Labor Day Review

Thomas Frank writes in today’s New York Times:

What we have watched unfold for a few decades, I have argued, is a broad reversion to 19th-century political form, with free-market economics understood as the state of nature, plutocracy as the default social condition, and, enthroned as the nation’s necessary vice, an institutionalized corruption surpassing anything we have seen for 80 years. All that is missing is a return to the gold standard and a war to Christianize the Philippines.

Iraq comes pretty close, I’d say. But back in the day progressivism arose to combat the forces of plutocracy. Alas, now we have the New Democrats, who feel our pain but think we should be resigned to it:

Mounting a campaign against plutocracy makes as much sense to the typical Washington liberal as would circulating a petition against gravity. What our modernized liberal leaders offer — that is, when they’re not gushing about the glory of it all at Davos — is not confrontation but a kind of therapy for those flattened by the free-market hurricane: they counsel us to accept the inevitability of the situation and to try to understand how we might retrain or re-educate ourselves so we will fit in better next time.

This last point was a priority for the Clinton administration. But in “The Disposable American,” a disturbing history of job security, Louis Uchitelle points out that the New Democrats’ emphasis on retraining (as opposed to broader solutions that Old Democrats used to favor) is merely a kinder version of the 19th-century view of unemployment, in which economic dislocation always boils down to the fitness of the unemployed person himself.

Also at the New York Times, Paul Krugman writes about the disconnect between our “great” economy and the perceptions of most workers.

There are still some pundits out there lecturing people about how great the economy is. But most analysts seem to finally realize that Americans have good reasons to be unhappy with the state of the economy: although G.D.P. growth has been pretty good for the last few years, most workers have seen their wages lag behind inflation and their benefits deteriorate.

The disconnect between overall economic growth and the growing squeeze on many working Americans will probably play a big role this November, partly because President Bush seems so out of touch: the more he insists that it’s a great economy, the angrier voters seem to get.

That’s exactly what sunk his dad’s administration.

But the disconnect didn’t begin with Mr. Bush, and it won’t end with him, unless we have a major change in policies.

The stagnation of real wages — wages adjusted for inflation — actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970’s, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.

Meanwhile, the decline of employer benefits began in the Reagan years, although there was a temporary improvement during the Clinton-era boom. The most crucial benefit, employment-based health insurance, has been in rapid decline since 2000.

Krugman cites a Pew poll that seems to shrug off workers’ concerns — people always say things were better in the old days. But, in fact, things were better in the old days.

Why have workers done so badly in a rich nation that keeps getting richer? That’s a matter of dispute, although I believe there’s a large political component: what we see today is the result of a quarter-century of policies that have systematically reduced workers’ bargaining power.

The important question now, however, is whether we’re finally going to try to do something about the big disconnect. Wages may be difficult to raise, but we won’t know until we try. And as for declining benefits — well, every other advanced country manages to provide everyone with health insurance, while spending less on health care than we do.

The big disconnect, in other words, provides as good an argument as you could possibly want for a smart, bold populism. All we need now are some smart, bold populist politicians.

Brad DeLong comments:

The easiest and most important thing the government can do to neutralize the adverse consequences of rising inequality is to make the tax system more progressive, not less. A reality-based government would react to growing pretax inequality by taxing the rich more, and subsidizing the poor more (through policies like the EITC) as well.

But when I read Paul’s call for “smart, bold populism,” I am reminded of earlier calls a couple of decades ago by Milton Friedman, Marty Feldstein, and their ilk for smart, bold conservatism or smart, bold libertarianism. But they did not get what they ordered: on the economic policy front the policies of Reagan and of Bush II have been a horrible botch. What populist policies that we can think of would be smart? And how can we make our high politicians allergic to populist policies that are stupid?


Speaking of health care, be sure to see this op ed in today’s Boston Globe by Cheri Andes. Families often cannot afford to pay the increasing premiums for employer-based health insurance, never mind staying insured if if you don’t get health benefits at all. See also this comment by Merrill Goozner.

At TPM Cafe, Elizabeth Warren suggests we should “give up on the term ‘middle class,’ and divide America into the Insured Class and the Uninsured Class.”

The difference between the IC’s (insured class) and the UC’s (uninsured class) would not be whether they were vulnerable to an economic collapse as a result of a medical problem. The difference would be how much vulnerability each group faces. The current health care finance system assures that everyone is vulnerable, and insurance makes the difference only between those who can be felled by one trip to the emergency room and those who are brought down financially only by the co-pays, uncovered expenses, and caps that eat them up when a more serious illness strikes.

I think the division should be between Ostriches (“It can’t happen to me”) and Realists (“Um, yes, it can.”

E.J. Dionne writes in today’s Washington Post:

Perhaps the release of the Census Bureau’s annual report on income, poverty and health insurance coverage in this particular week is a sign that God and statisticians have a sense of humor. The report reinforces what we knew at the time of Katrina — that the poor are still with us and that the middle class keeps losing ground.

The “good” news is that the poverty rate, the proportion of Americans who are poor, didn’t change much between 2004 and 2005, falling in a statistically insignificant way from 12.7 percent to 12.6 percent. The bad news is that the poverty rate, having risen steadily in recent years, is still higher than it was in 2001, when it stood at 11.7 percent.

Worse is that the proportion of the poor who are very poor has risen. People are considered in deep poverty if they have half or less of the yearly income of those at the poverty line. In 2005 half the poverty line for a family of three was $7,788; for a family of four it was $9,985. (Try living on that.) According to the new report, 43.1 percent of poor people lived in that sort of deep poverty — a record since 1975, when the government started assembling such statistics.

In the six economic recoveries since the early 1960s, this is the first time the poverty rate was higher in the recovery’s fourth year than it was when the recession was at its worst.

The number of Americans without health insurance rose, too, to 46.6 million in 2005, up from 45.3 million in 2004 and 41.2 million in 2001. The proportion without insurance is up from 14.6 percent in 2001 to 15.9 percent in 2005.

What about the middle class? Yes, the median income of American households rose by 1.1 percent last year after five years of decline. But most of the growth was in households headed by Americans 65 and over — who are helped, rightly, by substantial government benefits. In households headed by people under 65, incomes fell yet again.

This is interesting:

Adjusted for inflation, men’s earnings were lower in 2005 than they were in 1973.

Two items I linked yesterday: This Harold Meyerson column on the devaluing of labor from yesterday’s Washington Post and “America Eats Its Young” by Garrison Keillor in Salon. Meyerson writes,

The young may be understandably incredulous, but the Great Compression, as economists call it, was the single most important social fact in our country in the decades after World War II. From 1947 through 1973, American productivity rose by a whopping 104 percent, and median family income rose by the very same 104 percent. More Americans bought homes and new cars and sent their kids to college than ever before. In ways more difficult to quantify, the mass prosperity fostered a generosity of spirit: The civil rights revolution and the Marshall Plan both emanated from an America in which most people were imbued with a sense of economic security.

That America is as dead as the dodo. Ours is the age of the Great Upward Redistribution. The median hourly wage for Americans has declined by 2 percent since 2003, though productivity has been rising handsomely. Last year, according to figures released just yesterday by the Census Bureau, wages for men declined by 1.8 percent and for women by 1.3 percent.

As a remarkable story by Steven Greenhouse and David Leonhardt in Monday’s New York Times makes abundantly clear, wages and salaries now make up the lowest share of gross domestic product since 1947, when the government began measuring such things. Corporate profits, by contrast, have risen to their highest share of the GDP since the mid-’60s — a gain that has come chiefly at the expense of American workers.

Get this:

For the bottom 90 percent of the American workforce, work just doesn’t pay, or provide security, as it used to.

The bottom 90 percent, mind you.

On the other hand, if you want to get ahead be the CEO in the defense industry. The Associated Press reports:

The chief executives of corporations making big profits from the war on terror are enjoying far bigger pay increases than CEOs of nondefense companies, according to a study by two liberal groups.

The study, conducted by the Institute for Policy Studies and United for a Fair Economy, found that, on average, CEOs of corporations with extensive defense contracts are getting paid about double what they made before Sept. 11, 2001.

Garrison Keillor observes:

This country is squashing its young. We’re sending them to die in a war we don’t believe in anymore. We’re cheating them so we can offer tax relief to the rich. And we’re stealing from them so that old gaffers like me, who want to live forever, can go in for an MRI if we have a headache.

A society that pays for MRIs for headaches and can’t pay teachers a decent wage has made a dreadful choice. But healthcare costs are ballooning, eating away at the economy. The boomers are getting to an age where their knees need replacing and their hearts need a quadruple bypass — which they feel entitled to — but our children aren’t entitled to a damn thing. Any goombah with a Ph.D. in education can strip away French and German, music, art, dumb down the social sciences, offer Britney Spears instead of Shakespeare, and there is nothing the kid can do except hang out in the library, which is being cut back too.

This week we mark the anniversary of Hurricane Katrina and the Current Occupant’s line “You’re doing a heckuva job,” which already is in common usage, a joke, a euphemism for utter ineptitude. It’s sure to wind up in Bartlett’s Quotations, a summation of his occupancy. Annual interest on the national debt now exceeds all government welfare programs combined. We’ll be in Iraq for years to come. Hard choices need to be made, and given the situation we’re in, I think we must bite the bullet and say no more healthcare for card-carrying Republicans. It just doesn’t make sense to invest in longevity for people who don’t believe in the future. Let them try faith-based medicine, let them pray for their arteries to be reamed and their hips to be restored, and leave science to the rest of us.

Cutting out healthcare for one-third of the population — the folks with Bush-Cheney bumper stickers, who still believe the man is doing a heckuva job — will save enough money to pay off the national debt, not a bad legacy for Republicans. As Scrooge said, let them die and reduce the surplus population. In return, we can offer them a reduction in the estate tax. All in favor, blow your nose.

I want to conclude by going back to the Thomas Frank op ed linked at the top of the post.

Historically, liberalism was a fighting response to precisely these conditions. Look through the foundational texts of American liberalism and you can find everything you need to derail the conservative juggernaut. But don’t expect liberal leaders in Washington to use those things. They are “New Democrats” now, enlightened and entrepreneurial and barely able to get out of bed in the morning, let alone muster the strength to deliver some Rooseveltian stemwinder against “economic royalists.” …

…Democratic leaders must learn to talk about class issues again. But they won’t on their own. So pressure must come from traditional liberal constituencies and the grass roots, like the much-vilified bloggers. Liberalism also needs strong, well-funded institutions fighting the rhetorical battle. Laying out policy objectives is all well and good, but the reason the right has prevailed is its army of journalists and public intellectuals. Moving the economic debate to the right are dozens if not hundreds of well-funded Washington think tanks, lobbying outfits and news media outlets. Pushing the other way are perhaps 10.

The more comfortable option for Democrats is to maintain their present course, gaming out each election with political science and a little triangulation magic, their relevance slowly ebbing as memories of the middle-class republic fade.

Do try to enjoy your weekend, anyway.

15 thoughts on “Labor Day Review

  1. John Edwards, while not my first choice among Democratic politicians, is the only one tackling these issues head-on. As John said in his Gnomedex remarks, no more dancing around about “better access to health care” or “universal health care”; simply Single Payer Health Insurance for everyone.

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  3. It’s interesting that so many of these people touting “retraining” as the be-all solution are professional pundits and other Washington hangers-on, whose skill set consists of sucking up the those who are more powerful – a job they have been working on since high school. No retraining for them.

    I’m a tech professional and in this business you have to keep learning new skills but they are an extension of old skills, not at all the same as asking a highly trained mechanic to retrain as a teacher, nurse or web monkey. I’m thinking of going to school to realign my career (yay, retrain!), but it’s hard – the family still needs food and insurance.

  4. All true.
    I commented several weeks ago how the early 70’s were the last of the good times (except for leisure suits!).
    I recommend our leaders retrain themselves to be humans first, rotsa ruck on that one!

  5. ” The big disconnect” is not just pols who live high and tell us how great it all is, but a media that reports the ‘story’ as one thing while missing the whole point of the story itself( ex. bush’s speech is rousing his base and upping his numbers will it work in November?- rather than he is desparately pretending hitler is alive so why is that US foreign policy?) or the disconnect that he and the neocons are pushing endless war with Iran and Syria and gambling for their political fortunes , not they are gambling with my blood and money and whose country is this? It is the continual disconnect with those who report the news and never admit what it really means, never ask the pertinent questions, never admit to the public that the real issues are our fortunes not George’s.

  6. What weekend? I work six days a week now to pay off my education debt. My vision and dental insurance are laughable (about 50 dollars toward both), but better than nothing. Barely. Weekends for me have become Sundays- when I try to sleep as much as possible to get ahead for the upcoming week.

    I am 26 and I feel betrayed.

  7. I feel guilty because I have good insurance. I want it for everyone, I’d even put up with higher copays, deductibles, etc to see that everyone is insured. Why? Because I fear for my sons, who are 15 and 13 and soon to be in the workforce. There won’t be any jobs for them with good insurance and they won’t be covered by mine anymore.

    A few years back I got into a discussion online with a man from Italy, he couldn’t believe that the US doesn’t insure everyone. He said aren’t you the country that believes in “life, liberty, and the pursuit of happiness”? How can you have life if you can’t see a doctor when you are ill…health insurance should be a basic human right.

  8. Many years ago, when the Clinton’s were trying to sell their Health
    Care plan and Harry and Louise were telling us all the bad things that would happen (and ultimately came true), I got caught in a discussion with a young man who hated the Clintons and the thought of universal health care. I asked him what kind of insurance he had and he said he didn’t have insurance, when his family was sick they went to the emergency room and medicaid paid it. So this is the mentality of many people in this country and that really scares me.

  9. I really appreciate the phrase ‘the insured class vs. the uninsured class’. This concept could be added into the discussion any time the ‘death-is-for-others’ crowd exhorts about America’s need for ‘homeland security’.
    Homeland security applies only to the insured class of folks, right?

  10. I haven’t seen any posting about the fact that the whole Plame affair was one made up joke. The only person to blame was Armitage. Not the President, not the VP, and not Karl Rove.

    I think an apology is in order. In fact, I think the best way for you to atone for you sins is to (1) Admit you were wrong (2) apologize to the President and all Republicans and (3) vote Republican in the Nov. election.

  11. I haven’t seen any posting about the fact that the whole Plame affair was one made up joke. The only person to blame was Armitage. Not the President, not the VP, and not Karl Rove.

    Plenty of other people have commented, and of course you have your facts wrong.

    John Amato has a blog round-up linking to several leftie blogs that explain what the facts are and why you are a wanker.

    This is far from over.

    I think an apology is in order.

    At the very least you should apologize for harming America by supporting the Bushies, but I’m sure you don’t see the problem. Yet. You will if you live long enough.

  12. There is a health-care crisis in this country. The argument used against universal health-care was that America had the best health-care system in the world. Today America ranks 37th in the quality and availability of health-care, so much for that argument. Harry and Louise threatened dire consequences if “the government was in your medicine cabinet” – complete nonsense – so now we have the corporate druggers in our medicine cabinets, and everything is hunky-dory? I don’t think the Dem pols are about to move – unless they crawl further under the covers – on the issue. The only glimmer of hope, short of massive irate citizen marches on DC, is that corporations who are feeling the pinch big time of employee health care insurance will, not because they care about their employees but because they care about their bottom line, pressure Washington to do something. Afterall, GM is floundering and one reason is that $l500.00 of every GM car coming off the line goes for employee health care benefits. The danger is that Washington, fond as it is of tweaking rather than throwing out failed systems, will merely add insult to injury and invent another Plan B.

  13. Has the Washington Post editorial page become another bastion of right wing obfuscation? I thought that was the claim to infamy of The Washington Times.

    Armitage’s sin doesn’t negate the other more serious offenses of Bush, Cheney, Rove, Delay, Libbey, etc. etc..

    As for the triangulating Dem’s, the lesser of two evils still, hopefully the blogosphere can help change that.

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