“Plutocracy, Paralysis, Perplexity”: The Distorting Effects Of Great Wealth On Our Society
Before the Great Recession, I would sometimes give public lectures in which I would talk about rising inequality, making the point that the concentration of income at the top had reached levels not seen since 1929. Often, someone in the audience would ask whether this meant that another depression was imminent.
Well, whaddya know?
Did the rise of the 1 percent (or, better yet, the 0.01 percent) cause the Lesser Depression we’re now living through? It probably contributed. But the more important point is that inequality is a major reason the economy is still so depressed and unemployment so high. For we have responded to this crisis with a mix of paralysis and confusion — both of which have a lot to do with the distorting effects of great wealth on our society.
Put it this way: If something like the financial crisis of 2008 had occurred in, say, 1971 — the year Richard Nixon declared that “I am now a Keynesian in economic policy” — Washington would probably have responded fairly effectively. There would have been a broad bipartisan consensus in favor of strong action, and there would also have been wide agreement about what kind of action was needed.
But that was then. Today, Washington is marked by a combination of bitter partisanship and intellectual confusion — and both are, I would argue, largely the result of extreme income inequality.
On partisanship: The Congressional scholars Thomas Mann and Norman Ornstein have been making waves with a new book acknowledging a truth that, until now, was unmentionable in polite circles. They say our political dysfunction is largely because of the transformation of the Republican Party into an extremist force that is “dismissive of the legitimacy of its political opposition.” You can’t get cooperation to serve the national interest when one side of the divide sees no distinction between the national interest and its own partisan triumph.
So how did that happen? For the past century, political polarization has closely tracked income inequality, and there’s every reason to believe that the relationship is causal. Specifically, money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation.
And the takeover of half our political spectrum by the 0.01 percent is, I’d argue, also responsible for the degradation of our economic discourse, which has made any sensible discussion of what we should be doing impossible.
Disputes in economics used to be bounded by a shared understanding of the evidence, creating a broad range of agreement about economic policy. To take the most prominent example, Milton Friedman may have opposed fiscal activism, but he very much supported monetary activism to fight deep economic slumps, to an extent that would have put him well to the left of center in many current debates.
Now, however, the Republican Party is dominated by doctrines formerly on the political fringe. Friedman called for monetary flexibility; today, much of the G.O.P. is fanatically devoted to the gold standard. N. Gregory Mankiw of Harvard University, a Romney economic adviser, once dismissed those claiming that tax cuts pay for themselves as “charlatans and cranks”; today, that notion is very close to being official Republican doctrine.
As it happens, these doctrines have overwhelmingly failed in practice. For example, conservative goldbugs have been predicting vast inflation and soaring interest rates for three years, and have been wrong every step of the way. But this failure has done nothing to dent their influence on a party that, as Mr. Mann and Mr. Ornstein note, is “unpersuaded by conventional understanding of facts, evidence, and science.”
And why is the G.O.P. so devoted to these doctrines regardless of facts and evidence? It surely has a lot to do with the fact that billionaires have always loved the doctrines in question, which offer a rationale for policies that serve their interests. Indeed, support from billionaires has always been the main thing keeping those charlatans and cranks in business. And now the same people effectively own a whole political party.
Which brings us to the question of what it will take to end this depression we’re in.
Many pundits assert that the U.S. economy has big structural problems that will prevent any quick recovery. All the evidence, however, points to a simple lack of demand, which could and should be cured very quickly through a combination of fiscal and monetary stimulus.
No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority. And the key to economic recovery lies in finding a way to get past that minority’s malign influence.
By: Paul Krugman, Op-Ed Columnist, The New York Times, May 3, 2012
“Turning The Page”: Obama’s Winning Strategy On Foreign Policy
We expect some hypocrisy in politics, but it was still jaw-dropping to behold Republicans accusing President Obama of politicizing the anniversary of the killing of Osama bin Laden. Wasn’t it just eight years ago that the GOP organized an entire presidential campaign — including the choreography of its 2004 national convention — around the attacks of Sept. 11, 2001, and George W. Bush’s response to them?
Obama’s opponents don’t just think we have short attention spans. They imagine we have no memories whatsoever.
Yet very quickly, Mitt Romney and the rest of his party began slinking away from their offensive. It’s true, of course, that Obama played the ultimate presidential trump card. He visited our troops in Afghanistan on Tuesday, the anniversary of the bin Laden raid, and, with military vehicles serving as a rough-hewn backdrop, addressed the nation from the scene of our longest war.
But the GOP retreat reflected something else as well. For the first time since the early 1960s, the Republican Party enters a presidential campaign at a decided disadvantage on foreign policy. Republicans find it hard to get accustomed to the fact that when they pull their favorite political levers — accusations that Democrats are “weak” or Romney’s persistent and false claims that Obama “apologizes” for America — nothing happens.
The polls could hardly be clearer. In early April, a Washington Post/ABC News poll found that 53 percent of Americans trusted Obama over Romney to handle international affairs. Only 36 percent trusted Romney more. On a list of 12 matters that a president would deal with, Obama enjoyed a larger advantage on only one other question, the handling of women’s issues. And on coping with terrorism, the topic on which Republicans once enjoyed a near-monopoly, Obama led Romney by seven points.
How did this happen? The primary reason, to borrow a term from science, is negative signaling: By the end of Bush’s second term, the Republicans’ approach to foreign policy was discredited in the eyes of a majority of Americans. The war in Iraq turned out (and this is being quite charitable) much differently than the Bush administration had predicted.
It is always worth recalling Vice President Dick Cheney’s interview with Tim Russert on NBC’s “Meet the Press” on March 16, 2003. Among other things, Cheney famously declared that “I really do believe that we will be greeted as liberators.” And when Russert asked whether “we would have to have several hundred thousand troops there” in Iraq “for several years in order to maintain stability,” Cheney replied, “I disagree,” insisting: “That’s an overstatement.”
It was not an overstatement.
More generally, Americans came to see that the war in Iraq had nothing to do with what they cared most about, which was protecting the United States against another terrorist attack. Indeed, the war in Afghanistan, which was a direct response to 9/11, was pushed aside as a priority. At one point, Bush declared of bin Laden: “I don’t know where he is. You know, I just don’t spend that much time on him . . . to be honest with you.”
And this is where negative signaling turns into a positive assessment of Obama. He understood the importance of bin Laden. He addressed the broad and sensible public desire to get our troops out of Iraq. He focused on how to get a moderately satisfactory result in Afghanistan — which is probably the very best that the United States can do now.
The Afghan policy Obama announced Tuesday reflected the president’s innate caution. He wants to withdraw our troops but not so fast as to increase the level of chaos in the country. He imagines a longer engagement with Afghanistan because he does not want to repeat the West’s mistake of disengaging too quickly after U.S. arms helped the mujahedeen defeat the Soviet Union there in the 1980s.
Public opinion is on the side of getting out sooner. But most Americans are likely to accept the underlying rationale for Obama’s policy because it is built not on grand plans to remake a region but on the narrower and more realistic goal of preventing terror groups from regaining a foothold in the country.
And that’s why Republicans finally seem to realize that driving foreign policy out of the campaign altogether is their best option. After a decade of war, Americans prefer prudence over bluster and careful claims over expansive promises. On foreign policy, Obama has kept his 2008 promise to turn history’s page. The nation is in no mood to turn it back.
“Evangelical Chauffeur’s: What The Religious Right Want’s From Romney
After Mitt Romney’s foreign policy spokesman Richard Grenell resigned on Tuesday in response to social conservative complaints about his sexual orientation and his support for same-sex marriage, Bryan Fischer of the American Family Association is claiming credit. On his radio program Tuesday afternoon Fischer–who was the first to criticize Grenell for being “an out, loud and proud homosexual”–boasted, “This is a huge win… I will flat out guarantee you [Romney] is not going to make this mistake again. There is no way in the world that Mitt Romney is going to put a homosexual activist in any position of importance in his campaign.” (Fischer is a former evangelical pastor who is prone to making controversial remarkssuch as, “we should screen out homosexuals who want to immigrate to the United States.”)
That, of course, raises an important question: if staunch religious conservatives such as Fischer can dictate Romney’s policy and personnel decisions, what other demands will they make?
I called Fischer to find out. He says there are a number of stances on issues Romney has thus far avoided that would reassure the “pro-family” community. The most significant includes a pledge to veto the Employment Non-Discrimination Act, which would protect gays and lesbians from workplace discrimination, reinstating Don’t Ask Don’t Tell (DADT) and removing spousal benefits for the domestic partners of federal employees. Fischer laid out these same ideas in his initial attack on Grenell. “Romney needs to make the following public commitments… if he is to have any hope of generating even modest enthusiasm in the base…. If he’s going to pander, he’d better start pandering in a big, fat hurry.”
Here’s what Fischer told me on Wednesday:
One thing [Romney] can do is come out and endorse North Carolina’s marriage amendment. Sanctity of marriage is a very important issue for the pro-family community. I would urge him to restate his commitment to rigorously defend the Defense of Marriage Act (DOMA). I would urge him to commit to revoking spousal benefits for unmarried domestic partners. President Obama has extended spousal benefits to partners of federal employees in violation of DOMA. We need to hear Romney take a position on reversing that. He needs to publicly commit to vetoing the Employment Non-Discrimination Act (ENDA) if it reaches his desk. I think he should reinstate the ban on homosexuality in the military. He said he won’t do that, but he should make it clear that military chaplains on his watch will have freedom to teach biblical view of sexuality without any fear of repercussions.
Romney has a nuanced–some might say slippery–relationship with a few of these issues. On DADT Romney criticizes President Obama for signing the law repealing it and allowing gays to serve openly in the military. But his rationale is not exactly that it was the wrong policy in the abstract, only that it was too stressful for the military. Therefore he says it would be even more disruptive to reverse the repeal now. This complicated position has the virtue of being partially acceptable to people on both sides of the issue. He must attempt to keep the anti-gay conservative base mollified while not alienating the large majority of the public that supported letting gays serve. His position allows him to sidestep taking any stance of accepting or rejecting homosexuality, while nominally caring only about what is best for the military as a whole. Of course, what was best for the brave men and women already serving in the military who happened to be gay doesn’t enter into this calculation. It is politically shrewd, albeit nakedly calculating and cowardly.
On some of these other hot button issues, such as benefits for the domestic partners of federal employees and ENDA, Romney hasn’t taken a stance in this campaign. His campaign declined to comment on these issues. But Romney has spoken about ENDA in the past. Back in 1994 when he ran for U.S. Senate he pledged to co-sponsor ENDA if he was elected. Then, in 2007, he said he would not support ENDA as president. So Fischer should rest assured that, as of Romney’s most recent flip-flop, he opposes protecting gays from discrimination in the workplace.
The other issues are essentially symbolic. The president has no say over state ballot initiatives regarding marriage. The supposed oppression anti-gay military chaplains is an obscure myth that no one outside the religious right even knows about. It is mostly idle conjecture that chaplains will not be allowed to insult homosexuality now that gays can serve openly in the military, not actual evidence of any chaplains being punished.
Symbolism, though, is important to Fischer, as it is to many social conservatives. Unlike other evangelical leaders, who pretended that their only objection to Grenell was his advocacy for marriage equality, Fischer readily admits that he doesn’t think Romney should have openly gay staffers. “If Richard Grenell had kept his sexual preferences to himself, none of this would have happened,” says Fischer. “Nobody would know, nobody would care.” I asked if that meant he thinks gays can work on the Romney campaign only if they remain in the closet, but not if they are open about their sexual orientation. Fischer didn’t dispute that characterization of his views, saying, “In [Washington], D.C. personnel is policy. If [Romney] wants to reassure the evangelical community that he’s with us on the sanctity of marriage then he should not make hiring decisions that confuse us about where he stands.”
The Romney campaign declined to respond to Fischer’s comments. Romney has butted heads with Fischer in the past, most notably when he criticized Fischer’s lack of “civility” at the Conservative Political Action Conference last year.
Given that Fischer has expressed misgivings about Romney in the past, especially about whether he is truly committed to the social conservative cause, I wondered why Fischer was so happy that Romney dumped Grenell. Isn’t this just more evidence that Romney doesn’t, in his heart, oppose homosexuality; he just will bend to the conservative base as much as he has to? Then again, does it matter? Or is the proof that you can control a candidate as valuable as the proof that he personally agrees with you? “You would prefer to have a candidate that you know is with you in his heart on these issues,” says Fischer. “But 10 years from now all that’s going to matter is the policies he pursued, it’s not going to matter why he pursued them. If he will do the right thing because it is politically expedient, then he will have done the right thing. At the end of the day that’s what’s going to count.”
By: Ben Adler, The Nation, May 3, 2012
“From Politics To Profit”: The Republican Opportunity Society
Whenever the subject of inequality comes up, conservatives usually say the same thing: Barack Obama wants equality of outcome, while we want equality of opportunity. The first part is ridiculously disingenuous, of course—no one could honestly argue that Obama’s major goals, like raising income taxes from 35 percent to 39.6 percent, would bring us to some kind of pure socialistic society where everyone has precisely the same income and no one is wealthier than anyone else. But the second part is, I think, offered sincerely. Conservatives not only seek a world where everyone has the same opportunities, most of them think that’s pretty much what we have already, so major changes aren’t necessary, except in the area of getting government off your back. After all, this is America, where any kid, no matter where he comes from, can achieve whatever he wants if he’s willing to work hard. Right? Which brings me to the story of Tagg Romney.
Today’s New York Times has a story about the private equity firm Tagg and the chief fundraiser from his dad’s 2008 presidential run started after that campaign ended, called Solamere Capital. They didn’t do anything illegal or unethical, so it isn’t an exposé of wrongdoing or a potential problem for the current Romney campaign, just a somewhat interesting tale about how “that familiar path from politics to profit” works. But here’s the portion that jumps out. Though neither of the two original founders had any experience in private equity, using their contacts among people who had donated to the Romney campaign they quickly found investors who gave them $244 million to play with:
Solamere’s founders dispute any notion that they have cashed in on their political connections, arguing that Solamere, like any fund, has had to persuade investors on its merits.
“No one we went to as an investor said, ‘Oh, your dad is Mitt Romney, I’m going to give you $10 million,” Tagg Romney said, noting that his father’s political future was uncertain when the firm began. He added, “Our relationships with people got us in the door, but that did not get us investors.”
Even so, Mitt Romney was the featured speaker at Solamere’s first investor conference in Deer Valley in January 2010. Mr. Romney, who made his fortune in private equity at Bain Capital, also gave early strategic advice.
Does Tagg Romney actually believe that his dad had nothing to do with his successful entry into the private equity game, and the millions he has made and will continue to make are the result only of his own merit? That his life is radically different from those of the millions of people struggling to get by only because they don’t work as hard as he does, or have his gumption and entrepreneurial spirit? Maybe he does. That may strike you and me as utterly insane, but it wouldn’t surprise me a bit.
I’m not privy to the private conversations among folks like Tagg, but in public anyway, it seems that conservatives have become particularly vehement in defending inequality since the meltdown of 2008, insisting that in America, there is no such thing as privilege, money comes only from merit, wealth is a sign of virtue, and if we raise taxes a smidge on those at the top of the income ladder, we’re only “punishing success.” Repeat that to yourself and others often enough, and you can easily come to believe that we really do have equality of opportunity. But true equality of opportunity is actually nearly as radical an idea as equality of outcome. True equality of opportunity would mean that every public school would be equally good, for instance. But of course they aren’t—people with means move to towns with good schools precisely so they can give their kids more opportunity than other kids get.
There are a thousand ways in which wealth determines the opportunities available to you, in large part by making things easy. Yes, if you’re a poor kid being raised by a single parent who never finished high school, you can get to Harvard. But you’re going to have to be one in a million. It’s going to take extraordinary spirit, determination, and luck for you to make it. I’m sure Tagg Romney is a fine fellow, but the truth is that even if he was a lazy dolt he’d still do well. He went to the best schools, his parents gave him all kinds of enriching experiences, and he never had to worry about much of anything. He wasn’t going to get pulled out of college and have to take a job if one of his parents got sick. When he decided this private equity thing looked interesting, there was an escalator waiting, and all he had to do was hop on. That’s opportunity.
So when conservatives begin arguing that we don’t want equality of outcome, just equality of opportunity, look closely at what it is they’re arguing against. More often than not it’s the most modest of efforts to make things a just a bit easier for people who aren’t at the top. Not a full scholarship to an Ivy League school, just some student loans you’ll have to pay back. Not free nose jobs, just a guarantee of health insurance, so you know you won’t lose your home if you get sick. Not enough money to buy that Cadillac, just a minimum wage high enough that you’ll be able to feed your family. Not anything like real equality of opportunity, in other words. But even that is too much.
By: Paul Waldman, The American Prospect, May 1, 2012
“A Horrifying Worldview”: The Endless Arrogance Of Wall Street
The super wealthy apparently believe that they deserve constant deference.
Greg Sargent is rightfully stunned by the entitled petulance of Wall Street bankers who are shocked—shocked—that President Obama would do anything other than praise their indispensable brilliance:
Wall Streeters are so upset about Obama’s harsh populist rhetoric that they privately called on him to make amends with a big speech — like his oration on race — designed to heal the wounds of class warfare in this country. […]
Of course, their exaggerated weariness notwithstanding, the “wounds of class warfare” haven’t been borne by Wall Streeters, who remain fabulously wealthy even after causing the worst downturn since the Great Depression. If there’s anyone waging class warfare, it’s the radicalized representatives of the rich, who have successfully engineered government to enhance their wealth at the cost of our shared responsibilities. As such, the actual victims of class warfare are the ordinary Americans who face stagnant wages, rising costs, and a tattered safety net.
After going through the insanity of Wall Street complaints, Sargent ends his post on this note:
One wonders if there is anything Obama could say to make these people happy, short of declaring that rampant inequality is a good thing, in that it affirms the talent and industriousness of the deserving super rich. It certainly seems clear that they won’t be satisfied until he stops mentioning it at all. [Emphasis mine]
If you think the bolded section is an exaggeration, you should take some time to read Adam Davidson’s New York Times profile of Edward Conard, a former partner at Bain Capital—Mitt Romney’s investment fund—who now works as an apologist for the ultrawealthy. Conard believes three things. First, that millionaires and billionaires earned every penny of their wealth through merit and hard work:
God didn’t create the universe so that talented people would be happy,” he said. “It’s not beautiful. It’s hard work. It’s responsibility and deadlines, working till 11 o’clock at night when you want to watch your baby and be with your wife. It’s not serenity and beauty.”
Second, that immense wealth is the just reward for any and all risk taking:
“It’s not like the current payoff is motivating everybody to take risks,” he said. “We need twice as many people. When I look around, I see a world of unrealized opportunities for improvements, an abundance of talented people able to take the risks necessary to make improvements but a shortage of people and investors willing to take those risks. That doesn’t indicate to me that risk takers, as a whole, are overpaid. Quite the opposite.” The wealth concentrated at the top should be twice as large, he said.
And finally, that extraordinary income inequality is a net plus for society. Those who use their wealth for charity, Conard argues, are depriving the world of investment and gain:
During one conversation, he expressed anger over the praise that Warren Buffett has received for pledging billions of his fortune to charity. It was no sacrifice, Conard argued; Buffett still has plenty left over to lead his normal quality of life. By taking billions out of productive investment, he was depriving the middle class of the potential of its 20-to–1 benefits. If anyone was sacrificing, it was those people. “Quit taking a victory lap,” he said, referring to Buffett. “That money was for the middle class.”
For those of us who don’t see wealth as the ultimate end, who see value in other, non-monetary pursuits, and who understand the power of chance and fortune, this is a horrifying worldview. Conard seems oblivious to the fact that there are people who work hard—punishing their bodies with physical labor—in order to scrap by with the basics of life. It’s not that these people are lazy, it’s that they didn’t win the cosmic dice game that put them in a position to reach the heights of American society.
There is a disturbing corollary to Conard’s worldview, that he expresses in his conversation with Davidson—if the wealthy are supremely virtuous for their pursuit of wealth, then those who reject that choice—regardless of what they do—are unworthy of our respect or admiration:
Conard, who occasionally flashed a mean streak during our talks, started calling the group “art-history majors,” his derisive term for pretty much anyone who was lucky enough to be born with the talent and opportunity to join the risk-taking, innovation-hunting mechanism but who chose instead a less competitive life.
Given their friendship and close connections, one thing to consider is whether Mitt Romney holds views close to Conard’s. Judging from his domestic policy plans—huge income tax cuts for the wealthiest Americans, combined with tax cuts on investment income, and a dramatic reduction in social services—the obvious answer is yes, of course he does. And indeed, at the end of his profile, Adam Davidson offers the strong suggestion that Romney’s thinking has more in common with his friend than it does with any of us.
BY: Jamelle Bouie, The American Prospect, May 2, 2012
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