“Liberals And Wages”: Public Policy Can Do A Lot To Help Workers Without Bringing Down The Wrath Of The Invisible Hand
Hillary Clinton gave her first big economic speech on Monday, and progressives were by and large gratified. For Mrs. Clinton’s core message was that the federal government can and should use its influence to push for higher wages.
Conservatives, however — at least those who could stop chanting “Benghazi! Benghazi! Benghazi!” long enough to pay attention — seemed bemused. They believe that Ronald Reagan proved that government is the problem, not the solution. So wasn’t Mrs. Clinton just reviving defunct “paleoliberalism”? And don’t we know that government intervention in markets produces terrible side effects?
No, she wasn’t, and no, we don’t. In fact, Mrs. Clinton’s speech reflected major changes, deeply grounded in evidence, in our understanding of what determines wages. And a key implication of that new understanding is that public policy can do a lot to help workers without bringing down the wrath of the invisible hand.
Many economists used to think of the labor market as being pretty much like the market for anything else, with the prices of different kinds of labor — that is, wage rates — fully determined by supply and demand. So if wages for many workers have stagnated or declined, it must be because demand for their services is falling.
In particular, the conventional wisdom attributed rising inequality to technological change, which was raising the demand for highly educated workers while devaluing blue-collar work. And there was nothing much policy could do to change the trend, other than aiding low-wage workers via subsidies like the earned-income tax credit.
You still see commentators who haven’t kept up invoking this story as if it were obviously true. But the case for “skill-biased technological change” as the main driver of wage stagnation has largely fallen apart. Most notably, high levels of education have offered no guarantee of rising incomes — for example, wages of recent college graduates, adjusted for inflation, have been flat for 15 years.
Meanwhile, our understanding of wage determination has been transformed by an intellectual revolution — that’s not too strong a word — brought on by a series of remarkable studies of what happens when governments change the minimum wage.
More than two decades ago the economists David Card and Alan Krueger realized that when an individual state raises its minimum wage rate, it in effect performs an experiment on the labor market. Better still, it’s an experiment that offers a natural control group: neighboring states that don’t raise their minimum wages. Mr. Card and Mr. Krueger applied their insight by looking at what happened to the fast-food sector — which is where the effects of the minimum wage should be most pronounced — after New Jersey hiked its minimum wage but Pennsylvania did not.
Until the Card-Krueger study, most economists, myself included, assumed that raising the minimum wage would have a clear negative effect on employment. But they found, if anything, a positive effect. Their result has since been confirmed using data from many episodes. There’s just no evidence that raising the minimum wage costs jobs, at least when the starting point is as low as it is in modern America.
How can this be? There are several answers, but the most important is probably that the market for labor isn’t like the market for, say, wheat, because workers are people. And because they’re people, there are important benefits, even to the employer, from paying them more: better morale, lower turnover, increased productivity. These benefits largely offset the direct effect of higher labor costs, so that raising the minimum wage needn’t cost jobs after all.
The direct takeaway from this intellectual revolution is, of course, that we should raise minimum wages. But there are broader implications, too: Once you take what we’ve learned from minimum-wage studies seriously, you realize that they’re not relevant just to the lowest-paid workers.
For employers always face a trade-off between low-wage and higher-wage strategies — between, say, the traditional Walmart model of paying as little as possible and accepting high turnover and low morale, and the Costco model of higher pay and benefits leading to a more stable work force. And there’s every reason to believe that public policy can, in a variety of ways — including making it easier for workers to organize — encourage more firms to choose the good-wage strategy.
So there was a lot more behind Hillary’s speech than I suspect most commentators realized. And for those trying to play gotcha by pointing out that some of what she said differed from ideas that prevailed when her husband was president, well, many liberals have changed their views in response to new evidence. It’s an interesting experience; conservatives should try it some time.
By: Paul Krugman, Op-Ed Columnist, The New York Times, July 17, 2015
“Is The Iran Deal ‘Liberal’?”: Shifting The Reigning Washington Foreign-Policy Paradigm From War-Making To Deal-Making
So, Senator Chris Coons, what do you think of the Iran deal?
There’s a pause. I have spoken a few times in recent weeks to the Delaware Democratic Senator, because a) he is deeply immersed in the details of this negotiation and b) he’s coming from what seems to me roughly the right place here: He wants to support his president and he wants to see diplomacy succeed, but he doesn’t trust Iran and he wants a deal that has a chance of actually working. He’s thoughtful and smart and not a demagogue, and his ultimate support (or not) of the thing really will hang on the details and what he concludes about them.
So he opens by telling me that he first wants to give credit to President Obama and John Kerry for getting this done, because any negotiation is hard, this one almost incomprehensibly so. Then he gives an answer: “It seems on the face of it from press accounts to meet most of the goals that were set.” He hadn’t read it yet, but he’d read enough about it to draw a few conclusions.
Still, Coons says he hasn’t made up his mind yet how he’ll vote. “I’m aware that it’s easier to be critical than supportive because this deal is so complex and the stakes are so high,” he told me. “I do think the diplomacy was worth exploring.” He wouldn’t say this of course, but it seems to me unlikely that Congress can kill the deal; Obama needs the backing of only 34 senators, which would result in a failure to override his certain veto of a “no” vote. It’s hard to imagine he can’t get that.
We’ll circle back to Coons, but first let’s acknowledge a point that liberal Obama-backers everywhere ought to acknowledge in this case: The deal is a big gamble. Nobody can know today that it will work in the main goal of keeping the Islamic Republic from getting a nuclear weapon. Of course, nobody knows for certain that it will fail either, and Lindsey Graham and Tom Cotton and John Boehner’s instant and predictable Munich-ification of a deal they obviously hadn’t even read was revolting.
But the way to counter their false, know-nothing certitude is not with more false, know-nothing certitude. From a liberal internationalist point of view, it’s clearly a good thing that Obama is trying to shift the reigning Washington foreign-policy paradigm from war-making to deal-making. The war-makers have been wrong about everything for the last 15 years, have told us endless lies, have harmed American credibility, have sown destruction and death—and, by the way, have done a hell of a lot more to strengthen Iran than we doves have. So deal-making is a fine principle for which to strive. But that doesn’t mean the deal is without risks and downsides, and liberals do themselves and the world no favors by not acknowledging them just because Tom Cotton is such a dreary soapbox haranguer.
Here were Coons’s four concerns in the order he listed them to me. First, the inspections regime; second, the timing of the sanctions relief; third, the degree to which the International Atomic Energy Agency will be able to keep track of the possible military dimensions of Iran’s nuclear activities; and fourth, restrictions on centrifuge development after about year 10. “I need to have a much better sense of the breakout time after 10 years,” Coons said, noting concerns that limits on centrifuge development might ease after the tenth year.
For my money, Coons’s second concern is the biggest potential problem here. Iran will get a $150 billion windfall starting in December, and while the regime will presumably spend some of that money at home, it’s a certainty that the Syrian regime and Hezbollah and Hamas and the Houthis in Yemen are all going to get their share.
Combine this money with the deal’s lifting of the conventional arms embargo, which hasn’t gotten much attention yet but you can be sure will get more, especially once Congress starts holding hearings on this, and you have a recipe for Iran to make far more trouble in the region than it has been in recent years. It should not comfort Americans, and American liberals in particular, that the likes of Bashar al-Assad and Hezbollah leader Hassan Nasrallah, both busy murdering Syrian children and suppressing any chance of real democracy being able to grow in Syria and Lebanon, praised the deal to the heavens.
Coons told me he had a lengthy phone call with Joe Biden Tuesday, and “that’s precisely what I was discussing with the vice president.” He said he’d let Biden speak for himself, but he did tell me that he pressed Biden on questions like what we’d be doing to beef up our commitments to our allies and to check Iranian influence. He says Biden assured him that stern measures were in the works. We’ll see about that. This, too, will be much discussed in the upcoming hearings, and it’s not only Republicans who have these concerns.
Obama says people should judge the deal only on whether it prevents Iran from getting a nuclear weapon, that it isn’t designed to change the nature of the regime or address regional terrorism. What this means is the administration made the decision that keeping a nuke out of Iran’s hands was the job that took precedence over all other tasks. All in all that’s probably the right call. Lindsey Graham said Tuesday that this deal would start an arms race. Not if it holds. If anything, it’s the opposite that’s true: Without a deal, Iran would surely develop a bomb more quickly, leading Saudi Arabia and perhaps others to do the same.
But surely Obama doesn’t mean to suggest that we shouldn’t discuss the other possible consequences of the deal. American liberals in particular should discuss these things. Nuclear non-proliferation is an old-school liberal value, but so is seeing our country take stands against the fundamentalist extremism that Iran exports and the kind of slaughter of civilians we see in Syria.
I was pleased to see that Hillary Clinton’s statement on the deal took both of these concerns seriously. Oddly, it’s not on her website. I got it via email, and the part that impressed me says this: “Going forward, we have to be clear-eyed when it comes to the broader threat Iran represents. Even with a nuclear agreement, Iran poses a real challenge to the United States and our partners and a grave threat to our ally Israel. It continues to destabilize countries from Yemen to Lebanon, while exacerbating the conflict in Syria. It is developing missiles that can strike every country in the Middle East. And it fuels terrorism throughout the region and beyond, including through direct support to Hamas and Hizballah. We have to broadly confront and raise the costs for Iran’s destabilizing activities…”
That’s real liberal internationalism, and I hope she spells out in the coming weeks what “broadly confront” means. I’d rather have her doing it than Jeb Bush or Scott Walker.
By: Michael Tomasky, The Daily Beast, July 16, 2015
“The Same Priorities She’s Emphasizing Now”: What Hillary Said About Paid Leave, Child Care, Inequality — Yesterday And 20 Years Ago
Following Hillary Clinton’s first major campaign speech on Saturday, purveyors of conventional wisdom have assured us again that she is tacking toward the left to deflect her challengers and mollify her party’s liberal base. Such assertions usually hint that Clinton is not progressive herself, but merely swayed that way by polls and consultants.
On the evening before her big event in Four Freedoms Park, New York’s memorial to its favorite son, Franklin Delano Roosevelt, I picked up a copy of her 1996 bestseller, It Takes A Village. (While many journalists once thumbed through it, few seem to remember its contents.) Published during an era when the nation showed few signs of turning leftward, Clinton’s first book offered pithy arguments for the same priorities she is emphasizing now. Consider the views she expressed on family leave — and, in particular, the limitations of the law signed by her husband in 1993:
As I have mentioned, the Family and Medical Leave Act guarantees unpaid leave to employees in firms with more than fifty workers. That is a good beginning. Many parents, however, cannot afford to forgo pay for even a few weeks, and very few employers in America offer paid maternity and paternity leave….
Other countries have figured out that honoring the family by giving it adequate time for caregiving is not only right for the family and smart for society but good for employers, who reap the benefits of workers’ increased loyalty and peace of mind. The Germans, for example, guarantee working mothers fourteen weeks’ maternity leave (six weeks before and eight weeks after delivery) at full salary…
Other European countries provide similarly generous leave, some of them to fathers as well as mothers. In Sweden, for example, couples receive fifteen months of job-guaranteed, paid leave to share between them…
As First Lady, Clinton obviously was in no position to demand that her husband’s administration (or the Republican-dominated Congress) institute paid family leave, but her own opinion was clear enough. So was her view of early childhood education, another current issue that she highlighted on Saturday:
Imagine a country in which nearly all children between the ages of three and five attend preschool in sparkling classrooms, with teachers recruited and trained as child care professionals. Imagine a country that conceives of child care as a program to “welcome” children into the larger community and “awaken” their potential for learning and growing.
It may sound too good to be true, but it’s not….More than 90 percent of French children between ages three and five attend free or inexpensive preschools called écoles maternelles…
While I was in France, I had conversations with a number of political leaders, from Socialists to Conservatives. “How,” I asked, “can you transcend your political differences and come to an agreement on the issue of government-subsidized child care?” One after another of them looked at me in astonishment. “How can you not invest in children and expect to have a healthy country?” was the reply I heard over and over again.
Finally, Clinton drew sharp attention to the social instabilities of the post-industrial American economy and the role of government in redressing what she called a “crisis.” Observing that “long-established expectations about doing business have given way under the pressures of the modern economy,” she warned bluntly:
Too many companies, especially large ones, are driven more and more narrowly by the need to ensure that investors get good quarterly returns and to justify executives’ high salaries. Too often, this means that they view most employees as costs, not investments, and that they expend less and less concern on job training, employee profit sharing, family-friendly policies…or even fair pay raises that share with workers – not to mention their families and communities – gains from productivity and profits…
Despite record profits for many companies, the gap in income between top executives and the average worker has widened dramatically….This growing inequality of incomes has serious implications for our children.
She went on to again praise Germany, where “there is a general consensus that government and business should play a role in evening out inequities in the free market system” — and where higher base wages, universal health care, and superb job training guaranteed “a distribution of income that is not so skewed as ours is.”
Writing 20 years ago, when President Clinton was running for re-election against the odds, Hillary hedged her message — and yet she was prescient in addressing the harms of an increasingly unfair economy. What she said then undergirds what she is still saying, more and more forcefully, in this campaign.
By: Joe Conason, Editor in Chief, Editor’s Blog, Featured Post, The National Memo, June 15, 2015
“An Extremely Progressive Agenda”: How Hillary Clinton’s Kickoff Speech Highlighted Her Advantage Over Republicans
Hillary Clinton gave the first major speech of her presidential campaign on Roosevelt Island in New York City, and while it wasn’t quite as heavy on biography as the campaign had led reporters to believe in the past couple of days, it was probably a good preview of what Clinton’s entire campaign will be like: lots of policy talk, with just enough personal content to paint a portrait of a candidate who both advocates for regular people and is a regular person — or, to paraphrase something President Obama once said about her, is regular enough.
This speech, like much of what Clinton does now, is about creating a synthesis out of two related goals or ideas. She wants to energize liberals in a way that also wins independents. She wants to advocate an economic agenda that will be substantively compelling and also creates a personal affinity with voters. It’s Clinton’s good fortune that she has at least the opportunity to do both at the same time.
Presidential candidates come in two basic types: those who can tell a story of personal struggle and those who can tell their relatives’ story of personal struggle. For one of the first times, today Clinton told how her mother was abandoned by her own parents and started supporting herself as a teenager. The point of these stories is to tell people, “I’m just like you.” I understand your struggles and your challenges, and I’ll advocate on your behalf. The truth is that there’s absolutely no relationship between whether a candidate was rich as a child or is rich now and what kinds of policies she’ll pursue as president. But we can conceive of this relationship between the personal and political as a 2 x 2 array with one bad quadrant, one good quadrant and two that could go either way. Here’s my liberally biased version with an example for each, placing Hillary Clinton where she’s trying to place herself:
So FDR was a wealthy scion who championed the cause of the downtrodden, while Scott Walker came from modest circumstances but advocates the interests of the wealthy and corporations. Mitt Romney was a rich guy whom Americans came to believe cared only about rich people, a deadly combination. Clinton is someone who grew up middle-class and is now rich but who would prefer you think of her as a person just like you. Her policy case makes her personal case more persuasive, whereas someone like Walker has to deal with the tension between his personal story and the beneficiaries of his policies.
Of course, personal affinity isn’t all about economic class, and Clinton is obviously counting on women in particular to feel a bond with her and come out to vote. As she said in her speech, “I may not be the youngest candidate in this race, but I’ll be the youngest woman president in the history of the United States.” But while that may have been her biggest applause line, the speech was laden with policy talk, much of it about the economy.
And while some of the positions she mentioned have been more fully fleshed-out than others, what it added up to was an extremely progressive agenda: paid family leave, affordable college education, more infrastructure investments, renewable energy, universal preschool, expanding broadband access and a lot more — all of it wrapped in populist rhetoric (the part about 25 hedge fund managers making more than all of America’s kindergarten teachers seemed to hit a chord).
And I’d challenge Republicans to look at the policy proposals in the speech and say about any of them, “Oh boy, the general electorate isn’t going to go for that.” Which highlights one important way in which Clinton’s path to the White House is easier than that of her potential GOP opponents. They have multiple areas where the goals of winning over Republican primary voters and setting themselves up to assemble a general election coalition are at odds. They need to sound tough on immigration now, but that will hurt them with Hispanic voters next fall. They need to proclaim that the Affordable Care Act must be totally repealed, when most Americans would prefer to make it work better. They need to oppose things like paid leave, minimum wage increases and imposing restrictions on Wall Street bankers, all of which are extremely popular. And they need to do it all while arguing that they understand regular folks and will be their advocates.
Americans might or might not buy that Hillary Clinton is just like them. But the truth is that she could get elected even if most of them don’t, which is something the Republicans probably can’t say.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line, The Washington Post, June 13, 2015
“Dispensed With The Niceties”: Hillary Clinton’s Grand Strategy To Beat The GOP: Take Bold Positions Early And Often
For the better part of 20 years now, Bill Clinton’s presidency has been synonymous with a hazy political concept called triangulation. Since his advisers made the term famous, it has been used to describe everything from standard-issue compromise, to the willingness to confront reactionary elements in one’s own party (think Sister Souljah), to the appropriation of another political party’s policy ideas. The latter is as close to a proper definition as there is.
One big concern bedeviling progressives is that Hillary Clinton’s candidacy will mark the return of triangulation—the preemptive ceding of ideological turf, at a time when, thanks to partisan polarization, such concessions amount to outright victories for the Republican Party. But the early days of Hillary Clinton’s candidacy suggest these fears are overblown—that she is engaged in an entirely different kind of political positioning, one that carries the promise of significant progressive victories or at least of clarifying the terms of key policy debates dividing the parties.
The nature of the strategy involves staking out a variety of progressive issue positions that enjoy broad support, but it’s not as straightforward as simply identifying the public sentiment and riding it to victory. The key is to embrace these objectives in ways that makes standard Republican counterspin completely unresponsive, and thus airs out the substantive core of their ideas: Rather than vie for conservative support by inching rightward, Clinton is instead reorienting liberal ideas in ways that make the Republican policy agenda come into greater focus.
Most recently, Clinton has adopted an aggressive position in support of expanded voting rights. “We have a responsibility to say clearly and directly what’s really going on in our country,” she said in her latest campaign speech Thursday, “because what is happening is a sweeping effort to disempower and disenfranchise people of color, poor people, and young people from one end of our country to the other.”
This is standard Democratic boilerplate, but in service of something new. Most Democrats have been engaged for some time now in rearguard actions to protect voters from disenfranchisement efforts, and promote a remedy to the damage the Supreme Court did to the Voting Rights Act. These are important efforts, but easily countered. It isn’t unpopular to argue that voters should have to show ID, for instance, or to rail against phantom voter fraud, and it’s easy to gloss over the complex nature of the Voting Rights Act in ways that obscure the real goal of these policies, which is to systemically reduce turnout among disproportionately Democratic constituencies—the poor, the young, and ethnic minorities.
Clinton’s plan, by contrast, demands clarity from her opponents. She has proposed that every American, except those who opt out, be automatically registered to vote when they turn 18, and that every state offer at least 20 days’ worth of early voting. Republicans can’t easily oppose this—and oppose it they must—without being explicit about the fact that they want to keep the voting rolls as trim as possible.
Most Democrats likewise support President Barack Obama’s administrative efforts to liberalize immigration enforcement, and want to create a citizenship track for unauthorized immigrants. Republicans oppose both aims, but have been able to muddle that fact using vague procedural language. Generally speaking, it’s not the liberalization of immigration law they oppose, but the unilateral nature of Obama’s actions. They oppose amnesty, but keep the door to a nebulous “legal status” ajar. Both positions are malleable enough to allow the Republican presidential nominee to tack dramatically left in the general election, and gloss over the hostility the GOP has shown to immigrants since promising to liberalize after Obama’s reelection.
For over a year, Democrats humored the GOP’s wordplay in order to preserve the possibility of striking a legislative compromise that includes something Republicans could call “legal status.” Now that the immigration reform process has collapsed, Clinton has dispensed with the niceties. In promising to preserve Obama’s immigration policies, she called out “legal status” as a ruse. “When [Republicans] talk about legal status,” she said, ’“that is code for second-class status.” She has taken the standard Democratic position and weaponized it. Republicans can’t pretend there’s no daylight between their views and Democrats’ views, because Clinton has defined the Republican position for them, by contrast.
Because this kind of obscurantism pervades the GOP’s substantive agenda—through tax policy, social insurance reforms, workplace regulation—Clinton should be able to deploy the tactic across a wide array of issues. Seizing the first-mover advantage is one of the undiscussed upsides of Clinton’s dominance in the Democratic primary field. It doesn’t guarantee her victory over a Republican opponent, but it will assure that the debate between the two of them occurs mostly above board.
By: Brian Beutler, Senior Editor, The New Republic, June 6, 2015
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