Category Archives: economy

Who’s Sorry Now?

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Joe Conason has written some good articles at Salon lately, but Conason’s most recent article actually made me cry.

Like most of their continental neighbors, the nations of the north [i.e., north Europe, esp. Scandinavia] provide free or highly subsidized, high-quality child care that begins as soon as new mothers return to work. Nearly every child between the ages of three and six is enrolled in the public child care system, because it is staffed by well-paid and well-trained workers overseen by the national ministry of education. The results include not only better socialization and education of young children, but far lower poverty rates, especially among single mothers. And the security of European families is enhanced as well by the universal provision of decent old-age pensions and health care, which relieves the financial burden of supporting elderly parents while trying to raise children. So does free or low-cost university education.

Having raised two kids by myself, I remember the juggling act I did for years as a long, grueling ordeal of exhaustion, work and worry. For example, what do you do when a child is too sick to go to school and you’re out of work sick days? What do you do when the boss wants you to work late and the day care arrangement absolutely positively ends at 6 pm? I also remember that an upcoming school holiday meant I was spending hours on the phone (while at work, of course) trying to find babysitting. The cost of my son’s day care before he was old enough for first grade (I couldn’t send him to public kindergarten because it was only half day) cost thousands of dollars at a time I could barely afford to keep the electricity turned on.

Extreme example: I remember many years ago there were news stories about a mother whose child care arrangements had evaporated, so she kept her child in her car while she was at work. Her employer noticed she kept going out to her car, and checked it out and found the child. So there was a big scandal and much clucking about what a bad mother she was. But her perspective was that if she didn’t go to work she wouldn’t be paid and could lose her job altogether, and then what was she supposed to do? Our culture says that single mothers who don’t show up for work are bad people who just want to be on welfare. What were her alternatives? Frankly, she didn’t have any alternatives other than put her child at risk or lose her job, and none of the news stories picked up on that.

I’m not saying that keeping one’s kids stashed in a car is a good choice. It’s very dangerous. But parents are perpetually being put into these no-win situations in which they have to choose between job and children. Two-parent households may be more resourceful about it, but it’s still a problem. For single-parent households, really bad compromises are a constant reality. So sick kids get left home alone or left with babysitters of dubious character, and parents steal time from employers to take care of parent duties. It’s not so much how will I best take care of this, but who’s going to get the short end of the stick this time?

Well, I’ve ranted about that. Let’s go on.

Right wingers always get things backward. They see statistics that show unmarried people, especially mothers, are more likely to live in poverty, and their solution is to encourage people to get married. Like just about any struggling single mother wouldn’t be thrilled if a decent man she could care about popped into her life and wanted to marry her.

But my understanding of the sociology of thing is the other way around — people are not poor because they are not married; they are not married because they are poor. People hanging on to the edge of the economy by their fingernails live exhausting, chaotic lives that do not support stable relationships. And there is copious data showing that good marriages can come apart when a couple’s financial support collapses.

The Bush Administration sank $750 million into a “healthy marriage initiative” that did nothing whatsoever to relieve anyone’s financial burdens. Typical.

Jordan Stancil writes at The Nation that “the big meaning of the [economic] crisis for Europeans is the vindication of their ideas about how to run an economy.”

“I remember the days when American economists came to Germany and told us we had to privatize our community banks, that our small, family-owned industrial companies were not a strength, that we had to move closer to the Anglo-Saxon way of doing business,” Jens van Scherpenberg, an economist at the University of Munich who for several years led the Americas unit at the quasi-governmental German Institute of International and Security Affairs, told me. “If someone came here and said that today, the response would be laughter–sarcastic laughter.”

Paul Krugman keeps saying that Germany has some major economic problems that it lacks the political will to address, so their cockiness is a little misplaced. However, the social support Europeans receive from their governments means that the economic crisis is causing much less individual pain for Europeans than it is for us here.

This bit from Stancil’s article is fascinating:

Werner Abelshauser, an economic historian at the University of Bielefeld in Germany and a leading expert on differences in transatlantic economic cultures … argued that this is not about social justice; it’s about protecting skilled workers–the source of Europe’s competitive strength. He said this is in contrast to the United States, which doesn’t have, and never did have, as many skilled workers. “Production systems developed differently in each country,” Abelshauser said. “German industrialism always depended on high skill levels–and that was one of the main reasons for the establishment of the first social programs in Germany. It was not just about politics or social justice–it was about taking care of the skilled workers because they were economically valuable.” The profile of the US workforce was different, so American industry developed different production processes, ones that were suited to a lack of skilled labor.

It says a lot about our “every man for himself” mentality that we as a nation actually make it difficult for people to get job training and education beyond high school. You’re on your own to find the money and the time. I understand that in Europe there is much more support of apprenticeship programs that allow workers to learn advanced skills. Here, there are some vocational school-to-work programs, but they are always underfunded and mostly not taken seriously by either the education system or employers. Employers here may want skilled workers, but they don’t want to invest the money into training anyone. There are good apprenticeship programs run by the unions, but of course the Right has worked day and night to destroy the unions.

I’ve argued in the past that the Reaganomics-style, “free market,” unregulated economy we’ve been moving toward is unsustainable, and the only reason we haven’t crashed and burned a lot sooner is that the social/economic foundations laid by the New Deal and post-World War II programs kept us propped up. But now those props are just about burned.

For years the Right has predicted the European economies would collapse under the weight of “entitlement” programs like national health care and subsidized child care. From Europe’s perspective, it’s our — I should say, the Right’s — economic system that is unsustainable and sinking us rapidly.

GM Engine Overhaul

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Never fear for Rick Wagoner. He’s walking away from GM with a $23 million pension. It’s the rank-and-file GM worker who is more likely to suffer.

Stupid Alert: David Brooks today argues that restructuring doesn’t work. The automakers have been “restructuring” for years, he says. He prophesies that

The most likely outcome, sad to say, is some semiserious restructuring plan, with or without court involvement, to be followed by long-term government intervention and backdoor subsidies forever. That will amount to the world’s most expensive jobs program. It will preserve the overcapacity in the market, create zombie companies and thus hurt Ford. It will raise the protectionist threat as politicians seek to protect the car companies they now run.

What should happen? Brooks says,

It would have been better to keep a distance from G.M. and prepare the region for a structured bankruptcy process. Instead, Obama leapt in. His intentions were good, but getting out with honor will require a ruthless tenacity that is beyond any living politician.

Let’s go back to what the Anonymous Liberal wrote yesterday:

When a company files for bankruptcy under Chapter 11 of Bankruptcy Code, it doesn’t just disappear into a puff of smoke. The goal of a Chapter 11 bankruptcy is a reorganization of the company, and that reorganization process is overseen at every step by the government. Upon filing of the Chapter 11 petition, a federal bankruptcy judge takes jurisdiction and all important decisions from that point forward must by approved by the court. The officers and executives of the company are often replaced. Sometimes a trustee is appointed to run things. All sorts of business issues get litigated during the process. Eventually, if things go according to plan, a plan of reorganization is approved by the judge and the reorganized company emerges from bankruptcy.

In other words, bankruptcy is a process by which a company relinquishes ultimate control of its destiny and its operations to the government in exchange for protection from its creditors. It gives the government a veto power over everything. What the Obama administration is doing right now is no different in principle from what a bankruptcy judge does; they’re just trying to do it outside of the formal bankruptcy process because they believe that doing so will minimize the harm to GM and the overall economy.

As I understand it, the concern is that if a big automaker actually did go into formal bankruptcy, consumers would be frightened away from buying the products. The other concern is that, at the moment, the automaker would be unlikely to get the loans needed to continue operations while the bankruptcy was in process.

Brooks insists that GM already was “restructuring” and had been for some time. I assume Brooks defines “restructuring” as “trying to wriggle out of Union contracts,” because that’s about all I saw the old GM management doing. Brooks continues,

Corporate welfare rarely works when the government invests in rising firms. The odds are really grim when it tries to subsidize fading ones. (In the ’80s, Chrysler already had the successful K-car in the pipeline.)

I’m not sure if he thinks that what the Obama Administration is doing amounts to corporate welfare, or if just shoveling money at Detroit while the old management floundered is corporate welfare.

Wingnut hysteria to the contrary, I don’t think President Obama or anyone else in Washington really wants to be running a car company right now. My interpretation is that the administration is putting GM through the steps of a bankruptcy while reducing the risk that GM will fail completely.

When the Music Stopped

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There are those rare moments in the flow of daily life, about as rare as a solar eclipse, when history does a quiet, tectonic shift, and the ordinary landscape suddenly looks irrevocably dated, in an unannounced, unnerving way. Mark Morford – at the San Francisco Chronicle (give yourself a treat and subscribe to his feed) – writes what it was like during a recent trip to Lowes:

…One fine and sunny Saturday just recently, I visited a sparkly new Lowe’s home-improvement megastore to spec out a replacement oven for my apartment, an experience I was dreading not merely because it was the last place I wanted to spend a pristine Saturday, but because on weekends those places tend to be crammed and torturous and teeming, and such crowds generally give me hives.

I needn’t have worried.

It was like walking into a private game reserve, or some sort of museum of the long-lost American dream, a spectacle not unlike being the last person on the planet. The huge doors swooshed open, and I was greeted with the eeriest scene imaginable, aisle after aisle of shiny new roto tillers and chainsaws and barbeques, lawn furniture and rolls of sod and lighting fixture and every exotic gorgeous manly power tool imaginable.

And not a single human in sight.

Check that: a handful of humans milled about, but most were sales clerks looking equal parts bored, lonely, confused. The few actual customers I finally noticed were barely visible at all, swallowed up by the gleaming mountains of unsold goods, like a few tiny ants in a farm designed to hold ten thousand.

It was, in a word, disquieting. It was, in six more, strange and dreamlike and unexpectedly sad.

I had the same experience a few weeks ago – of walking into a big home improvement store, with mountains of shiny, pristine merchandise on shelves stocked to the gills, aisles and aisles of it, and no customers in sight. A few days ago, I visited a gigantic Whole Foods Market – which had plenty of customers – but I couldn’t help but wonder whether the moment has passed for ever-bigger retail stores. This store seemed as big as a football field, with who knows how many tens of thousands of square feet. How they could possibly run it at a profit baffled me. At the checkout, high end boho lifestyle magazines with names like "Simplify" called out, but they too, seemed to be published from an earlier age when there was such a thing as "discretionary income".

I felt like getting a camera and taking pictures of the inside of Lowes and Whole Foods to show my grandkids, what the full-blown consumer lifestyle was like, in all its glory, back in America, before the crash.

Moderate Mush

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In one of its trademark mushily oblivious editorials, the Washington Post today praises the “moderates” who worked out a Senate compromise stimulus bill. However, other people drew editorial scorn.

The effort wasn’t helped by those senators, including the leadership on both sides of the aisle, who wallowed in customary blame-gamesmanship. On Thursday, Senate Majority Leader Harry M. Reid (D-Nev.) accused the moderates of trying to hold the president hostage. Senate Minority Leader Mitch McConnell (R-Ky.) derided the impending bill as an “aimless spending spree that masquerades as a stimulus.” Sens. Lindsey O. Graham (R-S.C.) and Barbara Boxer (D-Calif.) went theatrical. He held up a copy of an earlier version of the Senate stimulus plan to slam the process that led to its creation. She brandished her own copy to complain that Mr. Graham never resorted to such antics when they considered President Bush’s bailout bill for Wall Street. Friday House Speaker Nancy Pelosi (D-Calif.) jumped in, deriding the quest for bipartisanship as a “process argument” and claiming that potential cuts in the Senate bill “will do violence to the future.”

What the mushheads at WaPo fail to understand is that Pelosi is right. Their ideas of “bipartisanship” call for process over substance, and the cuts in the Senate bill will prolong the misery of many Americans.

As Ian Welsh explains, the “moderates” have cut 1-1/4 million jobs from the stimulus bill (or just under a million, depending on what the actual cut turns out to be). To WaPo, 1-1/4 million jobs are not important. What’s important is that Senators speak politely and not rattle the teacups or slosh the cream.

Anyone up for storming the Bastille today?

Ian does the math. Paul Krugman also explains,

I’m still working on the numbers, but I’ve gotten a fair number of requests for comment on the Senate version of the stimulus.

The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

As Matt Yglesias puts it, “the cart of bipartisanship is straightforwardly put ahead of the horse of policy merits.”

Brad DeLong:

The stimulus package is too small–and it looks like almost all of the cuts are from reasonable uses of government funds that are substantially labor intensive and thus are the right kind of thing to be in the stimulus package.

Now, I tend to believe that process is important. But what the moderates are doing is ignorant. They aren’t looking objectively at the cost effectiveness of the various components of the package. They’re just cutting stuff out that it feels good to them to cut out. And yes, I think most Republicans want the thing to fail, and they’re ensuring that it does.

WaPo — deliberately undermining what the other party is trying to do is not “bipartisanship.

I understand President Obama will address the nation tomorrow. I hope he has the guts to explain to the American people that the compromised bill will be less effective than the one he wanted. I hope he doesn’t just praise the Senate for screwing up America’s future.

Stimulus Bill: Come to Jesus

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Mcjoan says “Maybe it’s time for Obama to have a come to Jesus meeting with a few members of the Dem caucus, Ben Nelson being at the top of that list.” I endorse that.

I also think Congress and the Washington press corps should listen to Nancy Pelosi:

Pelosi — speaking to reporters on the second day of her retreat with House Democrats at a swank Williamsburg, Va., golf resort — was clearly annoyed with Senate attempts to slash up to $100 billion in spending from the $819 billion package the House passed last week.

At the same time, she urged the need for speed in passing the package — and stopped short of saying that she’d insist on her demands during upcoming conference negotiations with the Senate.

“Washington seems consumed in the process argument of bipartisanship, when the rest of the country says they need this bill,” the California Democrat said, seeming to sweep aside the Obama administration initial desire to have broad GOP support for the plan.

The Obama Administration’s desire is to get the damn bill passed asap, and if it can be done with no Republican votes at all, then so be it. Unfortunately, the Senate will require some Republican votes to pass.

Brad Dayspring, a spokesman for House Minority Whip Eric Cantor (R-Va.), said: “Her comment really makes one wonder whether she understands the concerns of not only the majority of struggling Americans seeking tax relief and job creation, but many members from her own party.”

Are the majority of struggling Americans seeking “tax relief” right now? I don’t think so. “Tax relief” actually is pretty far down the list, except for right-wingers, who need to learn they are a bleeping minority.

There’s much clucking in media about how Pelosi and other Dems are being “partisan” for not standing around smiling and passive while the minority party ensures that the American economy remains bleeped up long enough for Republicans to take some seats back in 2010. Again, the beltway crowd sill seems to think that “bipartisan” means allowing the GOP to have the last word, even after they’ve lost an election.

We are reminded that John McCain is brain dead:

Day after day, McCain has been on the Senate floor criticizing Obama’s package with the core Republican message. “This bill has become nothing more than a massive spending bill,” he has said. “To portray it as stimulus flies in the face of reality.” He has called the legislation an “unnecessary, wasteful bill.”

I saw a clip of that on television last night, and it left me babbling at the walls. Dear Senator Idiot: Do you not understand that “spending” is the bleeping point of the bill? Do you not understand that the crisis requires getting more money into circulation as fast as possible, and only the government can do that? Do you have any brain at all?

I swear, if John McCain had popped out of the wall I think I would have thrown a lamp at him.

Anyway, it looks as if the Senate has agreed on a watered-down version of the stimulus bill. I think Congress should pass whatever it can pass as quickly as possible, but when Obama finally signs it into law I want him to go on television and explain to the American people that the bill as passed was watered down by Republicans and will be less effective than the bill he wanted. Credit where credit is due.

Caps and Cans

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Edmund Andrews and Vikas Bajaj write for the New York Times that

The Obama administration is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money. … Executives would also be prohibited from receiving any bonuses above their base pay, except for normal stock dividends.

The CEOs of the financial industry brought this on themselves because they proved they can’t be trusted with money. We saw from the first wave of no-strings-or-oversight-attached bailouts from the Bush Administration that they can’t be trusted with money. You might as well give the bailout money to crack addicts.

Although CEOs cannot directly write their own checks, as I understand it their compensation is determined by the Board of Directors, an insulated group of people living in the same bubble of privilege as the executives. Apparently, boards of directors of financial institutions cannot be trusted with money, either.

Those who are still insulated are whining that a $500,000 cap is “draconian.” Steve Benen writes,

What a fascinating perspective. There are a series of companies that have been managed poorly and are on the verge of collapse. They’re going to the federal government, hat in hand, hoping to get tax dollars to keep them afloat. As James F. Reda sees it, a $500,000 salary is “draconian,” and might lead frustrated executives — accustomed to exorbitant salaries disconnected to job performance — to leave the companies they helped drive into the ground. Companies that would no longer exist were it not for government intervention.

And this is a problem, because … ?

I agree with Steve that there must be some sharp people in the ranks of financial industry management who would be happy to take $500,000 a year. As for those executives who would be insulted and quit — good luck finding work elsewhere, bub.

The bad news is that it seems the stimulus bill is falling short of votes in the Senate. See the Talking Dog for background.

Gary Kamiya reminds us what’s at stake:

We are in a dreadful economic crisis, the worst in the lifetime of anyone who is under 70 years old. Forget the abstract statistic that millions of people are out of work and try to grasp this staggering reality: Twenty thousand jobs a day are being lost. Millions of people have lost their homes and their life savings. Countless millions have no health insurance. Businesses are failing at a staggering rate. Desperate states are shutting down services.

This is not a drill. These are real things that are happening to real people, people we all know. Everyone, whether they’re poor, working-class or middle-class, has either suffered themselves from the economic collapse or knows someone who has.

Try explaining that to the Senate. Thanks.

More on the Bonuses

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Alan Feuer and Karen Zraick write in the New York Times that Wall Street isn’t apologizing for outlandish bonuses.

“People come here because they want to work hard and get paid a lot for working hard,” one investment banker said Friday as he wended his way, lunch bag in hand, through the World Financial Center. “I think there’s a disconnect between Wall Street and Main Street.” …

… “My bonus is ‘shameful’ — but I worked hard to get it,” said John Konstantinidis, a wholesale insurance broker, lunching Friday at Harry’s at Hanover Square.

The idea seems to be that because they work very, very hard, they deserve enormous amounts of money. The thing is, normally the economy doesn’t reward a person based on how hard he works. It rewards people for producing something that has value to other people. The fact is that America is full of people who work very, very hard and who are not paid well at all for it.

I can understand a financial industry executive receiving a bonus for bringing more money into the company than the other executives. But these guys seem to think they are entitled to bonuses for breathing. They argue that if they don’t make so much money, New York doesn’t collect as much in income taxes. However, as James Ledbetter points out in Slate, “Paying pedophiles billions of dollars in bonuses would also have ancillary economic benefits—that doesn’t make it a good idea.”

Dan Gross, also in Slate, says,

The rationalization is that the bonus is the salary. The paycheck they get every week, which might add up to $150,000, is nothing. Without the bonus, [they get] no private school tuition, no mortgage, no nothing. Not getting a bonus is like getting fired. It’s as if you’ve worked all year for nothing.

Well, some people do work all year for nothing, or at least a whole lot less than $150,000.

Another argument is that companies have to reward their people generously or they will move to other firms. And what firms will they move to, pray tell? Bear Stearns? Lehman Brothers? Oh, wait …

The idea seems to be that people who do the money handling should be insulated from the nation’s financial problems. I think the opposite is true — people who do the money handling should be the first ones to take a hit when money is mishandled. I argue that it is this very sense of living in their own universe that lured so many of these people into such bad decisions.

Saving Capitalism From Capitalists

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At WaPo, Fareed Zakaria writes that Barack Obama’s first task is to save capitalism. After writing the requisite paragraph explaining that Obama’s supporters love him only because he is charismatic, Zakaria explains to us that being POTUS is real work.

Wow, Fareed, what would we do if we didn’t have you to clarify stuff for us? (/snark)

The task is to restore confidence in credit. But how is confidence restored? “After all, George W. Bush has pretty consistently projected an air of confidence, one that tends to get people even more worried than they need to be.” Yes, and that’s because he has no clue what he’s doing, and everyone in the country knows that but him.

The system has to be stabilized and reformed. And I would say there is one more task, which is to sweep up all the “free market” worship we can find and drown it in a bathtub.

At The Guardian, Gary Younge gets to the heart of the problem.

Greenspan’s ideology was unfettered, free-market capitalism. Its understanding of how the world works was rooted in self-interest. It was a value system that placed the private before the public, the individual before the collective, and the wealth of the few before the welfare of the many.

So pervasive was this worldview that, after a while, it was not even understood to be a view at all. It was just the hard-nosed reality against which only lunatics and leftists raged. “Unlike many economists,” Bob Woodward wrote of Alan Greenspan in his book Maestro (the title speaks volumes), “he has never been rule driven or theory driven. The data drive.” They drove a sleek black limousine over the edge of a steep cliff. And since the invisible hand of the market ostensibly guided everything, there was no one who could really be held accountable or responsible for anything. The buck didn’t stop anywhere. Indeed, for those who were already wealthy, the bucks just kept rolling in.

If you want to see brainwashed cult followers, don’t look at Obama supporters. Look at libertarians, “free market” devotees, and anyone who thinks Ayn Rand had a brilliant intellect. Somehow our economy came to be guided by these nitwits and their transparently absurd belief system. I say “transparently” absurd because it has always been utterly disconnected from real-world human behavior, and those of us living in the real world could see that. But the leaders of the “free markets” cult were insulated enough from reality that they didn’t see it.

One of the most galling aspect of the “free market” religion has been the notion that the wealth generated by an economy belongs only and entirely to those investing capital into it. Workers whose labor creates the wealth have no claim to that wealth. Worse, the status of working people has eroded to the point that workers are looked at as parasites because they have some expectation of a living wage, health care, and some kind of retirement benefits. “Smart” capitalists scraped these parasites out of their companies as quickly as possible by moving to Third World countries where labor can be exploited. And according to the free market culties, any attempt by government to protect wages and benefits or to make sure securities and finance are kept honest is “socialism.”

The problem with this system is that, if a majority of people have no disposable income, who’s going to buy stuff? And what happens to capitalism when money just plain stops flowing? Well, we can see what happens, because that’s pretty much what has happened — money has stopped flowing.

The theory has been that people who rise to the tops of corporations have done so because they are smart and capable, and these smart and capable people naturally will not do anything to hurt the long-term prospects of their businesses, like selling fraudulent products or stealing from shareholders. Therefore, government regulation is an unnecessary burden.

The problem with this theory is that, too often, people rise to the tops of corporations because they are aggressive and ruthless and don’t have the scruples that God gave pickles.

Right-wingers won’t be able to wrap their heads around the idea that saving capitalism requires putting limits on it, but the truth is that capitalism, left entirely unfettered, sooner or later devours itself. That’s what we see happening right now.

We not only need to re-learn the lesson that capitalism needs regulation; we also need to restore the value of work. Citizens who work for paychecks to make a living are not “parasites,” and they are not “cost.” They are America. Capitalists need to remember that. We have an economy for the people, not people for an economy.

Traitors in Our Midst

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I just want to call out this bit from Michael Lind’s “The Economic Civil War“:

If the major U.S. automobile companies go under, it will be partly because timely federal aid for them was blocked by members of Congress like Tennessee Senator Bob Corker, whose states have created their own counter-Detroit in the form of Japanese, Korean, and German transplant factories. The South will have risen by bringing down the North. Jefferson Davis will have had his revenge.

The most shocking thing about the alliance between the Southern states and America’s friendly but earnest economic rivals to destroy America’s most important industry is the fact that so few people find it shocking. Contrast the U.S. with the European Union. The nation-states of the European Union collaborate with each other in order to compete against foreign economic rivals, including the U.S., Japan, and China. By contrast, many states, particularly in the South, collaborate with foreign economic rivals of the U.S. in order to compete against other American states. Any British or French or German leader who proposed collaborating with Japan or the U.S. in order to wipe out industry and destroy jobs in neighboring EU member states would be jeered out of office. But it is perfectly acceptable for American states to connive with Asian and European countries in the destruction of industry elsewhere in the U.S.

It’s particularly galling when you realize most of the “Red” states receive more federal dollars than they pay in federal taxes, while most of the “Blue” states receive less federal dollars than they pay in federal taxes. However, Lind says that’s the way things have to be:

Second, the race to the bottom in taxes and public services must be stopped by means of federal revenue-sharing. In most industrial democracies, the central government contributes much of the money for local services. In the 21st century U.S., too, a much greater percentage of state and local public service funding should come from the federal government, in the form of general revenue sharing (a popular and effective program abolished by Reagan) as well as special purpose grants and loans for some needs like infrastructure.

This means that more tax money, not less, will flow from blue states to red states. But it is the price the blue states must pay for the survival of their own way of life in their own regions. Ruthless Southern state governments have been willing to underfund public education and other public services, while lavishing hundreds of millions of dollars to bribe Nissan, Toyota, and other foreign corporations into opening up factories in their borders. The Southern states cannot be forced to raise state and local taxes. But federal revenue-sharing can raise the level of public services in Mississippi and Louisiana, thereby leveling the playing field by leveling up, not down. Nor is revenue-sharing unfair to the blue state rich, because the federal government taxes the rich everywhere, including the rich few in poor states. Moreover, the gradual equalization of public service spending nationwide might be compensated for by reductions in high blue-state tax levels.

I suppose that makes sense, but right now I don’t think I like it.