The Alternative to Rick Perry: Trickle Up

October 26th, 2011 at 8:05 am | 53 Comments |

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Perhaps the greatest single threat to both conservatism in American life and the nation’s economic vitality is not Ivy League professors or Hollywood elites or a sinister “progressive” conspiracy but the economic decline of the middle class. Take away hope in the churning of the free market, and you push many citizens considerably closer to the state as a provider.

The turmoil of the markets in 2008 was merely the cataclysmic icing on top of the cake of a decade of lost ground for the bottom 90% of workers. Take that away, and an Obama victory would have been much less of a sure thing (and even such a victory would have been considerably moderated). If insurance premiums and coverage rates had been closer to those of 1993, Obamacare, the bette noire of conservative activists, would not have passed. The economic wasteland of the past few years has pushed more than a few public and private pension plans closer to the edge of insolvency.

The recent Congressional Budget Office report on incomes from 1979 to 2007 has depressing news for believers in egalitarian free-market capitalism. Since 1979, the after-taxes income of the bottom 80% of Americans as a share of the total national after-taxes income has dropped from 57% to 47%; every one of the first four quintiles has seen a drop in its share of the national income. Yet even the gains in economic strength for the top quintile have been unevenly shared. The 81st-99th-income-percentile range has seen its share of the national income stay the same. Meanwhile, the top 1% of earners have seen their share of the nation’s after-taxes income climb from 8% in 1979 to 17% in 2007. These numbers suggest that the profits of the national economy (broadly considered) have increasingly flowed to the top.

There are broader policy reasons that explain this change. For much of the past decade and beyond, the prevailing Republican (and, frankly, bipartisan elite) orthodoxy has been as follows: lower wages, lower prices, and an empowerment of capital over labor. The CBO numbers reflect this dynamic, as they show the share of income due to labor declining since 1979, while the share of income due to the combination of capital and business income increasing. The claim made continually on behalf of statist globalization over the past twenty years has been that lower prices on various goods through cheaper labor would reward the American consumer, and that the increase in spending power on tchotchkes would exceed the decline in wages due to outsourcing. Similar claims have been made on behalf of massive amounts of illegal immigration: poor workers in the shadows enrich Americans as a whole through providing a plentiful peon class to act as babysitters, home-builders, fast food workers, and other assorted “service” positions.

This decline in labor cost provides a de facto empowerment of capital: if you earn money from investing rather than collecting a paycheck, having cheaper resources of labor allows your dollar to go much further. The “ownership society” sought by President Bush attempted to leverage this dynamic. By making as many Americans investors as possible (especially through investing in the housing market), the Bush administration tried to place hundreds of millions of Americans in the position of the victorious investor class in order to compensate for the decline of the labor class.

However, there are noticeable shortcomings to this model. First of all, not all Americans can join the investor class, so a substantial number of Americans lose out in an investor-centric model. Moreover, housing, the investment vehicle favored by the Bush administration, is a dangerous institution on which to base an investor-centered economy: an individual house is nowhere near as fluid an investment vehicle as a stock portfolio, and the fact that most people need somewhere to live complicates the role of a house as an investment commodity. Since most people need to take on a mortgage in order to buy a house, using the house as the doorway to the investor market requires Americans to take on considerable amounts of debt, and the debt needed to keep the housing-investing game going will balloon (as the 2000s proved).

And the decrease in prices due to cheaper labor is not spread equally across all sectors of the economy. Those sectors least undermined by outsourcing and domestic and international low-skilled workers, such as health-care, have seen some of the biggest price increases over the past decade. Jeans at Walmart may be less, but your health insurance premiums have doubled. With wages stagnating or declining, health-care bills and others like them eat more and more into a worker’s paycheck. So the decline in wages is not fully compensated for by cheaper goods and services.

A final limit for the low wages=low prices model is that the consumer often does not feel the full price benefits of the decline in worker wages. Instead, the “savings” that many companies find through shipping work abroad or otherwise cutting labor costs are translated into bigger compensation packages for elite management and the investor class. While current “globalization” has witnessed the decline in wages for the middle and working classes, it has also seen the the pay of upper management (those who control large amounts of capital) increase. The recent history of American business is saturated with stories of companies that close down their American factories while giving upper management colossal paydays. So many of the presumed benefits of declining wages are accruing to an increasingly narrow band of the population.

With wages shrinking and the spigot of easy credit turned off, it’s no wonder that public demand has withered.

What might be slightly more interesting, though, is a movement among some factions on the right and left toward a policy reversal: using higher wages and not lower wages as a stimulant for economic growth. Under this model, rising incomes for working- and middle-class workers would increase consumer demand. Rather than the cost of jeans production going down, workers would have more money to spend on jeans—and housing and cars and medical care and foreign trips. Economic growth for the bottom 90% of wage-earners would in turn provide new opportunities for the top 10%. Things weren’t exactly bad for top-tax-bracketers during the egalitarian 1950s and 1960s or during the later part of the 1990s, when the income of a broader range of Americans increased in real terms (though income inequality increased in the 90s, as well). Rather than trickle-down economics, we would instead have foundation-up economics.

Nurturing this foundation in part depends upon increasing the skill level of the American workforce, so that workers can make the most of cutting-edge technologies. Education as driving future economic growth has perhaps acquired the somewhat dusty ring of tired dogma, but, like many things that may seem trite to the jaded, it has some truth to it. Reforming our immigration system, making new investments in fundamental research, and pushing back against social dysfunction (among other policies) would go a long way in the direction of improving the skills of America’s workforce and would likely improve the wages of many workers.

But mere training is no panacea. With all due respect to current education “reform” movements, people are not mere containers for educational inputs; they exist in vibrant, heterogeneous communities, where all do not all have the same aptitudes. America will not and probably cannot be a nation populated solely by Facebook founders and investment bankers and political pundits. It will have maids and clerks and factory technicians and farmers and truckers, too. We can and we should have an economic system that offers advancement to all productive enterprises of worth and merit.

(And make no mistake: the People’s Republic of China is witnessing great economic growth not because some of its students are doing well on international standardized math and science tests but because it has pursued an aggressive policy of protecting and developing Chinese industry. The decline of the US economy has less to do with the notion that it is graduating “insufficient” numbers of math and science majors and more to do with the fact that whole sectors of the economy have withered.)

Part of foundation-up economics also thus depends on protecting the livelihoods of so-called “lower-skill” workers (though, in reality, it does take considerable skill to build a house or run complex machinery or sundry other tasks). It may be true that the current statist flavor of globalization may increase inequality somewhat, but the extent of this inequality is in part due to other domestic policies. Our immigration and trade policies in particular have allowed those on the higher end of the ladder to leverage worker against worker in the pursuit of maximizing profits. Moreover, many of the gains for the wealthiest have been due not to the fair functioning of a free market but tothe manipulations of state power.

It is possible to realize an economy that combines the exuberance of the market with a sense of popular prosperity. However they may differ in their methods of reaching this goal, many Republican and Democratic presidents have aimed for it. For a number of years now, we have empowered capital through cheapening labor; now may be the time to increase the value of labor in order to find new opportunities for capital.

From a conservative perspective, an egalitarian economy, where all may have ready hope of living a comfortable life and of advancing economically, is far better than either an economy where the vast majority of workers need government checks to survive or an economy where the super-wealthy plunder the resources of the public and leave the populace as a whole to malinger. Some extremists of the left and of the right would push the economy in one direction or the other. Neither extreme is sustainable. A happy, prosperous workforce is not only the best environment for defending the free market; it is also one of the greatest promises of the free market.

Originally posted at A Certain Enthusiasm.

Recent Posts by Fred Bauer



53 Comments so far ↓

  • Fart Carbuncle

    Wages are shrinking because of globalization. Corporations like WalMart can get a manufactured product much cheaper in China or India. I fault American labor unions and regulatory rules for this.

    When we finally bottom out of the housing industry bubble, things will be much better. Until then, buck up.

    • ottovbvs

      “I fault American labor unions and regulatory rules for this.”

      Yeah sure. Without those troublesome unions and regulations Americans would still be working for $5 a day and competitive with Indian and Chinese workers. This would do wonders for US GDP which is 70% made up of consumer spending.

    • Oldskool

      You should choose between globalization or labor unions. Workers in China will someday have their own unions when they have their fill of abuse, just like we did.

      • Fart Carbuncle

        I agree that there is a powder keg in China ready to explode in the next 10-15 years. A couple billion folks with new Western comfort items getting schwacked by a corrupt communist apparatchik…not good for Comrade Mao’s good ol’ boy network.

    • tommybones

      That’s brilliant. Let’s blame unions for preventing American workers from working for slave wages, with no workplace protections and no pensions/vacations or health care. How dare they? Don’t they realize the only way to compete is to reverse everything the labor movement has fought for over the past two hundred years and revert back to the age of rampant poverty and early death?

      Of course, the idea that our government put in protections which stop American companies from exploiting the third world could never be a possible solution! We’re better off having American workers lose everything. Then we can compete! Yeah!

    • Houndentenor

      Factor workers in China make about $200-300 a month for full time work. Americans cannot compete with wages like that. It has nothing to do with labor unions.

      • balconesfault

        I still argue that a lot of conservative Americans who would have been instinctively protectionist were willing to buy off on trade deals that harmed American industries specifically because of the cultivated antipathy towards unions.

        Unions helped a few generations of American workers have stable incomes so they could support community services, pay taxes, raise their kids without CHIPS or free school lunches. Unions facilitated a few generations of American workers being able to get home from work everyday at 5:30 so they could coach little league or be scoutmasters in the evenings. Unions established seniority systems and pensions that helped stabilize communities, rather than leaving them open to the ravages of massively fluctuating unemployment rates.

        Somehow, Americans were convinced that their neighbors, their Pop Warner league coach, the person sitting near them in church, was ripping off the country by organizing to ensure a living wage. And once enough Americans were convinced of that, we got attitudes of those like Mr. Fart that helped drive policies that undermined unions. And make no mistake – offshoring of jobs was a strong part of that plan.

        • Fart Carbuncle

          No argument that unions served a good purpose in the early 1900s when the pendulum swung in the corporation’s favor.

          Today, however, they’re extinct by their own choosing. When the pendulum swung in the union’s favor, they got greedy. When the information revolution exploded and globalisation occurred, capitalism says you go where the best profit is. Plus, the government has made the need for unions moot by offering the needed protections through bureaucratic fiat.

          The American standard of living was in a bubble, and it has burst. Yes, there are fat cats, but they will always exist in a free market system.

        • zephae

          [i]Wages are shrinking because of globalization. Corporations like WalMart can get a manufactured product much cheaper in China or India. I fault American labor unions and regulatory rules for this.

          When the information revolution exploded and globalisation occurred, capitalism says you go where the best profit is.[/i]

          This article and the others in its series beg to differ with you on those points:

          http://www.forbes.com/sites/stevedenning/2011/08/17/why-amazon-cant-make-a-kindle-in-the-usa/

          Perhaps it was poor and weak management and not simply unreasonable union demands that have lead to the decline of manufacturing.

  • ottovbvs

    Mr Bauer gives us a sensible conservative analysis of the central flaw at the heart of Republican trickle down economic theories. When you have a post industrial society where 70% of GDP is generated by consumer spending you are not going to create strong growth by progressively impoverishing 80% of the country. This latest CBO analysis is just the latest confirmation of what has been common knowledge for years.

    http://www.nytimes.com/2011/10/26/us/politics/top-earners-doubled-share-of-nations-income-cbo-says.html

    There’s also an interesting analysis in today’s NYT of the relative importance of consumer spending and corporate investment as engines of economic expansion.

    http://www.nytimes.com/2011/10/26/opinion/its-consumer-spending-stupid.html?nl=todaysheadlines&emc=tha212

    I’d endorse 90% of Bauer’s comment but it’s a million miles away from current Republican policies, the Democrats policies while not perfect are much more compatible with these goals which is fundamentally why I switched from being a lifelong but not particularly assiduous Republican.

  • zaybu

    “From a conservative perspective, an egalitarian economy, where all may have ready hope of living a comfortable life and of advancing economically, is far better than either an economy where the vast majority of workers need government checks to survive or an economy where the super-wealthy plunder the resources of the public and leave the populace as a whole to malinger.”

    This is not only true from a conservative perspective. It’s true if we want a better world with less violence.

  • NRA Liberal

    “Perhaps the greatest single threat to both conservatism in American life and the nation’s economic vitality is not Ivy League professors or Hollywood elites or a sinister “progressive” conspiracy but the economic decline of the middle class. Take away hope in the churning of the free market, and you push many citizens considerably closer to the state as a provider….”

    The Great Satan, FDR, knew this very well, of course.

  • bamboozer

    A very long winded way to say “The Jig Is Up” for Supply Side Economics. Trickle down failed and tax cuts for the rich never”paid for themselves in increased revenue”. That and the attention thats increasingly being paid to the ever increasing inequality in this country are going to doom Grover Norquist and the GOP politicians that worship him. It’s still Jobs, Jobs, Jobs and thats not going to change. Perhaps not in our life time.

  • Southern Populist

    Unfortunately, there is not much that can be done when you have two parties beholden to Wall Street running the country.

    On the financial issues that matter, Obama and the Democrats are no better than the Republicans, or at best only marginally better.

    The writer below summarizes the status quo well and explains why it is highly unlikely we will ever see meaningful change for the benefit of the middle class from Obama and the Democrats.

    • Southern Populist

      Both national parties are captured to a large degree by financial industry contributors. But this is not as much of a problem for the Republicans as for the Democrats. Since Nixon, the Republicans have successfully channeled anger away from Big Money to Big Government. They have done so by manipulating the classic populist paradigm of producers vs. parasites. They have treated private sector workers, business owners and investors as allies in a common struggle of producers against parasitic public sector employees and poor people dependent on welfare.

      To counteract this powerful neo-Jacksonian narrative, the Democrats would have to be equally pungent in their criticism of plutocratic bankers and overpaid CEOs. But how can President Obama and Democrats in Congress wave pitchforks at Wall Street while engaging in Wall Street fundraisers for their 2012 campaigns?

      Barack Obama, who went without federal matching funds in 2008 so that he would be free to shovel in unlimited amounts of big money, is a particularly unlikely critic of Wall Street. In 2008, if professors at universities are not counted, the top institutional donors to the Obama campaign were Goldman Sachs, Microsoft, JP Morgan Chase, Citigroup and Time Warner.

      Obama’s 2008 campaign looks less like William Jennings Bryan’s outsider challenge than like William McKinley’s successful fundraising in 1896 from the banking and corporate elite.

      http://www.alternet.org/vision/152693/6_reasons_why_occupy_wall_street_protests_won%27t_help_democrats?page=entire

      • Graychin

        The last time I checked, Obama and the Democrats are proposing to raise the tax rate on the wealthy by a small percentage, while the Republican response is “not by one penny.”

        And Republicans would repeal Dodd-Frank tomorrow, to the delight of Wall Street. Democrats want to keep it, inadequate though it may be.

        So you seem to be mistaken about the equivalence of the two parties.

        • Southern Populist

          No, I don’t think so.

          Dodd Frank, for example, allows for future bailouts of Goldman Sachs and the rest of the thieves on Wall Street that are responsible for the largest malfeasance in all of history.

          Obama and the Democrats gave us Dodd Frank when Obama had 59 in the Senate and a big majority in the house.

          When the Democrats were at the height of their power — and they probably won’t see those kinds of majorities again for years — they gave us a “reform” that allows for future bailouts of the worst thieves in history.

          It really is a misconception the Democrats are any better.

          I get that the Republicans are awful, but I really don’t get why people defend the Democrats as aggressively as they do.

        • ottovbvs

          “Dodd Frank, for example, allows for future bailouts of Goldman Sachs and the rest of the thieves on Wall Street that are responsible for the largest malfeasance in all of history”

          Well that would be because there are financial institutions that are literally too big to fail. And what exactly has this to do with the failure of supply side economics which this commenter is describing? Zero.

        • Graychin

          SP – I believe that banks that are “too big to fail” should not be allowed to exist. Both parties need to recognize that, but they don’t – or won’t.

          Dodd-Frank was only a tiny down payment – that Republicans want to repeal.

      • ottovbvs

        “The writer below summarizes the status quo well and explains why it is highly unlikely we will ever see meaningful change for the benefit of the middle class from Obama and the Democrats.”

        DSP gives us another of his delusory conservative rationalisations. This time it’s the “false equivalence” logical fallacy and McGuffins about campaign contributions. Democrats have never subscribed to the central tenets of supply side/trickle down economics which are largely responsible for the huge income shifts we’ve seen over the last 30 years and the decline in the real incomes of the middle class. And yet despite their evident failure they remain a central feature of Republican economic thinking (eg. the Cain and Perry flat tax plans or Ryan’s budget). The Obama administration certainly don’t believe in them and have spent the last three years in a effort to combat their destructive effects. DSP you can lie to yourself if you want but why do you have to inflict this mendacity on the rest of us. It’s pathetically transparent.

        • Southern Populist

          One major error you make and that many people who defend Democrats make is in seeing supply-side economics as the “single cause” of middle class impoverishment. It is a cause not the only cause. The more fundamental and important cause is globalization which the Democrats have done nothing to combat.

        • ottovbvs

          “One major error you make and that many people who defend Democrats make is in seeing supply-side economics as the “single cause” of middle class impoverishment.”

          Distorting again DSP. I NEVER said it was the “single” cause. I said:

          “Democrats have never subscribed to the central tenets of supply side/trickle down economics which are largely responsible for the huge income shifts we’ve seen over the last 30 years and the decline in the real incomes of the middle class.”

          Of course globalisation is a factor but the Democrats can’t do anything about that. They can however ameliorate its effects by domestic fiscal adjustments which is one of the reasons why the only time in the last thirty years that real incomes of all Americans rose was in the 90′s during the Clinton administration. All advanced economies are faced with the challenge of globalisation but there have been nothing like these income shifts in Germany, France, Sweden et al. To take a few key conclusions from the report:

          …. government policy has become less redistributive since the late 1970s, doing less to reduce the concentration of income.

          …..“The equalizing effect of federal taxes was smaller” in 2007 than in 1979, as “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,”

          …..federal benefit payments are doing less to even out the distribution of income, as a growing share of benefits, like Social Security, goes to older Americans, regardless of their income.

          ….from 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent for the 1 percent of the population with the highest income.

          ….For others in the top 20 percent of the population, average real after-tax household income grew by 65 percent.

          …. for the poorest fifth of the population, average real after-tax household income rose 18 percent.

          ….. the three-fifths of people in the middle of the income scale, the growth in such household income was just under 40 percent.

        • Southern Populist

          OK, fair enough; I didn’t intend to distort your point re: supply side versus globalization.

        • ottovbvs

          “OK, fair enough;”

          Accepted. My point (and Bauer’s I think) is that this is a matter of economic reality which a bit like military reality is largely impervious to political propagandizing.

  • Graychin

    This article might well be titled “Rediscovering Henry Ford.” His insight was to pay his workers enough so they could afford to buy his product.

    That observation isn’t a knock on Mr. Bauer’s excellent analysis. I’m happy to see someone calling out tinkle-down economics for the fraud that it is. I’m doubly happy to have read it on a website that purports to celebrate conservative, free-market economics.

    Meanwhile, all of the Republican presidential candidates are falling into line supporting one or another “flat tax” scheme and/or excluding investment income from all taxation. The sole purpose of these schemes is to further redistribute America’s wealth – in the direction of those who already control most of it.

    And as Rick Perry’s figure-your-taxes-twice offering shows, flat and simple have nothing to do with one another.

  • icarusr

    “The turmoil of the markets in 2008 was merely the cataclysmic icing on top of the cake of a decade of lost ground for the bottom 90% of workers. Take that away, … . If insurance premiums …”.

    In other words, if Republicans were not implementing Republican economic policies but Democratic ones, Obama would not have got elected in 2008.

    Here is the thing. I know of no mainstream Democrat that would advocate a Statist economy over a well-functioning market system; but the entire leadership of the Republican Party expressly rejected a 1-for-10 increase in spending on purely ideological grounds – they prefer a trickle up economy to a sound one. Now, this tells me that conservative or liberal, to vote for the current crop of Republican clowns is economically insane. The rest is just, well, blather.

  • ottovbvs

    The good news is that a majority of Americans (70% according to this latest NYT/CBS poll) do seem to be waking up to the fact that the main goal of congressional Republicans is to protect the interests of the wealthy. Something my father and grandfather told me in the early 50′s as a positive reason for always voting Republican.

  • cz4ever

    Great post and a nice summary of one of the major problems we face in the US at the moment. So why can’t Mr. Bauer take the next logical step and break with the Republican Party (at least on economic and tax policies) until they regain their senses and shift back to a moderate position? I agree with Southern Populist that the Democrats have been far from perfect, but at least they make *some* effort to maintain a balance between the power of labor and capital.

    Like ottovbvs, the continued Republican push for policies that exacerbate the problem (removal of taxes on long-term capital gains, elimination of the estate tax, defenestration of most financial regulation, elimination of progressive tax brackets, banning Medicare from negotiating on drug prices, …) has pushed me from where I regularly voted Republican to one where I simply cannot in good conscience. And I say that as one of the top 2% who has done quite well financially myself.

  • ottovbvs

    “And I say that as one of the top 2% who has done quite well financially myself.”

    Ditto when I was working until a few years ago and I’m still probably in the top 5%. I figured out years ago what Bauer is explaining that you simply cannot sustain a consumer based economy while making the vast majority of consumers collectively poorer. It’s ultimately self destructive.

  • steven08817

    If only this was the prevailing view among conservatives. Instead too many on the right just want to double down on the same old tax cuts for the rich model of economics. They are blind to the decline in the middle class and are their own worst enemy.

  • jdd_stl1

    It strikes me that this post gets into something that might be called,
    “The Science of Conservatism” which I would claim is quite
    different from being a Republican. This is a new thought that I am
    still working through so bear with me. But it seems that for some
    time now the Republican party has been tied to an ideology and
    can’t break away from that. As has been noted on other fronts
    (evolution, climate science, etc), ideology trumps science for
    a lot of the Republican base. Well, how about for Economics?
    Will they listen to the reason (science?) of economic theory?

    If a conservative can ANALYZE the economic situation and come up
    with a THEORY about why things are the way they are and propose
    a HYPOTHESIS on how we could improve
    things, would Republicans listen if it didn’t necessarily fit
    their ideology?

    • ottovbvs

      Self evidently not. I saw a report of an interview with Ryan a couple of days ago in which he was accusing the administration of imposing austerity on the country. No kidding. So his solution is to impose more austerity on the country. It’s gobbledegook. You can’t make this make stuff up.

    • JohnMcC

      My friend Mr STL1, may I recommend a book? You should read Russell Kirk’s “The Conservative Mind, From Burke to Eliot”. You will be surprised to learn that it is possible to be both conservative and to have a mind. You will also learn that the present so-called-conservative movement has nothing at all to do with conservatism.

  • balconesfault

    DSP continues to argue that the Dems did not try to do anything significant with financial sector reform when they had big majorities.

    http://www.huffingtonpost.com/2009/12/11/house-financial-regulator_n_389062.html

    WASHINGTON — The House passed the most ambitious restructuring of federal financial regulations since the New Deal on Friday, aiming to head off any replay of last year’s Wall Street failures that plunged the nation deep into recession.

    The sprawling legislation would give the government new powers to break up companies that threaten the economy, create a new agency to oversee consumer banking transactions and shine a light into shadow financial markets that have escaped the oversight of regulators.

    The vote was a party-line 223-202. No Republicans voted for the bill; 27 Democrats voted against it.

    Given our current political system, you can keep pissing into the wind and saying “both sides are as bad” … or you can dig down and see that had the GOP had about 6 or 7 less Senators, or there not been a filibuster rule, we’d have had a much more significant financial reform bill passed.

    Right now, sadly … we have incremental reform if we elect Dems … and gutting of reforms if we elect Repubs. Choose a side.

    • Southern Populist

      It is telling that Obama went with “incremental” reform instead of major reform from 09 to 11.

      This is exactly my point.

      Consider this: Bush passed his tax cuts via reconciliation to bypass the 60 vote requirement.

      If Obama and the Democrats are so concerned about wealth inequality and battling the impact of supply-side economics, why didn’t they use reconciliation to immediately restore tax rates to 50s, 60s and 70s-era levels?

      Their actions don’t match their rhetoric.

      • ottovbvs

        “why didn’t they use reconciliation to immediately restore tax rates to 50s, 60s and 70s-era levels?”

        You really are so full of it. Like the comment below about unilaterally abrogating trade treaties you’re either a complete fool or a complete liar. As even anyone with a cursory knowledge of politics knows the Democrats simply didn’t have enough votes in their caucus to pass monumental tax changes such as you suggest on a reconciliation vote. As best I recall Bush only got his tax cuts through because about 10-15 Democrats out of about 45 voted with the Republicans. And Dodd Frank couldn’t have passed on recon because it’s not a money or tax bill.

        • Southern Populist

          I point out that the Democrats did not use their big majorities to institute major tax changes via the reconciliation process the way Bush did, and your response is that the Democrats couldn’t muster enough Democrat votes in their own caucus to support major tax changes.

          Yes, well, this is exactly my point.

        • ottovbvs

          Well I suppose it’s a valid point if your view of the Democratic caucus is so simplistic that it ignores the fact that it never had “big majorities” and that it includes views as disparate as Bernie Sanders and Ben Nelson. At max the Democrats probably had about 48 votes for a return to say the Clinton tax regime, a comfortable majority of their own caucus. And then by some magical alchemy this gets translated into:

          “It is telling that Obama went with “incremental” reform instead of major reform from 09 to 11.”

          As if this was some policy decision by the president and not the product of political math. One of these days you’re going to amaze me and make a good faith, straightforward argument free of logical fallacies, ridiculous oversimplifications, and factual innaccuracies.

        • JohnMcC

          So it will not shock you Mr Populist, that many of us on the left find Barack to be roughly as much of a liberal as Eisenhower was? And yet, you complain?

      • balconesfault

        If Obama and the Democrats are so concerned about wealth inequality and battling the impact of supply-side economics, why didn’t they use reconciliation to immediately restore tax rates to 50s, 60s and 70s-era levels?

        First, Obama didn’t campaign on returning tax rates to those levels … and it would have been dishonest for him to have immediately tried to restore them.

        Second, Obama did campaign on allowing the Bush tax cuts to expire on schedule. I do hold him responsible for reneging on that, although he believed that it was more critical to extend unemployment benefits in the middle of a continuing recession and the GOP was holding the unemployed hostage.

      • larocquj

        Your talking about 70%+ top marginal tax rates, right? There were plenty of conservative Democrats that never would have voted for this. Because Democrats didn’t have a Tea Party, DINO, “purity test,” Grover Norquist’s anti-tax pledge, or the real, proven threat of being “primaried” for deviating from the strict party line, it was very difficult to get the Democratic caucus to support legislation without serious horse trading.

        Tax increases are extremely unpopular even in the best of circumstances. Returning to confiscatory tax rates on anyone is a political non-starter, especially during a recession — only a minority part of the Democratic Party would even consider doing this.

        The Democrats are not as ideologically monolithic as the GOP. You can’t think of the Dems like you think of your own party.

  • balconesfault

    The biggest tragedy is that America had for decades the most desired economic commodity in the world – access to the US market.

    During the Cold War, we used that access as a tool to guide nations towards capitalist economies, and head off global expansion of communism. That was a noble goal.

    After the fall of the Iron Curtain … we somehow decided that freeing up trade with Communist, command-style economies in the Pacific Rim was a great idea. Not only was it a great idea … but we did so demanding very very little in return.

    We could have transformed our global trade policy after the fall of the Soviet Union into one which promoted worker rights and safety, one which promoted environmental protections, one which promoted rising income levels.

    Instead … we fixated on the term “fair trade” and promoted movement of jobs to a country which dumped benzene into its rivers, pumped sulfur and particulate into its air, used child labor, prison labor, and heavily underpriced labor – along with crushing any union movements.

    We could have transformed the world into a much better place than it is now by a smarter trade policy, as well as making America a much more prosperous and strong nation. We were idiots.

    • ottovbvs

      “but we did so demanding very very little in return.”

      I think you’re fooling yourself here because in reality our ability to demand much in return was severely circumscribed and the US has benefitted substantially from globalisation and the expansion of world economic activity that it has produced. No one can do anything about globalisation (certainly not Obama) and ultimately it’s a good thing for us and everyone else particularly the millions it has pulled out of poverty. You might as well blame the weather for our economic problems. This is not to say we shouldn’t be more aggressive in protecting our economic interests (Chinese manipulation of its currency is a disgrace but ultimately it’s going to be self destructive to the Chinese themselves) but ultimately the main remedies for handling the implications of globalisation are internal and these have been a failure principally because of Republican resistance to fiscal adjustments, public investment, dealing with messes like healthcare, and so forth although this has involved playing on a lot of myths Americans harbor about themselves and our society.

      • Southern Populist

        Of course there are things that can be done: tariffs, protectionism, trade embargoes, industrial policy, tax penalties for sending jobs overseas, economic incentives for keeping jobs in the United States, withdrawing from GATT, NAFTA and all free trade agreements. That would be a good start.

        • ottovbvs

          “tariffs, protectionism, trade embargoes, industrial policy, tax penalties for sending jobs overseas, economic incentives for keeping jobs in the United States, withdrawing from GATT, NAFTA and all free trade agreements. ”

          DSP’s principal solutions essentially boil down to protectionism, trade wars, and isolationism. I seem to remember we tried this once before in thirties. This man seriously suggests that the route to a strengthened economy in the US (a country btw that is massively dependant on exports and invisible earnings; has the largest overseas investments in the world; depends on massive international borrowings; and is the possessor of the world reserve currency) is to unilaterally withdraw from GATT, Nafta, and all free trade agreements; and raise tariff walls and hidden barriers against imports. I’ll leave the acuity of this proposal to speak for itself since it seems to amount to “Stop the world I want to get off.”

        • Bebe99

          I would suggest the kind of partial protectionism that Germany has employed to keep the more technical parts of its manufacturing at home, while outsourcing the least technical jobs. As well a prudent country would want to keep the industries most critical to its security at home in their entirety. This would require an extremely thorough and bi-partisan plan of action with industry and political parties’ cooperation over the course of several years. With our current climate of political civil war we just aren’t capable of any of that at this time.

        • ottovbvs

          “I would suggest the kind of partial protectionism that Germany has employed to keep the more technical parts of its manufacturing at home, while outsourcing the least technical jobs.”

          What “protectionism” is this? The Germans certainly have a host of programs aimed at supporting their domestic manufacturing industries which are heavily unionised btw (like the employee retention scheme). This is not protectionism (they’d be hauled before the WTO if it was) and they’re entirely the kind of “internal” measures we could use to ameliorate the impact of globalisation but the political will simply doesn’t exist here. Republicans are outraged that Obama saved the domestic US auto industry for godsake.

        • balconesfault

          DSP’s principal solutions essentially boil down to protectionism, trade wars, and isolationism. I seem to remember we tried this once before in thirties.

          There is pure protectionism, based on the idea of maximizing your balance of trade … and there is use of trade negotiations as a way of requiring your trading partners to upgrade their environmental and worker standards to acceptable global norms.

          Hell – we went the other way. Our trade agreements of the 80′s/90′s actually gave nations the right to seek damages if they believed an environmental standard in a nation was a barrier to free trade. Instead of using trade to raise the bar for poorer-performing nations, we used it to lower the bar for the better-performing nations.

        • balconesfault

          Republicans are outraged that Obama saved the domestic US auto industry for godsake.

          Which circles back to my thesis. WHY have the Republicans really been outraged? Because they saw the collapse of the Auto Industry as a way to drive a stake through much of the remaining unionized workforce in America.

        • ottovbvs

          “and there is use of trade negotiations as a way of requiring your trading partners to upgrade their environmental and worker standards to acceptable global norms.”

          Well DSP was proposing pure protectionism. And even on this watered down interpretation I’m afraid you’re living in cloud cuckoo land bf. It’s taken five years to get sign off on a trade treaty with Columbia that had as one of its conditions a stipulation that the govt of Columbia would act against death squads responsible for the murder of trade unionists. Needless to say Republicans balked at this. Why do we have assume all the time our trade negotiators are totally incompetent. One either accepts that globalisation is inevitable and desirable or one doesn’t. As it happens we’ve at least broken even on the process, many claim a net gain, so why blame all our problems on globalisation. It’s a reality that we need to deal with and you don’t deal with it by building a wall around the country or threatening to take your ball home. Really bf do you for one moment believe that the Chinese were going to upgrade all their social/environmental systems to equivalence with ours in return for having access to US markets? Particularly when many US corporations were desperate for access to the Chinese market?

  • Radsenior

    Perry’s in trouble and he knows it! Everyone else stand in line behind us who really hate him for taking Texas down his rose petal path to hell! There are numerous people who have better working knowledge and experience than Perry! He’s trying to mimic Cain’s un-thought through 9-9-9 plan! Yelling and talking through Romney’s retort and his “Deer in the head lights­” stare showed how vulnerable he is to inside counseling­! His inexperien­ce glares accentuating his lack of proper preparatio­n for this run! Whomever is dyeing Ricky’s hair leaves it too false as his facial wrinkles hide the fear of losing to Romney shows. He was supposed to be the Republican­’s best shot at president Obama. Bounce that up against the president’­s effectiven­ess! The president has authorized drone exercises in adversarial removal and has been effective as Osama Bin Ladin, Atiyah abd al-Rahman, Anwar al-Awlaki(­­American Militant) and his son, and others including the removing of Moammar Khaddafy(n­ow deceased), while fighting off numerous Troubling Economic Antagonist­­­(TEA) party efforts to run other than jobs producing legislatio­n through Congress! Tricky Ricky’s in a fix-y! Ohio’s voters will make their decision based on what they are told and how strong local influences are! Perry’s trying to make waves to garner additional exposure. And he has already been exposed as a ill-prepared cookie cutter sampling of the same old rag! He is crashing and burning!

  • JohnMcC

    Our Original Poster seems something of a mystery man. His blog (A Certain Enthusiasm) is mostly a duplicate of his postings here; on his own turf they elicit very little comment. Is that a proxy for very little readership? I suppose he is not the Fred Bauer who wrote devotional Christian books in the 70s and 80s nor the CEO of GENTEC (since that gentleman lives in Michigan).

    One thing is certain from scanning his ‘Certain Enthusiasm’ — he does not care for the Democratic Party leadership. And another, he is no movement conservative.

    He has written an analysis of the last 12 years that I could find little to disagree with.

    As with much of this school of thinking (“we’re becoming so unequal we have to change course — but not the Democratic course nor the Republican course!!!”) there is a certain magical thinking behind it. Some yellow brick road will appear and we’ll follow it to a wonderful emerald city!

    Assuming our OP writer is listening, does he have a policy preference? An economist he particularly likes? A historical figure who inspires him?

    I dislike trying to understand a voice from the shadows.