“Only Losers Out-Trump Trump”: Trump’s Supporters Have An Intuition That Something Is Deeply Wrong In Their Party
The Fox News debate this week ought to be an occasion for the Republican Party’s presidential candidates to put new and innovative ideas on display. At the center of the discussion should be Friday’s report about the historically anemic wage growth during this year’s second quarter.
Here’s guessing that the previous paragraph called forth dismissive chuckles among many shrewd readers for its naivete. We all “know” that the only important thing about Thursday’s encounter — other than which 10 candidates get to participate — is how the rest of the Republican field will deal with Donald Trump, and how The Donald will deal with them.
Many would blame this on Trump and also on the nature of journalism these days.
Well, sure. Trump has a lot to answer for. His defense Sunday on ABC News’s “This Week” of his statement that the United States “would not elect another black president for generations” because President Obama had set “a very poor standard” was astonishing in its outrageousness — even by Trump’s standard.
And the media tend to analyze debates by focusing on gaffes and on whether a given candidate “did what he (or she) had to do” in political terms. This conditions how the candidates behave.
I would further concede that the mere inclusion of Trump’s name here likely increased my online page views. The media incentives these days militate against searching discussions of the Earned Income Tax Credit or methods of prompting investors to take a long-term perspective.
But before they take the stage, the Republican candidates who get to confront Trump should ask themselves why a showman who gleefully ignores all the political rules is outshining the rest of the field.
There are many reasons to criticize the far right and what it has done to the GOP, with the complicity of its so-called establishment. But it’s both remarkably elitist and an analytical mistake to write off Trump’s backers as “crazies” while ignoring the source of their frustrations. They tend to be less well-to-do Republicans who are fed up with the political system, dislike the codes and conventions that dictate the way most politicians talk and have lost confidence that politics and government can really do very much for them.
That Trump is quite brilliant at faking authenticity (except for his thoroughly genuine belief that he’s far better than his opponents whom he loves to brand as “losers”) should not be held against his supporters. It’s not hard to see why they get a kick out of the extent to which he is getting under the skin of his many critics.
If Trump’s rivals see their task as proving themselves to be as theatrically gifted as he is, he’ll clobber them. But there’s an unconventional alternative: lifting up politics by embracing the idea that voters, especially those being hammered by the economy, aren’t dunces and would like for their government and their politicians to take concrete steps to improve their situations. This is especially important in a new economy that simply doesn’t deliver to large parts of the middle class, let alone the poor.
As it is, there is a terribly stale quality to the pronouncements even of candidates such as Jeb Bush and Marco Rubio who are bidding to be the “new ideas” guys. While both at least talk about the need to restore paths to upward mobility, their underlying proposals remain rooted in the thinking of the Reagan era. Unwrap their well-packaged agendas and what you have are the same old nostrums: that government can do little about what ails us and that the path to nirvana is still paved with tax cuts and business deregulation.
But as progressive economist Joseph Stiglitz noted to me in a conversation last week, it’s precisely the rules and policies of the past 35 to 40 years that have helped lead the middle class into its current economic impasse. I don’t expect many conservatives to embrace Stiglitz’s views. But it would surely be an improvement if these candidates recognized that they are running in 2015, not 1980.
Is there no Republican engaging in a real — as opposed to superficial — questioning of the party’s old assumptions? Is there not even a glimmer of acknowledgment that if stagnating wages are the problem, further tilting the system toward employers and financiers is unlikely to solve it?
Trump’s supporters have an intuition that something is deeply wrong in their party. Their explanations for its shortcomings may differ from my own, but they are correct that the party is not delivering what they have a right to expect. Most candidates will play along with the disaffection. Those who try instead to reverse the loss of faith by responding to it constructively will deserve to win the debate.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, August 3, 2013
“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
“Thoughtful And Forward-Looking Policymaking”: Why The 2016 Candidates Ignore The Sharing Economy At Their Own Peril
Before Hillary Clinton gave her big economic speech on Monday, a rumor spread through the tech journalism world: Clinton was about to attack Uber! Based on a passing mention in a Politico article previewing the speech, tech sites played up the rhetorical blitzkrieg to come. “Presidential candidate Hillary Clinton will blast contractor-fueled companies for repressing middle-class wage growth,” said Techcruch. Even after she delivered the speech and there was no actual attack on Uber, articles continued to describe her anodyne remarks about the rise of the sharing economy as a “blast,” a “diss,” and even a declaration of war.
As it happens, Clinton raises an issue that more presidential candidates ought to talk about. We don’t yet have much idea of what she would actually do about the transformations in the economy that are taking place, but we ought to press her and the other presidential candidates, Democratic and Republican, for more specifics.
For the record, here’s what Clinton actually said on this topic, in its entirety:
Meanwhile, many Americans are making extra money renting out a small room, designing websites, selling products they design themselves at home, or even driving their own car. This on-demand, or so-called gig economy is creating exciting economies and unleashing innovation. But it is also raising hard questions about workplace protections and what a good job will look like in the future.
Seldom have I witnessed a political attack of such merciless cruelty.
But here’s the point: In many ways, public policy on the workplace is organized around the way things used to be, when people hoped that they could stay with one employer for their entire career, and that employer would provide them a panoply of benefits including health insurance, paid vacations, and a pension. Today, more and more Americans are cobbling together a living from multiple sources. And even many who aren’t working for a technology-based company like Uber are doing hourly work that makes scheduling their lives exceedingly difficult and doesn’t come with any benefits at all.
Depending on what sort of situation you can put together, it’s possible for that kind of work to offer more rewards than the traditional 9-to-5 job. But for millions, the contemporary American workplace is characterized by insecurity: insecurity that they’ll have enough work this month to pay their bills, insecurity that they’ll be able to put anything away for retirement, insecurity that an illness or family crisis won’t send them into a financial tailspin from which they can’t recover.
So what can government do? Up until now, Democrats have been offering piecemeal proposals that try to ameliorate that insecurity from one angle or another, trying to get people better wages and treatment. All Democrats want to increase the minimum wage. The Obama administration is updating the rules on overtime so more workers can be paid adequately for the extra hours they work. The Affordable Care Act finally made health insurance at least somewhat portable, so that “job lock” — in which you can’t leave your job for fear that you won’t be able to get covered — is a thing of the past. They’re now pushing for mandatory paid sick leave. But most measures like these concern how traditional workers relate to traditional employers.
Republicans, on the other hand, generally look at the state of the workplace today and say, “What’s the problem?” They oppose raising the minimum wage, objected to updating the overtime rules, don’t want employers to have to offer paid sick leave, and of course find the ACA to be a Stalinist nightmare of oppression. They love to fetishize Uber because it fights with entrenched taxi unions (and because they hope it will make them seem young and hip), but don’t have any particular ideas to help workers adapt to the new world.
There are ideas out there; for instance, Nick Hanauer and David Rolf recently proposed that the government create a Shared Security Account that would work something like Social Security, but provide a means to pay for things like vacations and sick leave. Critically, it wouldn’t be at the whim (or under the control) of anyone’s employer, but would travel with workers whether they worked for General Motors, waited tables at the local diner, or did odd jobs for TaskRabbit (I interviewed Hanauer about it here).
That’s just one idea, and hopefully people will come up with others. But we deserve a debate on how as a country we can adapt to the evolution of work in ways that both maximize the benefits of the changes that are taking place and minimize the number of people getting steamrolled by them. The economy needs innovation and disruption, but it also needs thoughtful and forward-looking policymaking. That may be a lot to expect from presidential candidates. But it doesn’t hurt for us to ask.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Week, July 15, 2015
“Hey, Middle Class; Hillary Gets It”: Linking The Concepts Of Fairness And Growth
Here’s one thing I’m sure of about the economic speech Hillary Clinton gave Monday morning at the New School: If a relatively unknown Democratic governor of Illinois or Michigan were running for president, and he gave the speech Hillary Clinton gave Monday morning at the New School, rank-and-file liberals would be turning rapturous cartwheels. She correctly identified the central economic problem of our time; she talked very clearly about the kinds of solutions she’d pursue to address it; she even tossed a few threats in Wall Street’s direction.
The problem is the wages of middle-class workers. The solutions are varied but boil down to a range of policies that would do two things: one, give corporations incentives to share profits and think less about short-term profit-maximization; two, help middle-class families meet the life expenses (college tuition, day care, etc.) that have increased greatly over the last 20 years while wages have remained stagnant. And as to Wall Streeters who gamble with middle-class people’s money, she said, “We will prosecute individuals and firms” who do so. She used the word “criminal” in this context more than once.
My hypothetical governor giving exactly this speech would be showered with liberal praise. But Clinton says it, and it’s like so what. She faces too much distrust from liberals over her past centrism; and for the moment everybody’s all Bernie Bernie Bernie. And that’s all fine. Sanders is fun and sometimes exhilarating, and a primary contest needs a candidate who can speak the unvarnished truth.
But it’s the speakers of varnished truth who usually win presidential nominations, and Clinton is at least 90 percent likely to win this one. And as varnished truths go in Democratic presidential politics, Clinton’s are about as liberal as any liberal could reasonably hope for. There’s an art to taking it right up to line, but not an inch past, and she’s doing that.
One way of testing whether proposals have any ideological bite to them is to imagine whether anyone from the other party could put them forward. Everyone can and will say they want to help the middle class. But how? Jeb Bush says with 4 percent growth into infinity. First of all this is a big fat lie of a promise, and he’s surely smart enough to know he’s lying. From 1975 to 2014 (for 40 years), annual GDP growth in the United States averaged 2.79 percent, according to World Bank data (the stuff I used came in the form of an Excel spreadsheet, so there’s no URL, but Google something like “Real Historical Gross Domestic Product” and you’ll find it). So it doesn’t happen. The best years of sustained GDP growth we’ve ever had were under—yep—Bill Clinton, but even in the late 1990s, we had only four straight years of plus-4-percent growth, and that’s a modern record (there was a three-year run under Ronald Reagan from 1983-1985).
So it’s a lie, number one, but more importantly, it means nothing as a measure. No, actually, it means something, and what it means is toxic: It means that if we actually do experience growth at 4 percent but without taking any of the ameliorative measures Clinton is talking about, the main impact of that growth will be to give us more inequality, more wage stagnation, more corporate profit-hoarding, more stock buybacks, and more roulette-wheel banking. Bush’s is a flawed way of looking at the economy, and this is a very old point of contention between right and left; As Robert Kennedy once said, GDP “measures everything, in short, except that which makes life worthwhile.”
Clinton is talking about growth too, but she’s emphasizing equitable growth. And she puts forward numerous proposals that no Republican would touch, from raising the minimum wage—remember, Bush wants no federal minimum wage—to strengthening unions to offering paid family leave to cracking down on employers who misclassify workers as contractors to expanding on Dodd-Frank to endorsing the Buffett Rule, which applies a minimum effective tax rate of 30 percent on earners north of $1 million.
She left a lot of the details for later, and she was fuzzy here and there—she was noncommittal on trade, and it will be interesting to hear what “defending and enhancing” Social Security actually means.
But for now, it’s enough that she’s linking the concepts of fairness and growth and that she’s making that link the centerpiece of her economic agenda. This is important because until very recently, the economics profession hasn’t regarded fairness as anything it should care about. But that has begun to change. This was the big question in my mind last year as I contemplated Clinton’s candidacy last year. Believe me, I had no small amount of doubt about how aggressively she’d embrace the equitable growth proposition. I’d say she’s answered my questions. Last year, on her book tour, she pooh-poohed paid family leave. Now it’s a centerpiece of her platform.
It’s still going to take time for liberals to believe this, and of course some never will. This is where Clinton still has some work to do. When it comes to economics, liberals don’t really want to hear policy proposals. They want to hear FDR-style attacks on the economic royalists. This is not something Clinton is known for, to put it mildly. I don’t think anyone expects her to be Elizabeth Warren, but in her own way, she has to go there, especially when you consider that she might become the wealthiest president in modern times.
This, from the speech, started moving in that direction, and it’s the first time I recall her talking like this: “And while institutions have paid large fines and in some cases admitted guilt, too often it has seemed that the human beings responsible get off with limited consequences—or none at all, even when they’ve already pocketed the gains. This is wrong and, on my watch, it will change.”
Maybe if she keeps this up and the royalists start attacking her, and she stands her ground, the Warrenites will finally come around. In the meantime, liberals ought at least to recognize that the old cautious Hillary they have in their minds would never have gone this far this fast.
By: Michael Tomasky, The Daily Beast, July 14, 2015
“Bernie Sanders’ Presidential Run Really Matters. Here’s Why”: The More Attention He gets, The More Attention Economic Inequality Gets
Vermont senator Bernie Sanders is officially running for president, meaning that there will be at least two contestants in the Democratic race (after what’s been going on in the city where he was mayor for eight years, Martin O’Malley may be reconsidering). I am obligated by law to point out that Sanders’ chances of beating Hillary Clinton are slight, but the question many have already raised is what effect his candidacy will have on Clinton. Will it pull her to the left? Give her room to run to the right? Force her into missteps? It might do any of those things, or none of them.
But Sanders could actually cause more headaches for the Republicans running for president — if he succeeds on focusing the campaign on his area of interest.
To understand why, you first have to know that Sanders’ candidacy will be almost entirely about economic issues. Advocacy for the interests of what we might call the non-wealthy has always been at the top of Sanders’ agenda and at the heart of his political identity. That’s the reason he’s finally running now, at the tail end of a long career: the national debate has moved in his direction, with issues like wage stagnation and inequality now being brought up even by some conservatives.
But as far as Hillary Clinton is concerned, that’s just fine. Bernie Sanders isn’t going to pull her to the left, because she was already moving that way. She’s talking about issues like inequality and criminal justice reform in terms that she might not have used 10 or 20 years ago, and in some cases she’s actually taking positions that she wouldn’t have then. As Greg and I have argued, whether this evolution is sincere isn’t particularly relevant, because she’s reflecting the consensus within her party, and if she becomes president her actions will follow along. The reason she doesn’t have to be pulled to the left by Sanders, O’Malley, or anyone else is that the entire environment around these issues has changed. Talking about them in more liberal terms isn’t just good for her in the primaries, it’s good for her in the general election, too.
Nevertheless, Sanders’ presence will concentrate the debate even more on economic issues, because that’s most of what he’ll be stressing. Every bit of attention he gets will serve to keep the economic discussion at the forefront. And you know who isn’t so happy about that? The Republican candidates.
They’ll all have their economic plans, of course, and will be happy to tell you why they’re superior. But the current debate on the economy puts them at a disadvantage. They know that they’re at odds with the public on many economic issues, like the minimum wage, paid vacation time, or increasing taxes on the wealthy. Though they’ve begun to talk about inequality, it’s obvious that they haven’t quite figured out how to address the issue without running up against their traditional advocacy for things like cutting upper-income taxes and reducing regulations on corporations and Wall Street.
When Sanders says, “We need an economy that works for all of us and not just for a handful of billionaires,” few voters disagree. Republicans say they want that, too, but the fact that some specific billionaires like Sheldon Adelson and the Koch brothers are so eagerly bankrolling their campaigns makes it an awkward argument for them to make.
And Sanders will draw attention to the billionaires funding Republican campaigns: At his presser today, he was asked about donations to the Clinton Foundation, and he pushed back by asking: Where are the conflicts of interests when the Koch brothers are spending hundreds of millions to influence the outcome of the presidential race? In other words, Sanders won’t only attack Clinton on the money question; he’ll helpfully point out that GOP attacks on this are rather questionable, given their own funding sources.
The best outcome for Republicans is if the campaign revolves around other issues where they might find more support for their positions and they can more easily attack Hillary Clinton. The more attention Bernie Sanders gets, the more attention economic inequality gets, which is something Republicans would rather avoid.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line, The Washington Post, April 30, 2015
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