the economy become completely irrelevant? What will we have to fight about? Roosevelt Institute Fellow Mike Konczal and EPI's Josh Bivens took this question on in the latest Fireside Chats episode on Bloggingheads:

It may be hard to imagine, but (we all hope, anyway) some day the recession and meager recovery period will come to an end. At that point, will the debates we're having now about the economy become completely irrelevant? What will we have to fight about? Roosevelt Institute Fellow Mike Konczal and EPI's Josh Bivens took this question on in the latest Fireside Chats episode on Bloggingheads:

As Mike points out, "Right now the debates seem very focused on things very specific to this recession," such as what the Federal Reserve could do to make things better or whether we should reduce mortgage burdens to boost consumption. Those are "very technical and very important debates to be having," he points out, "but they’re very narrow to the moment we’re in right now." Once we one day leave these issues behind, what will liberals decide to promote? And will we all be able to get on board?

The first issue Josh sees rearing its head is what we consider the "natural" rate of unemployment to be. Right now it's pretty obvious that unemployment is too high. At what point does it fall so much that some people, including the Fed, start to say it shouldn't go any lower? This question will have larger implications as well. As Mike says, "You see policy experts running around trying to figure out how to boost the wages of the lower quintile, but we know what has done it in the past 30 years, and it’s when unemployment is below 5 percent for a sustainable period of time." In fact, he says, a low unemployment rate "is the ultimate jobs program, it is the ultimate policy solution," and boosts wages for everyone -- not just those at the bottom.

What else will we squabble over when the economy once again booms? Bivens predicts social insurance programs -- Social Security, Medicaid, and Medicare -- will have to be on the agenda. And related to that will be just how high we can go with tax rates on the rich. "Obviously you can have a fairness argument and a just deserts argument, but the economic case is pretty clear that [tax] rates [on the wealthier] could go much higher," Mike says. "But we’re seeing resistence to just getting to near 40 percent at this point." Brace yourself, political battles are coming.

Watch the full episode below, in which Mike and Josh discuss how little we all take home and whether inequality and the social safety net have anything to do with it:

 

Crossroads image via Shutterstock.com.

Share This

The War on Crime as a Conservative (and Progressive) Assault on Liberal Philosophy

Sep 21, 2012Mike Konczal

In case you didn't see, Aaron Schwartz just had an absurd level of felony charges brought against him for allegedly trying to mass download JSTOR by prosecutors. You can support him here. Meanwhile Twitter turned over the account records of Malcolm Harris to the New York criminal justice system.

In case you didn't see, Aaron Schwartz just had an absurd level of felony charges brought against him for allegedly trying to mass download JSTOR by prosecutors. You can support him here. Meanwhile Twitter turned over the account records of Malcolm Harris to the New York criminal justice system.

How can we theorize innovations in criminal justice policy over the past decades as a reaction to liberalism? Not liberalism like the New Deal or the Great Society, but liberalism as in the philosophical theory of the modern era. Let's start with the policy innovation driven by neoconservatives, and then examine how the progressive assault on classical liberalism also functions in the war on crime.

The Conservative Assault

One part of liberalism is about formal equality--liberty to participate as well as equal freedom from government interference. The War on Drugs and aggressive quality of life initiatives, beyond filling our jail cells, are about getting a lot of low-level charges and convictions on as many people as possible. From 1994-2000, arrests for smoking marijuana in public view (MPV) were up 2,670%. Why does this matter? They interact with three-strike laws to build to large sentences out of minor charges. This also allows for the creation of hierachy through a law ostensibly dedicated to equality and liberty. Once people have been prisoners, they face serious legal impediments, such as limits on access to voting, public housing, public employment, and public assistance. Tens of thousands of legal restrictions regulate the ability of ex-convicts to function and exist in society. There are also certain presumptions against individuals, especially felons, that deny any type of formal equality before the law. When Michelle Alexander talks about a New Jim Crow system of segregation through the legal code and policing, this is the dynamic she is discussing.

Another part of liberal philosophy is that if the state wants to use its power to act against an individual, say for violating a crime, they need to make their case through an institution that is skeptical of that power. In the United States, that means trial by jury, under the supervision of a judge. The judge and a jury of one's peers are supposed to be the key agents in a court.

Another key policy innovation of neoconservatives is attacking the relative independence and power of judges. There have been a host of conservative policies designed to reduce the power of judges, of which mandatory minimums are one of the most important. As judges lose power, prosecutors gain it. Prosecutors are now the major presence in the courtroom, overseeing the overwhelming majority of cases that are run through plea-bargains.

When the evangelical Harvard law professor William J. Stuntz writes that the American criminal justice system has collapsed, this focus on the prosecutor as the arbiter of justice in the courtroom, rather than the judge and the jury, is what he means. Stuntz: "Prosecutors now decide whom to punish and how severely...To a degree that had not been true in America's past, official discretion rather than legal doctrine or juries' judgments came to define criminal justice outcomes....criminal law does not function as law. Rather, the law defines a menu of options for police officers and prosecutors to use as they see fit."

Notice how the prosecutor overseeing Aaron Schwartz's case just decided to charge him with 13 felonies, mostly for violating the Terms and Services "terms of service" of a website. At 13 charges, it looks like the prosecutor is trying to stack the deck on overreaching and arbitrary charges so they can have as much leverage as they can get when it comes time to go to court. That isn't a rule of law, it's a rule of prosecutorial discretion as justice. This is what a collapsed criminal justice system looks like.

The Progressive Assault

Part of the progressive assault on the laissez-faire of classical liberalism was creating the idea that there is no pre-political distribution in the economy. Property is a creation of government, and therefore the distribution of that property is also created by the government. Governments must balance conflicting boundaries of property, and must do so democratically, because appeals to "natural rights" or "economic liberty" will ultimately be empty. Matt Bruenig has several recent posts - one, two, three - spelling out this "myth of ownership" argument over distribution and property rights that are worth checking out.

This progressive approach to property and the state is absent in contemporary talk on economic policy, but it is being theorized and applied in the most avant-garde ways when it comes to criminal justice policy. Let's talk about dogs that do drug searches. If the police wanted to search your suitcase, or look through it with hypothetical x-ray goggles, they'd need a warrant. That would be an illegal search of your property, which is protected by the Constitution. However if a drug dog sniffs your suitcase and smells drugs, that doesn't count as a search.

Why? As Justice Stevens argued in United States v. Jacobsen (1984), "Congress has decided -- and there is no question about its power to do so -- to treat the interest in 'privately' possessing cocaine as illegitimate; thus governmental conduct that can reveal whether a substance is cocaine, and no other arguably 'private' fact, compromises no legitimate privacy interest." Since the dog can only "see" contraband such as cocaine when it sniffs, that sniff doesn't count as a search of your property, because you have no right to contraband.

You have a legitimate privacy interest in your property, except when you don't, because the government doesn't recognize your property as "property." Even though drugs are excludable, rivalrous, and have their price determined in large part by supply and demand, they aren't property the government recognizes, so the bundle of rights that go with property don't apply. The distribution of property outcomes is overwhelming determined by the government here.

People have talked about property this way in the past, but less so now. We talk about inheritance as almost a right now, but John Stuart Mill, for instance, argued in Principles of Political Economy that while "the right of bequest, or gift after death, forms part of the idea of private property, the right of inheritance, as distinguished from bequest, does not." Your right to receive inheritance doesn't exist outside of political framework, which can be held democratically accountable. (For those who think the war on drugs should be stopped and that you receiving an inheritance should be thought of as a type of quasi-contraband, the current policy framework is very backwards.)

There's not enough space here to really dive into it, but there's a mind-blowing legal realist seminar on the "Myth of Ownership" taking place in the realm of "asset forfeitures" criminal justice policy right now. The government sues property and money for being illegitimate under civil law; the government can seize the proceeds of the trade of contraband as well as property instrumental to that transaction. If you drive a car solely to sell contraband, and use the surplus of those sales to buy a home, what property claim can you have to own that car or that house? Here the government is actively creating and policing the boundaries and relationships of property through denying its existence as legitimate "property," all done under criminal law.

This brings us to Malcolm Harris' Twitter account. Who owns a tweet? Who has the ability to turn it over to a third party, and who has the ability to block it? The property claim of a tweet is now being determined through the ability of the government to take it for criminal justice purposes.

A New York criminal court had demanded Twitter hand over Malcolm Harris' tweets, and Twitter did so last week under extensive pressure. The court argued that "Here, the defendant [Malcolm Harris] has no proprietary interests in the @destructuremal account’s user information and Tweets between September 15, 2011 and December 31, 2011...While the Fourth Amendment provides protection for our physical homes, we do not have a physical 'home' on the Internet." They are determining that Harris has no legitmate property claim on the tweet and no right to prevent a search of his account on Twitter's mainframe.

It is fascinating, though problematic, to see the idea, boundaries and relationships of online "property" being determined through the criminal justice system. Here the "property" of online records are carved out and created based on where it will be easiest for cops and prosecutors to access them. Hence all the more reason to have Congress re-establish baselines on what our privacy expectations are online, in the opposite way it has been dissolving privacy and property claims under the banner of the War on Drugs.

 

Follow or contact the Rortybomb blog:

  

Share This

The Left Doesn't Need a Rand and the Right Shouldn't Want Another Reagan

Aug 16, 2012Jeff Madrick

When we wish for modern incarnations of the right's biggest idols, we feed into the myths surrounding them.

When we wish for modern incarnations of the right's biggest idols, we feed into the myths surrounding them.

I am more than a little disturbed by all these pieces coming out about why the left has no Ayn Rand as a guide or how Ronald Reagan was a “socialist” compared to Paul Ryan. One has to be more than a little careful not to elevate these two icons to acceptable status. Let’s keep Ayn Rand in perspective. She was a talented mass market novelist who wrote David and Goliath myths about a super individualist versus the behemoth society. Her philosophy was not even second rate. Ronald Reagan did not save the economy; his legacy was a crumbling foundation for growth and a rising tide of injustice. It could be seen as a positive to fail to measure up to either of them.

The right's portrayal of Paul Ryan as a Reaganite is not that far from the truth, but the right then goes on to mythologize and entirely distort the Reagan years. Under Reagan in the 1980s, wages stopped growing, productivity grew at historically slow rates, investment was soft, and the deficit never came down to the levels promised. That deficit was an albatross around the neck of George H.W. Bush, his successor. Meanwhile, deregulation was unloosed, only to be given further impetus by the Clinton administration. The right goes so far as to attribute the productivity boom of the second half of the 1990s -- that is, after the Clinton tax hike -- to Reagan. How can we take such claims seriously? 

Does Ryan go much farther than Reagan did in terms of changing Medicare from a guarantee to a poorly financed premium program? Sure. Would he cut other programs to almost zero? Yes. Did Reagan? No, but probably because he couldn’t politically, not because he didn’t want to. Maybe Reagan had a more generous heart than Ryan’s -- he was once a lefty and never a rich kid like Ryan, and his dad worked for the New Deal. But he played the race card in California and on his way to the White House. Is there anything uglier these days than his attacks on "welfare queens" were then?

In the end, Romney and Ryan are both preaching Reagonomics: cut taxes and worry about closing the deficit sometime in the future. Neither tells us the loopholes they’d close or the other programs they’d cut to allegedly meet their deficit targets. Their aim is to reduce the size of government, as was Reagan’s and Milton Friedman’s. The deficit is a secondary consideration, for all the blather about it.

As for why the left doesn't have an Ayn Rand, I say thank goodness it doesn’t follow a great over-simplifier like her. Her sexually charged novels focusing on an individualist hero appealed to adolescents or those who still yearned for those years. Her economics were derived from her individualism. A Russian by birth, her thinking was animated by her loathing of Soviet totalitarianism -- certainly understandable. But she became an ideologue, not a disinterested intellectual. She had no serious friendships with the likes of Hayek and collaborated with few schooled economists other than Murray Rothbard, who later left her circle. She was really more a cult leader than a thinker. 

The nation turned conservative in the 1970s and began reading Rand, Hayek, and Friedman again. Milton Friedman’s writings really only caught on well after he published, but he was all over the mass media in the 1970s and won a Nobel prize, which would have been unlikely had it existed when he started out. These books were very accessible as part of the right’s appeal is the simplistic nature of its economics, all captured by a demand and supply curve that economists as far back as Alfred Marshall warned against taking too seriously. Today, the entire economy is portrayed as a supply and demand curve crossing at equilibrium. But we have cause and effect mixed up here. Americans became more conservative not due to the literature, but for a complex number of reasons. 

But there have been great leftist successes. J.K. Galbraith was more articulate than any of these conservative authors and wrote major best sellers. The counter-culture of the 1960s was groomed on Marcuse and others. I myself as a student wrote a summary of such writing for the curriculum of Harvard Business School. Why is there no return to these kinds of authors—to Harrington, Rachel Carson, Betty Friedan, even Eldrige Cleaver? The answer is that the nation and its press are pretty conservative and seek books that reinforce these views.

Perhaps we will get a novel out of Occupy Wall Street that will move young people. I hope so. It seems ripe with possibilities. But there are other books to be read or at least dipped into. The most recent mass phenomenon was a book by French author Stephane Hessel called Time for Outrage! in English. It reportedly sold millions of copies and helped ignite the Arab and Spanish Spring. It is a highly accessible and moving and angry work. Robert Nozick was the popular libertarian philosopher of the 1970s, but John Rawls won the day among serious thinkers. A lot of writers have written about the importance of government recently. Stiglitz has written well about inequality

So let’s not demand another Ayn Rand, who wrote essentially low-brow literature, or another Reagan, who is now mostly a mythological figure. Let’s keep our sights higher and avoid drawing the wrong conclusions from the right's past success.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

Share This

The "Pain Funnel" and the Harkin Report on For-Profit Schools

Aug 1, 2012Mike Konczal

Senator Tom Harkin (D-IA) has finally released his major report on for-profit schools, the result of two years of studies and investigations. It's a telling look into the numbers in the for-profit college industry and the growing future of higher learning amid a collapsing public sector. It gives us a reason to reexamine some of the deregulation that took place around this industry during the George W. Bush years. The report also also clarifies one of my new favorite metaphors, and that is the role of the "pain funnel" in our new system of higher educaiton.

Senator Tom Harkin (D-IA) has finally released his major report on for-profit schools, the result of two years of studies and investigations. It's a telling look into the numbers in the for-profit college industry and the growing future of higher learning amid a collapsing public sector. It gives us a reason to reexamine some of the deregulation that took place around this industry during the George W. Bush years. The report also also clarifies one of my new favorite metaphors, and that is the role of the "pain funnel" in our new system of higher educaiton.

There's some great metaphors for understanding how higher education has been created by the government throughout the years. There's the "democracy's college" of the 1862 Morrill Act, which sought to "promote the liberal and practical education of the industrial classes in the several pursuits and professions in life" by making sure public higher education would spread westward across the nation and be broadly accessible to all, including women, not just the rich or connected. There's the "Master Plan" of California, the culmination of a moderate Whig Republicanism and progressive liberalisms that no longer exist, which guaranteed those who wanted to study would be able to do so in a way that emphasized mobility -- one could move up or down in the three-part hierachy of education institutions. And this Master Plan was government planning, an explicit goal to create a certain amount of supply at a center price. 

Instead of government planning, we now have the for-profit industry. And one of the things it brings to the table is its aggressive recruitment techniques, one of which is called the "pain funnel." The Harkin report uncovered a for-profit recruiter's handbook from ITT that included this sales technique. As the Harkin Report notes, "After a recruiter located a prospective student’s pain point, the 'pain funnel' presented a number of questions that the recruiter can ask that are progressively more hurtful. In 'Level 1' a recruiter asks prospective students, 'tell me more about that' or 'give me an example.' In 'Level 2' the recruiter asks 'What have you tried to do about that?' The highest level asks a hurtful question to elicit pain." There's even a chart of the pain funnel from the recruitment materials:

I bring it up because this pain funnel approach to recruiting higher education students was brought up earlier last year by Harkin, and ITT immediately turned around and denied that it was actual company policy. Harkin's team went and interviewed the recruiter in question, and she said that "at quarterly district meetings I did pain funnel training for nearly every top recruitment representative, financial aid coordinator, dean, instructor, department chairs, all functional managers, all college directors and the district manager for the entire Southern California District, the largest district in the country... In October 2009, I wrote up a BEST OF THE BEST (BOB) submission to HQ that included the same 'Pain Funnel and Pain Puzzle' and how proper usage of this tool can bring a prospect to their inner child, an emotional place intended to have the prospect say yes I will enroll." Yup.

It's amazing how quickly we've gone from using government resources to enact the democratic visions of the Morrill Act, the GI Bill, and the California Master Plan, three of the greatest pieces of legislation our country has passed, to using government resources to enact a vision premised on eliciting pain. Through a funnel.

Because government is creating this vision. Government resources pay for it all. Eighty-seven percent of revenues at for-profits come from federal or state sources, including student loans and pell grants. Dylan Matthews has more on this. Though they teach around 10 percent of students, they take in about 25 percent of total Department of Education student aid program funds. These numbers are on the rise and show little sign of slowing.

Given that government is funding the basis of this system, what's the benefit of this privatization of public services and the introduction of the profit motive? Where's the innovation? The general claim for the privatization of government services is that you can get the same quality for a much cheaper price. The profit motive rewards those who go after inefficiencies, finding ways to make the same thing cheaper. When Mitt Romney praised for-profit colleges as the solution to higher education problems, he explicitly noted that it would “hold down the cost of education.”

But that is a significant failure. For for-profit schools, "Bachelor’s degree programs averaged 20 percent more than the cost of analogous programs at flagship public universities... Associate degree programs averaged four times the cost of degree programs at comparable community colleges... Certificate programs similarly averaged four and a half times the cost of such programs at comparable community colleges."

It's at the low end, i.e. community colleges that are particularly hit by state-level austerity, where this is even worse. The report finds that "for comparable diplomas, tuition at for-profit colleges ranges from 2 to 20 times the tuition at local community colleges." These for-profit schools have worse employment outcomes than community colleges as well. And there's significant dropout rates. Are there any advantages to us spending our valuable resources this way rather than expanding public community colleges? A former Poet Laureate, Kay Ryan, once said of public community colleges, "I can’t think of a more efficient, hopeful or egalitarian machine, with the possible exception of the bicycle.” Compared with the boiler room techiques and massive debts of the "pain funnel," I think the bicycle vision is the better one.

Why are we choosing to pay for higher education this way? How do we make sure that the demand for higher education is met? The government took steps to deregulate the way funding goes to for-profit schools under the George W. Bush administration, and the results are a disaster. Meeting the demand for mass higher education after the Civil War has never been a private phenomenon, either for profit or nonprofit. It has fallen to the public sector to ensure broad, accessible higher education for all.

Follow or contact the Rortybomb blog:

  

Share This

What Policy Agenda Follows From "You Didn't Build That?"

Jul 20, 2012Mike Konczal

(Note: There's a previous post on this subject of "you didn't build that," taking apart the conservative agenda around "job creators," which you can read here.)

(Note: There's a previous post on this subject of "you didn't build that," taking apart the conservative agenda around "job creators," which you can read here.)

The right is freaking out about President Obama's "you didn't build that" comment. Well, let's hope the conservatives in the audience have their fainting couches nearby and pearls sufficiently clutched, because I am going to start by kicking out two jams by my man, Franklin Delano Roosevelt, from back from when he was on the campaign trail:

"Our Republican leaders tell us economic laws--sacred, inviolable, unchangeable--cause panics which no one could prevent. But while they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings." (Nomination Address, July 2nd, 1932, Chicago, IL)

"To insure the first set of rights, a Government must so order its functions as not to interfere with the individual. But even Jefferson realized that the exercise of the property rights might so interfere with the rights of the individual that the Government, without whose assistance the property rights could not exist, must intervene, not to destroy individualism, but to protect it." (Commonwealth Club Address, September 23, 1932, San Francisco, CA)

Now as long as people are guessing as to what the true, deeper, esoteric meaning is of President Obama saying, "Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that," let throw something out there. It may be less a legal argument for how all property is the creation of the state - or as Roosvelt said, "the Government, without whose assistance...property rights could not exist" - and more a genuine call for actually building roads and bridges, something Congress is no longer capable of doing in these times. The current House went to war over whether or not to fund transportation infrastructure. It barely passed in a last-minute bill that left many issues still on the table. Former Republican congressman and now Transportation Secretary Ray LaHood told Politico that the original proposal was “the worst transportation bill I’ve ever seen during 35 years of public service.” Given that capital markets are willing to lose money to loan to us for 20 years and there's lots of unemployed people around, this should be a no-brainer.

There's two responses I've seen on the right to this topic that I'd like to address on the "you didn't build that" point, and both come up in Julian Sanchez's post "What Follows from 'You Didn't Build That'?" One is that President Obama is addressing a strawman, and that unless you are speaking to an anarcho-capitalist nobody would disagree with this. "Even we minarchist libertarians are already on board with" basic public goods, he writes, and President Obama's vision of the role of the state is much more expansive than that. I disagree that there is no disagreement. I think that the current vision animating conservatism broadly and GOP policy narrowly is one of an economy in which value is created top-down by "job creators," which I outlined at length here. Rather than "Social Darwinist," as the president refers to it, I think it is clearer to say that the current GOP policy, centered around the Ryan Budget, is "Randian." Now, that doesn't mean the opposition believes every part of Ayn Rand's theories; it just means that their political compass is orientated towards her vision, and if you step in that direction you are getting closer to your goal.

The other response is that what Obama says is largely true, but there's no actual politics that falls out of it. Sanchez writes, "It’s not that the 'you didn’t build that' argument is wrong as a factual matter—it’s that it’s true about everything, and therefore doesn’t get you much of anything."

That's a good point. What does a "you didn't build that" agenda look like? Here's what I think it should include broadly, and what matters it should be concerned with, at least on all things related to economics. (Noting in advance that I'm pretty sure the mainstream Democratic Party and President Obama aren't going to sign up for most of this.)

The first step is what President Obama was calling for in the speech, which is progressive taxation. This doesn't require the state to do more than what it does now, or less than what it does now, but instead changes how we pay for those things. And here the idea would be that those who have benefitted the most have an obligation to contribute the most. This has historically been a controversial policy - when the French economist and statesman Turgot was presented with a project for progressive taxation he responded "we must execute the author, not the project" - and I think it is useful to consider the Ryan Plan as ending progressive taxation. There's a lot of ways to argue for progressive taxation, including shared sacrifice of marginal utility, and this is another.

Another would be emphasizing that public goods are actually that: publically provided and shared. There's been a move to both privatize large parts of the government and to emphasize putting costs for the use of publically provided infrastructure directly on end users instead of making them paid for broadly. Higher education, for instance, is now less a conscious set of planning the government does to make sure all who need education can receive it, which is paid for broadly through taxes, but instead of a series of coupons -- grants, loans, tax subsidies -- to subsidize individuals purchasing a self-investment by and for themselves, with the assumption that the "for-profit" sector and innovation broadly will expand in size and quality to pick up the slack of decreasing public provisioning. A broader question is what is treated as a commodity, and under what terms. Fighting back against both of these issues would be part of the agenda.

Continuing the inter-generational pact of the welfare state is another part. David Frum recently described the current GOP as "a going-out-of-business sale for the baby-boom generation." Not wrecking the entire social safety net and the mechanisms of the goverment on the way out the door, and instead thinking of the government as a pact through time, is another important point to emphasize.

Now for property. Conn Carroll at the Washington Examiner brings up Robert Hale and the progressive, legal realist attack on laissez faire, and Sanchez brings up the similar arguments of the Nagel/Murphy book “Myth of Ownership.” These arguments are partially inherited from people like Jeremy Bentham, who argued that “property is entirely the creature of the law.”

One of the critiques that comes out of these arguments is that the picture of property rights as a vertical relationship between a person and an object, one where the issue at play is whether the person's right over the object is “deserved all the way down,” is flawed, or at least insufficient. Property is really a horizontal set of relationships between people; it isn't just your control of an object but your control over others with respect to that object. The fundamental right of private property, of course, has always been the power to exclude others. But in the 1910s, a law professor named Wesley Hohfeld formalized property "rights" into a series of four capacities: "right," "privilege," "power," and "immunity." They contrast with four incapacities: "duty," "no-right," "liability," and "disability" (see here or here for more). Each type of property right is predicated on being able to force others to respond a certain way -- you have certain immunities while others have disabilities in response, certain powers while others have liabilities, and so on.

And so "liberty" for one comes at an expense of "liberty" for another. Since there's no neutral way for the government to set these rules, certainly no abstraction like "economic liberty" to guide the path, the question over social control of property, as Leonard Trelawny Hobhouse put it, is "not of increasing or diminishing, but of reorganizing, restraints." The issue here isn't that everything is up for grabs - it's that there is no "neutral," and appealing to higher abstractions as "rights" or "ownership" don't get you anywhere.

Perhaps you find that objectionable or maybe you don't, so let's build out the You Didn't Build That Agenda in regards to property. The first stop is that there needs to be a democratic element and accountability in setting up these rules. If only because trying to back out a system of rules from vague appeals to "liberty" (especially as interpreted by courts) don't actually get us anywhere. The second issue would be acknowledging and confronting the issue that the current set up of the rules of property and economic exchange are important in creating our current economic inequality, from the runaway wealth of the top 1% to the stagnating wages of everyone else.

The way we set up the rules creates a lot of winners. The top 1% consists mostly of corporate CEOs and financial wealth. The former are influenced by the way we structure corporations through law -- read Demos' Anthony Kammer on "Reimagining the Corporate Form: Toward a More Democratic System of Corporate Governance" -- and compensation packages through tax law. The latter has a clear link with financial deregulation and much of the system exists in a way where finance's failure can pose huge externalities on other market actors and the macroeconomy as a whole. Another example is patent law which, as many note, provides large windfalls for owners. Over half of the windfall that comes from the fact that we privledge income from capital over income from labor in taxation goes to the top 0.1%. Dean Baker’s e-book, "The End of Loser Liberalism: Making Markets Progressive," is great on these points.

The way we set up the rules also creates a lot of losers. Bankruptcy law has become tougher on regular people while corporations do fine under it, something Robert Kuttner writes about as an important double standard. It is harder to unionize, and simple measures to allow for card check have failed in Congress. Inequality at the low end can be largely attributed to decreased unionization (for men) and a stagnant minimum wage (for women), both of which reduce bargaining power for their respective parties.

There's also macroeconomic policy, something the government does (or doesn't do) that has significant impact on economic outcomes but that impacts all kinds of claims to property. As Ryan Avent notes, commenting on the You Didn't Build That issue, the "operating monetary principle over the past generation—price and financial stability at all costs, help for the unemployed if we get around to it and only to the extent that the first priorities aren't endangered—has facilitated the creation of an enormous amount of financial wealth," as well as stagnating wages for everyone else. Full employment for all is a great start, though there's no way to appeal to it by referencing abstractions of economic liberty.

What else needs to be part of the agenda?

Follow or contact the Rortybomb blog:

  
 
Engineering image via Shutterstock.com.

Share This

Pages