“Real Vs. Republican Populism”: How To Win The War On Inequality
So Republicans are going populist, or at least two of them are, reports The Daily Beast’s Patricia Murphy. And perhaps it’s only in the sense that unlike Mitt Romney and many in the House GOP, they’re not speaking of working people with contempt. Well, it’s a start. But I wish they’d pick up copies of Thomas Piketty’s Capital in the Twenty-First Century. Oh, of course Ted Cruz and Rand Paul would find ways to pooh-pooh the book’s findings and conclusions, but it’s nice to think of them merely having to immerse themselves in empirical reality for a few hours instead of the magical economic fairy tales that undoubtedly constitute their usual diet.
If you’ve not heard of Piketty or Capital, it’s certainly the economic book of the year, and probably of the decade so far. (You can read Paul Krugman’s rave in The New York Review of Books here.) I admit I’ve only waded into it so far, but I went to see the author, a French economist, speak at the Economic Policy Institute in Washington to a room full of people who braved a hideous, monsoon-ish rain Tuesday morning. (The video of the event is here.) What Piketty has done, my economist friends tell me, is nothing short of revolutionary and deserves to change the way we think about wealth and inequality. Much more important, it also deserves to alter what we do about them.
Here’s the story in a ridiculously small nutshell. Thirty scholars collected data from 20 countries over about 100 years. Piketty pored over the data trying to pinpoint salient reasons for our insane levels pf income inequality, which is worse in the United States, where the richest 1 percent own nearly 40 percent of the wealth, than in most other advanced countries but hardly endemic to America.
The one key: In all times and places under study, the rate of return on capital increases at a faster rate than general economic growth. Growth averages 1, 1.5 percent. Rate of return averages 4 or 5 percent. So presto, the people with the capital—money and assets of all kinds, land and equipment and what have you—are getting richer a lot faster than the rest of us. And as Nobel Prize-winning economist Robert Solow, a panelist at the event, pointed out: “Note that this is not a market failure.” This disparity (r > g, in wonk-speak) is a feature, not a bug, as they say, and it’s just our fate, and on and on it shall go, as the rivers roll to the sea.
And is there anything we can do to mitigate this? Three things, said panelist Josh Bivens of the Economic Policy Institute: 1) Make sure more people enjoy more access to r; 2) raise g; 3) lower r.
Now, if you are reasonably conversant in our economic debates, you already have some idea of what all this means. It means what Cruz and Paul would call “socialism” and what I would call “the kinds of reasonable, worker-focused economic policies this country had for about 40 years that were, on balance, the best years this country ever had.” We had large-scale public investment, near full employment at times, a more heavily unionized work force, a minimum wage that until 1968 kept pace with productivity, a more progressive tax system, a much more heavily regulated financial sector in which banks couldn’t gamble against themselves, and all the rest. Even with all these measures in place, r still grew faster than g, but not the way it does in today’s America.
In other words, Piketty makes the case that inequality will just grow and grow unless societies take affirmative steps to reduce the gap between the rate of return on capital and overall economic growth. The problem is the old one: In our present political climate, there’s not a chance of that happening.
As I sat there Tuesday morning, I kept wondering to myself: Is there any way a politician, a presidential candidate, can turn these concepts into plain English, something that can capture people’s imaginations—an answer to the right’s vacuous “a rising tide lifts all boats,” but which happens to have the benefit of being true? We now have ample evidence that the “rising tide” of the better part of the last 30 years has not lifted all boats. The ocean liners are getting farther and farther away from the pack.
I think there must be a way, but before we ponder that question, we first have to wonder whether the presidential candidate I have in mind (it’s not Cruz or Paul) even believes all this. I think she does, or most of it. But this is class politics—not “class warfare,” just class politics—and that hasn’t exactly been Hillary Clinton’s game over the years. The great question looming over her expected campaign is the extent to which she’ll address the inequality crisis head on.
Given the 1 percent’s ownership of our political system these days, we’re probably stuck with living out this crisis for a very long time, until even the 1 percenters are finally forced to agree that something has to be done. We seem a long way away from that. But things do change sometimes. “In 1910 in America, everybody would have said a progressive income tax was impossible,” Piketty said Tuesday. “It could not be permissible under the Constitution, and so forth. But, you know, things happen.” Three years later, we had one. So it’s not impossible. And if trickle-down could start on a dinner napkin, surely the process of reversing its malignant effects can start with a book.
By: Michael Tomasky, The Daily Beast, April 16, 2014
“Aligned Agenda’s”: The Tea Party and Wall Street Might Not Be Best Friends Forever, But They Are For Now
“Our problem today was not caused by a lack of business and banking regulations,” argued Ron Paul in his 2009 manifesto End the Fed, which outlined a theory of the financial crisis that only implicated government policy and the Federal Reserve, while mocking the idea that Wall Street’s financial engineering and derivatives played any role. “The only regulations lacking were the ones that should have been placed on the government officials who ran roughshod over the people and the Constitution.”
There seems to be some confusion about the relationship between the Tea Party and Wall Street. New York magazine’s Jonathan Chait says the two “are friends after all,” while the Washington Examiner‘s Tim Carney insists that the Tea Party has loosened the business lobby’s “grip on the GOP.” So let’s make this clear: The Tea Party agenda is currently aligned with the Wall Street agenda.
The Tea Party’s theory of the financial crisis has absolved Wall Street completely. Instead, the crisis is interpreted according to two pillars of reactionary thought: that the government is a fundamentally corrupt enterprise trying to give undeserving people free stuff, and that hard money should rule the day. This will have major consequences for the future of reform, should the GOP take the Senate this fall.
On the Hill, it’s hard to find where the Tea Party and Wall Street disagree. Tea Party senators like Mike Lee, Rand Paul, and Ted Cruz, plus conservative senators like David Vitter, have rallied around a one-line bill repealing the entirety of Dodd-Frank and replacing it with nothing. In the House, Republicans are attacking new derivatives regulations, all the activities of the Consumer Financial Protection Bureau, the existence of the Volcker Rule, and the ability of the FDIC to wind down a major financial institution, while relentlessly attacking strong regulators and cutting regulatory funding. This is Wall Street’s wet dream of a policy agenda.
Note the lack of any Republican counter-proposal or framework. The few that have been suggested, such as David Camp’s bank tax or Vitter’s higher capital requirements have gotten no additional support from the right. House Republicans attacked Camp’s plan publicly, and Vitter’s bill lost one of its only two other Republican supporters immediately after it was announced. So why is there a lack of an agenda? Because the Tea Party thinks that Wall Street has done nothing wrong.
The story of the crisis, according to the right, goes like this: The Community Reinvestment Act and other government regulations forced banks into making subprime loans, and the “affordability goals” of government-sponsored enterprises made the rest of the subprime that crashed the economy. The Federal Reserve pumped a credit bubble, as it always does when it tries to push against recessions. In other words, the financial crisis in 2008 was entirely a government creation, and could have been solved by just putting all the financial firms into bankruptcy. There’s no such problem as “shadow banking,” and to whatever extent Wall Street misbehaved, it was only the result of the moral hazard created by the assumption that there would be bailouts. Or as Senator Marco Rubio said in his 2013 State of the Union response, we suffered “a housing crisis created by reckless government policies.”
This narrative is an easy one to believe for people who distrust government, but it’s far from the facts. The CRA didn’t even cover the fly-by-night institutions making the vast majority of subprime loans. The GSEs lost market share during the housing bubble and subprime loans account for less than 5 percent of their losses. Low interest rates likely account for only a quarter of housing price shifts, and even then, low interest rates likely offset capital coming into the country from abroad.
The mainstream account of the crisis, as Dean Starkman pointed out in The New Republic, is that we’re all to blame—or, as Georgetown law professor Adam Levitin wrote in his recent survey of the crisis, that it was a “perfect storm.” Starkman argues that the Everyone-Is-To-Blame narrative is partially responsible for the lack of serious homeowner help in the Home Affordable Modification Program. As he demonstrates in his piece, “there’s a big and growing body of documentation about what happened as the financial system became incentivized to sell as many loans as possible on the most burdensome possible terms.”
The lack of any Republican policy on financial reform is the result of several factors. Mitt Romney thought it would be a liability to put forward his own agenda in 2012. By voting nearly unanimously against Dodd-Frank, Republicans were able to make this moderate, lukewarm response to the crisis look like a partisan takeover of finance (financial reform is hard and may not work, so all the better to have Democrats own the issue so they can be clubbed with it later). Rather than wage total war against Dodd-Frank through partisan outfits, the smartest minds on the right are weakening the law through law firms and K Street. And the conservative infrastructure has been solely focused on privatizing the GSEs completely.
This lack of policy has allowed the far right and Austrian School acolytes to occupy the intellectual space in the party. It’s the minority party for now, but all it takes is a few Senate seats changing hands before the Tea Party narrative becomes the prevailing one on the Hill—and nothing would delight Wall Street more.
By: Mike Konczal, The New Republic, March 21, 2014
“The Decline Of Conservative Publishing”: The Days Of Two-Bit Hacks With Anti-Liberal Screeds Getting On Bestseller Lists Are Over
As a liberal who has written a few books whose sales were, well let’s just say “modest” and leave it at that, I’ve always looked with envy at the system that helps conservatives sell lots and lots of books. The way it worked was that you wrote a book, and then you got immediately plugged into a promotion machine that all but guaranteed healthy sales. You’d go on a zillion conservative talk shows, be put in heavy rotation on Fox News, get featured by conservative book clubs, and even have conservative organizations buy thousands of copies of your books in bulk. If you were really lucky, that last item would push the book onto the bestseller lists, getting you even more attention.
It worked great, for the last 15 years or so. But McKay Coppins reports that the success of conservative publishing led to its own decline. As mainstream publishers saw the money being made by conservative houses like Regnery and the occasional breakthrough of books by people like Allan Bloom and Charles Murray, they decided to get into the act with right-leaning imprints of their own. But now, “Many of the same conservatives who cheered this strategy at the start now complain that it has isolated their movement’s writers from the mainstream marketplace of ideas, wreaked havoc on the economics of the industry, and diminished the overall quality of the work.”
I find that last part puzzling; it isn’t as though the anti-Clinton screeds of the 1990s were carefully researched and written with style, but that didn’t stop them from selling well. It seems as though this is mostly a reflection of the problems in the publishing industry as a whole. But one sub-niche that is definitely suffering is the pre-presidential-campaign book. Bizarrely, publishers still compete fervently to sign every last senator running a quixotic presidential campaign, on the off-chance that he might become president and then his book would sell spectacularly. But all but one of the candidates fails, and then the publishers have wasted their money. Just look at the pathetic sales some of these guys have generated:
For example, Tim Pawlenty, a short-lived presidential candidate in 2012, received an advance of around $340,000 for his 2010 book Courage to Stand. But the book went on to sell only 11,689 copies, according to Nielsen Bookscan, which tracks most, but not all, bookstore sales. What’s more, Pawlenty’s political action committee bought at least 5,000 of those copies itself in a failed attempt to get it on the New York Times best-seller list, according to one person with knowledge of the strategy.
This pattern continues as you scan the works of recent and prospective Republican presidential candidates. According to one knowledgeable source, Wisconsin Gov. Scott Walker received an even larger advance than Pawlenty’s, and Bookscan has his 2013 book Unintimidated selling around 16,000 copies. Sen. Rand Paul’s latest, Government Bullies, has barely cracked 10,000 sold; and despite spending months in the 2012 GOP primaries, Rick Santorum’s book about the founding fathers, American Patriots, sold just 6,538 copies. Perhaps most surprising, Immigration Wars, co-authored by Jeb Bush, the former Florida governor who consistently polls in the top tier of the Republican 2016 field, sold just 4,599 copies.
Meanwhile, Marco Rubio’s 2012 autobiography, American Son, has sold around 36,000 copies — a figure one conservative agent described as “respectable,” before pointing out that Rubio received an astounding $800,000 advance, according to a financial disclosure. The publisher’s bet, he speculated, was that Rubio was going to be selected as Mitt Romney’s running mate. He wasn’t.
Frankly, I have trouble seeing why anyone would want to drop $26 on one of these books, because they’re uniformly awful, even if you really like the guy who “wrote” it. Yet when one after another of these books sells terribly, the publishers keep buying them. This is yet more evidence, in case anyone needed any, that publishers are terrible businesspeople.
By: Paul Waldman, Contributing Editor, The American Prospect, March 20, 2014
“Demographic Death Spiral”: 2014 May Be White Enough For The GOP, But What Comes Next?
Overshadowed amid Sarah Palin’s unique interpretation of Dr. Seuss, Wayne LaPierre’s overheated vision of America’s apocalyptic decline, and all of the other craziness at the 2014 Conservative Political Action Conference, Republican pollster Whit Ayres gave a fact-based presentation to the gathering of right-wing activists. What he said should terrify the GOP.
Ayres, whose firm counts the RNC, NRSC, NRCC, and several influential Republican politicians among its clients, appeared on a panel on Saturday to discuss electoral trends and the future of the GOP.
The slides from Ayres’ presentation, which are available on his firm’s website, reiterate something that many Republicans have long warned: America’s changing demographics leave the increasingly white GOP at risk of entering what Senator Lindsey Graham (R-SC) memorably described as a “demographic death spiral.”
In short, as the Republican pollster explained, the white proportion of the American electorate is declining at an alarming rate. Meanwhile, Republicans are performing much worse among non-white voter groups. If the party doesn’t change something — Ayres suggests immigration reform as a good place to start — it will cease to be viable in national elections.
One particular point in the presentation stood out, however. Turning to the midterm elections, Ayres declared to hearty applause that “we’ve got some good news: We’re going to have a great 2014. We’re going to hold the House, we’re going to pick up the Senate, it’s going to be a great 2014.”
“One of the reasons why,” he explained, “is that the percentage of whites in the electorate is about five points higher in the off-year elections.”
Perhaps Ayres — who, like most pollsters, does not have a spotless record when it comes to predicting elections — should remember what he said in 2012 before asserting that the whiteness of the midterm electorate will bring his party certain success in 2014. Back then, he explained his party’s failure to elect Mitt Romney as president by noting that “it is a mistake to place rosy assumptions on a likely electorate that are at variance — and substantial variance — with recent history.”
Democrats immediately called foul on the crowd’s warm reception to Ayres’ assertion.
“It says a lot that top Republicans believe that lower minority participation in the electoral process is something to celebrate. They know that when the electorate represents more Americans and more voices, they lose,” DNC Director of Voter Expansion Pratt Wiley said in a statement.
In fairness to Ayres, he made it perfectly clear that Republicans need to diversify their party, instead of relying on shrinking the electorate.
“Some people see it as a problem,” he said of America’s demographic shift. “I see it as a real opportunity.”
“Conservative values of free markets, and limited government, and low taxes, and good education, and reward for hard work appeal across all boundaries regardless of race, color, religion, or national origin,” Ayres argued. “Conservatives can be very successful in the new America if we reach out and adopt an inclusive tone, bring people into our coalition, and aggressively campaign in their communities.”
That theory sounds very good on paper — and very familiar. That’s because it’s almost identical to the RNC’s post-election “autopsy report,” which was released almost exactly one year ago. Back then, the RNC suggested that “if we want ethnic minority voters to support Republicans, we have to engage them, and show our sincerity.”
Indeed, one has to wonder whom Whit Ayres thought he could convince that America’s ascendant minority populations could be a positive development. Certainly not the white nationalist-led group manning an English-only booth at the conference. Or racial provocateur Ann Coulter, who used her CPAC speech to decry the “browning of America,” and warned that if immigration reform passes, “then we organize the death squads for the people who wrecked America.” Or the CPAC attendees who delivered a resounding victory in the conference’s presidential straw poll to Senator Rand Paul (R-KY), who has spoken out against the Civil Rights Act of 1964.
Ultimately, Ayres may be right, and the combination of a whiter electorate and a friendly electoral map could deliver a big win for the Republican Party in 2014. But it couldn’t be clearer that the GOP’s broader demographic problem hasn’t been solved — and in fact, it’s actually getting worse.
By: Henry Decker, The National Memo, March 11, 2014. Graph via Northstaropinion.com
“Batter Up”: GOP’s Whack A Mole Addiction
While the Republican presidential contenders were kumbaya-ing at CPAC, evidence continued to mount over which of them gets to suffer the embarrassment of winning 180 electoral votes. A USA Today poll found that 59 percent of respondents said they will or might vote for Clinton. It showed enormous improvements in personal qualities (Is she likeable? Is she honest?, etc.) since the first time she ran for president. Respondents even thought that she was six years younger than she actually is!
What the CPAC goings on tell us, combined with a burst of polls showing Clinton wiping out Chris Christie and just mopping the floor with Jeb Bush, is that as they face 2016, the Republicans are in a situation that has almost no precedent in the party’s modern history. In practically every nomination battle going back to Tom Dewey—I’m not even going to tell you the year, but trust me, that’s going back!—the Republicans have had a chalk candidate. The establishment guy, the early front-runner.
Dewey, Dewey, Eisenhower, Eisenhower, Nixon, Rockefeller, Nixon, Nixon, Ford, Reagan, Reagan, Bush Sr., Bush Sr., Dole, Bush Jr., Bush Jr., McCain, Romney. These were the establishment nominees. You could make a case for William Scranton instead of Rocky in ’64, and you might argue, I guess, that at the start of the 1968 cycle, it wasn’t Nixon but George Romney, although he imploded in the pretty early innings. And anyway, I’m not sure Romney ever led Nixon in the polls. So these were the GOP establishment choices. You’ll have noted that only one of the whole bunch of them, Nelson Rockefeller, failed to capture the nomination.
Today? No chalk horse. Wide open. Christie was, but clearly isn’t anymore (by the way, Clinton leads him by 10 points—in New Jersey). Those who think Jeb Bush can step in and play this role are going on name and history, but they obviously aren’t looking at the numbers—Ted Cruz and Mike Huckabee do just about as well against Clinton as Bush does. Establishment money might chase Bush if he got in, but there’s no evidence that votes would.
So this time it really could be almost anyone. The CPAC straw poll results suggest as much. It doesn’t mean much that Rand Paul won going away with 31 percent. He’s engineered to win CPAC straw polls. They’ll always overstate his support, although he is certainly among the front rank of aspirants right now. But look at the other numbers: Cruz, 11; Christie, 8; Rick Santorum, 7; Scott Walker, 7; Marco Rubio, 6. It’s a good bet that the nominee is going to be one of these people (counting Paul), and they’re packed in there pretty tight. That’s not a bad number for Rubio, whom the chattering classes have spent the last few weeks writing off (except Ross Douthat, who just yesterday suggested that a Rubio nomination was a distinct possibility.) I remember telling people in 2006 that I thought there was no way the GOP would nominate McCain in 2008, although I also said the opposite the following week.
It’s fascinating that this is happening at the precise time that the GOP establishment looks to be asserting control over the party at the congressional level. After two congressional election cycles during which the insurgent radicals started to take over, the establishment conservatives have said enough and started their own organizations to beat back Tea Party challenges to incumbents (the Times ran a good summary on this Sunday). The early sense is that for the most part, the establishment will succeed at this task. No more Christine O’Donnells on ballots. Most of the GOP incumbent senators being challenged from the right are probably going to end up winning their primaries. All those senators needed to see was what happened in Indiana in 2012, when the Tea Party wingnut beat the establishment Republican and then lost in the general, giving the state a Democratic senator even as Mitt Romney was beating Barack Obama there by 10 points, to conclude finally that they’d better clamp down on can’t-win-in-November extremism.
But it turns out they can’t contain it completely. It’s whack-a-mole, GOP style: They move to solve the problem at the congressional level, but lo and behold the mole pops up out of the presidential hole. If Christie is cleared, maybe matters will revert to normal. But even if he is cleared, he can’t turn back time; his image just isn’t what it was and never will be. He is already not quite Dole/McCain/Romney, the troika calumniated as sellouts by Cruz at his CPAC speech last week.
And thus the odds are strong that the GOP, for only the second time since 1944, is going to nominate an anti-establishment insurgent. Because, you know, they only lost in 2008 and 2012 because they failed to offer voters “a real choice.” Or so some of them say. So let them offer voters that choice. As they did in 1964, the voters will know what choice to make, and she’ll be a fine president.
By: Michael Tomasky, The Daily Beast, March 10, 2014
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