Levees Not War
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Posts Tagged ‘Paul Krugman’

The Social Contract, Explained by Elizabeth Warren,
Paul Krugman, and Robert Kuttner

Saturday, September 24th, 2011

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“There is nobody in this country who got rich on his own. Nobody. . . . You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate.”

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United We Stand, Divided We Fall

Elizabeth Warren, the consumer protection reformer and Harvard law professor who is now campaigning to represent Massachusetts in the U.S. Senate, has given one of the most direct and cogent explanations of the social contract we’ve ever heard. (It’s an idea that is not talked about often enough.) One way of describing the social contract, also known as the social compact, is of putting the Golden Rule into practice in society through the mechanisms of government for the benefit of all: Do unto others as you would have them do unto you. Share and share alike. It’s something children can understand, but not many bankers or senators.

Briefly, the idea of a social contract is of a mutually beneficial system that serves both the ordinary folk and the wealthy, and makes demands on all, a two-way street of reciprocal obligation and fulfillment. The closest the U.S. has ever come to enacting a social contract is through FDR’s New Deal and LBJ’s Great Society. It is an ideal, never quite reached completely, but its essentials were in place not so long ago and could be restored by determined, sustained effort. Robert Kuttner has written about how during the boom decades after World War II a “managed, rather than laissez-faire, brand of capitalism . . . delivered broadly shared prosperity, as well as greater security for both the system and individuals” (The Squandering of America [2007], p. 6). More from Kuttner below.

Let’s go straight to Dr. Warren herself.

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No!

There is nobody in this country who got rich on his own. Nobody.

You built a factory out there—good for you! But I want to be clear.

You moved your goods to market on the roads the rest of us paid for.

You hired workers the rest of us paid to educate.

You were safe in your factory because of police forces and fire forces that the rest of us paid for.

You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Isn’t this more or less the idea behind “United we stand, divided we fall”?

As Steve Benen at Washington Monthly notes of Warren’s remarks, “First-time candidates don’t usually articulate a progressive economic message quite this well.”

We have written lately about how the Democrats seriously need to sharpen and toughen up their communication skills. We hereby nominate Elizabeth Warren as one of the chief instructors and exemplars at the Democrats’ School for the Mute. The school also needs a disciplinarian. The Democratic party cannot depend on the skills of Barack Obama alone—though he has lately been showing signs of improvement. Every senator, every representative who wears a D after his or her name should be in intensive training. Dr. Warren—whose talk about economic fairness prompted Jon Stewart to say, “I want to make out with you!”—is the Teacher of the Week. (Click here for her Huffington Post blog posts.)

 

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We were alerted to the good professor’s comments by Paul Krugman’s well-titled column “The Social Contract” (see below, after the jump, for a full version, highlighted and underlined as a convenience for our readers). After explaining why President Obama is right to assert that the wealthy should bear part of the burden of reducing the budget deficit, Krugman cites the “eloquent remarks” made this week by Elizabeth Warren, now on the campaign trail in Massachusetts, countering the assertion that the rich should get to keep all their wealth. It’s hardly “class warfare.” Summarizing Warren’s argument, Krugman writes:

“There is nobody in this country who got rich on his own. Nobody,” she declared, pointing out that the rich can only get rich thanks to the “social contract” that provides a decent, functioning society in which they can prosper.

This column follows several days after President Obama, in remarks in the Rose Garden (Sept. 19) on Economic Growth and Deficit Reduction, asserted with welcome clarity, “Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both. . . . This is not class warfare. It’s math.”

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“Pass This Jobs Bill”

Thursday, September 8th, 2011

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“I am sending this Congress a plan that you should pass right away. It’s called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans—including many who sit here tonight. . . .”

“This is the American Jobs Act. It will lead to new jobs for construction workers, for teachers, for veterans, for first responders, young people and the long-term unemployed. It will provide tax credits to companies that hire new workers, tax relief to small business owners, and tax cuts for the middle class. And here’s the other thing I want the American people to know: The American Jobs Act will not add to the deficit. It will be paid for.”

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President Challenges Congress to Act as if It’s Functional

President Obama did the right thing—about two years late—in asking for an address before a joint session of Congress. For only the second time in his presidency in a speech other than a State of the Union address (the other occasion was in September 2009 when he launched a big push for health care reform), the president pitched to the nation a plan costing just under $450 billion designed to avert a second recession and attack an unemployment crisis and economic stagnation that require action now. Economists say it could add almost 2 million jobs. Paul Krugman says, “significantly bolder and better than I expected.” Even conservative NYT columnist David Brooks says the plan has potential and is worth pursuing.

In “plainspoken, Trumanesque” language—no wonky terms or professorial manner tonight, not even the highfalutin word “infrastructure”—Obama pressed for a jobs and economic relief package with a memorable name, the American Jobs Act, that is 55% tax cuts, 31% infrastructure and local aid, and 14% unemployment insurance. (Detailed breakdown here.) He stressed the bipartisan origins of the proposals, and about a dozen times in 30 minutes he directed Congress to “pass this bill.” Obama was assertive, even imperative, yet his message was warmed by a progressive moral vision; if he keeps this up he just might win re-election.

What’s in the American Jobs Act?

Washington Post policy analyst Ezra Klein observes that “the plan, taken as a whole, attempts to include every single theory of how to address the jobs crisis. If you believe we need more direct spending, you’ve got the infrastructure component. More tax cuts? The plan has $250 billion in tax cuts. More help for the unemployed? Yep.”

Among the elements identified by Ezra that we find most appealing are:

•  “$35 billion in aid to states and cities to prevent teacher layoffs, and earmarks $25 billion for investments in school infrastructure.”

•  “$50 billion for investments in transportation infrastructure, $15 billion for investments in vacant or foreclosed properties, and $10 billion for an infrastructure bank.” (Why not the $50 billion for an infrastructure bank that Obama has proposed before?)

•  “$49 billion to extend expanded unemployment insurance benefits. $8 billion for a new tax credit to encourage businesses to hire the long-term unemployed, and $5 billion for a new program aimed at supporting part-time and summer jobs for youth and job training for the unemployed.”

The jobs act, crafted by the administration, not left to the tender mercies of congressional committees—is heavily weighted with originally Republican ideas that will make it politically harder for the G.O.P. to dismiss. They will invent reasons to reject it anyway, though House Speaker John Boehner (R-Ohio) did have the decency to release a statement that “The proposals the President outlined tonight merit consideration.” Maybe those golf games are paying off. Republicans do not want to allow this president any kind of accomplishment before November 2012, regardless of the deep and widespread suffering of millions of jobless, homeless, hopeless fellow citizens whose taxes pay the representatives’ salaries and health plans. (Note: The American Jobs Act “will not add to the deficit”: it will be paid for by cuts elsewhere. Even if it were not paid for, it would cost only about half of the projected $800 billion addition to the deficit incurred by extension of the Bush Tax cuts for million- and billionaires in Dec. 2010.)

“The people who sent us here—the people who hired us to work for them—they don’t have the luxury of waiting 14 months. Some of them are living week to week, paycheck to paycheck, even day to day. They need help, and they need it now.”

“Paycheck to paycheck”? Some 15 to 20 million would-be workers have no paycheck at all, not even unemployment benefits.

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What a Deal

Monday, August 1st, 2011

Is This What “Winning the Future” Feels Like?

“Our enemies could not have designed a better plan to weaken the American economy than this debt-ceiling deal.”

—Joe Nocera, “Tea Party’s War on America” (see below)

“With all this incessant emphasis on deficit reduction, it’s going to be extremely tough to convince people that we actually might need to spend some money right now, in the short run, to help get this economy out of neutral.”

Jared Bernstein, former White House economic advisor (see below)

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Well, gentle readers, our weekend of faxing earnest, carefully crafted letters to Democrats in Congress (“Tell Obama to Use the Constitutional Option”) had the usual, predictable result.

Below are a few selections of choice commentary on the agreement reached Sunday by Senate leaders Reid and McConnell and Obama—but not yet voted on by Congress. The Senate is expected to pass it today. The House may vote by this evening, though large numbers of Pelosi’s and Boehner’s representatives may yet balk.

[ Timeline of debt ceiling negotiations ¶ How the plan would work ¶ Text of the bill ]

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New York Times editorial: “To Escape Chaos, a Terrible Deal

. . . a nearly complete capitulation to the hostage-taking demands of Republican extremists. It will hurt programs for the middle class and poor, and hinder an economic recovery.

. . . this episode demonstrates the effectiveness of extortion. Reasonable people are forced to give in to those willing to endanger the national interest.

Paul Krugman (NYT): “The President Surrenders

. . . the deal itself . . . is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status. . . .

Republicans will surely be emboldened by the way Mr. Obama keeps folding in the face of their threats. He surrendered last December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it’s just me, but I see a pattern here.

. . . It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn’t over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.

Joe Nocera (NYT): “Tea Party’s War on America

America’s real crisis is not a debt crisis. It’s an unemployment crisis. Yet this agreement not only doesn’t address unemployment, it’s guaranteed to make it worse. (Incredibly, the Democrats even abandoned their demand for extended unemployment benefits as part of the deal.) . . . The spending cuts will shrink growth and raise the likelihood of pushing the country back into recession.

. . . What is astonishing is that both the president and House speaker are claiming that the deal will help the economy. . . . Our enemies could not have designed a better plan to weaken the American economy than this debt-ceiling deal.

One thing Roosevelt did right during the Depression [as opposed to 1937 spending reductions] was legislate into being a social safety net to soften the blows that a free-market economy can mete out in tough times. During this recession, it’s as if the government is going out of its way to make sure the blows are even more severe than they have to be.

. . . Obama should have played the 14th Amendment card. . . . Yes, he would have infuriated the Republicans, but so what? They already view him as the Antichrist. . . . Inexplicably, he chose instead a course of action that maximized the leverage of the Republican extremists.

Steve Benen: “Don’t Call It a Compromise

I’ve seen several reports on the debt-ceiling framework describe it as a “compromise” between Republicans and Democrats. That’s far too generous a term. Is this a deal? Sure. Is it an agreement? Absolutely. Can it fairly be characterized as a “compromise”? Not at all.

Republicans threatened to crash the economy, on purpose, unless a series of radical demands were met. Democrats made an effort to lessen those demands and make them less painful than intended. The result, not surprisingly, is rather ugly, which is to be expected.

The debt-reduction framework isn’t a compromise; it’s a ransom. . . . If you’re looking for good news in this agreement, you’ll be looking for a long time. Overall, what we’re left with is bad news and less-bad news.

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“Shock Doctrine” in Wisconsin

Monday, February 28th, 2011

First, a few notes about Wisconsin:

•  Speaking with Rachel Maddow, Milwaukee Mayor Tom Barrett observes that when Gov. Scott Walker spoke last week with the “fake David Koch,” he made no mention of a “fiscal crisis” that he claims compels him to strip public workers of collective bargaining rights, but spoke only of union-busting strategy and tactics.

•  Also on Rachel Maddow, Eugene Robinson points out that the “fiscal crisis” argument for revoking collective bargaining rights falls apart when you look at Texas. The Lone Star State has no collective bargaining rights for workers, practically no unions, and a $27 billion deficit. Why would revoking collective bargaining help Wisconsin if it doesn’t help the Lone Star State?

•  See below: video of American Federation of Teachers’ Local 212 marches in Milwaukee and Madison on Feb. 24, 26.

Disaster Capitalism in the Heartland

Leave it to Paul Krugman to notice that what Gov. Scott Walker is trying to do in Wisconsin is precisely what Naomi Klein described in her best-selling book The Shock Doctrine: The Rise of Disaster Capitalism. Briefly, the shock doctrine is the use of crises and public disorientation (as by a natural disaster, political upheaval, or economic crisis) to push through free-market economic shock therapy disguised as “reforms.” The traumatized public is too concerned with basic survival to notice what “the authorities” are doing. (The book is Excellent, Highly Recommended.)

Naomi Klein opens with the (Iraq) Coalition Provisional Authority’s opportunistic attempts to “corporatize and privatize state-owned enterprises” and “wean [Iraqis] from the idea the state supports everything” (in American viceroy L. Paul Bremer’s words) in Baghdad in 2003. She then explains that the shock doctrine has been used, very deliberately, after the U.S.-supported coup that overthrew Argentina’s Salvador Allende in 1973 up to the aftermath of Hurricane Katrina with the privatization of formerly public institutions of housing and health care in New Orleans (shutting down public housing projects, Charity Hospital), etc.

Since Chile in the 1970s, Krugman writes, “right-wing ideologues have exploited crises to push through an agenda that has nothing to do with resolving those crises, and everything to do with imposing their vision of a harsher, more unequal, less democratic society.”

Now, he says, the same methods are being used in Wisconsin:

What’s happening in Wisconsin is . . . a power grab — an attempt to exploit the fiscal crisis to destroy the last major counterweight to the political power of corporations and the wealthy. And the power grab goes beyond union-busting. The bill in question is 144 pages long, and there are some extraordinary things hidden deep inside.

For example, the bill includes language that would allow officials appointed by the governor to make sweeping cuts in health coverage for low-income families without having to go through the normal legislative process.

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Obama Sends Wall Streeters to “Reform School”

Friday, April 23rd, 2010

[ Ed. note: The following account of President Obama’s remarks on Wall Street reform yesterday are not, strictly speaking, part of Levees Not War’s usual portfolio (we do have many interests!), but then again it’s not every day that we get to personally attend a presidential address. A variant of this post appears at Daily Kos. ]

President Obama came within a few zip codes of Wall Street yesterday to speak to a gathering of prominent banking executives (including Lloyd “I’m Doing God’s Work” Blankfein of Goldman Sachs) and illustrious Empire State politicos at the fabled Great Hall of Manhattan’s Cooper Union. It was a privilege to sit in the Great Hall where over the last 150 years audiences have gathered to hear Abraham Lincoln, Frederick Douglass and other abolitionists; Susan B. Anthony and other advocates for woman suffrage; speakers for the NAACP and the American labor movement; and eight presidents including Theodore Roosevelt, Woodrow Wilson, and Bill Clinton; and another illustrious (former) congressman from Illinois: Senator Obama the presidential candidate spoke at Cooper Union on “Renewing the American Economy” in March 2008, a half year before the crash.

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Are “Conservatives” Conservative?
Are They Even American?

Tuesday, October 6th, 2009

Sipa Press“. . . although they believe themselves to be conservatives and usually employ the rhetoric of conservatism, [pseudo-conservatives] show signs of a serious and restless dissatisfaction with American life, traditions, and institutions. . . . Their political reactions express rather a profound if largely unconscious hatred of our society and its ways. . . . The pseudo-conservative is a man who, in the name of upholding traditional American values and institutions and defending them against more or less fictitious dangers, consciously or unconsciously aims at their abolition.”

Richard Hofstadter, “The Pseudo-Conservative Revolt” (1954)

We’ve been looking for a more accurate word to describe those on the political right. Philosophically, self-proclaimed “conservatives” are far from the root meaning of conserve, as in conservation, preservation (see Inhofe below). “Traditionalist” would not do, either, exactly. “Pseudo-conservative,” the term used above by Hofstadter? Radicals? Revolutionaries? The question of identity here is not so much about ordinary citizens who are understandably ill at ease with high government spending, economically insecure, suspicious of the mainstream news media, and so on. We’re thinking more of the elites, the elected officials who until recently held the White House and majorities in Congress, certain corporate executives and right-wing think tankers and pundits who identify themselves as conservatives.

Now, of course, those who call themselves conservatives will insist that they are the true Americans, and that those they oppose are not worthy of the name (think, for example, of HUAC, the House Un-American Activities Committee [1938–75]). And the more fiercely “conservative,” the more vehemently they insist. But we think they do protest too much.

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