All posts by Sheila

When Debt is Investment

I recently ran across a very interesting report from the Brookings Institution, arguing for a “balance sheet” approach to fiscal policy. The basic argument, in “economic-ese” was

For a long-term balance-sheet approach to gain traction, politicians will have to drop the ideological biases that are distorting fiscal policy. Proponents of austerity currently use nominal debt figures to scare voters, even in countries with record-low interest rates and large private-sector profits that are not being channeled toward investment. To counter their arguments, opinion-makers should emphasize the expected long-term returns on incremental public investment, not with ideological arguments, but with concrete examples from various sectors in the recent past that have had reasonably good rate of returns.

In everyday English, author Kermal Dervis was arguing–among other things– that we need to distinguish between kinds of debt.

The mortgage on your house is debt. So is the credit-card balance from that shopping spree you indulged in. But the house is a long-term asset–the clothes you bought probably aren’t.

When we look at the books of a business, the purchase of more modern tools and machinery are an investment that will allow the business to earn more in the future (hence the saying “you have to spend money to make money”), while the CEO’s acquisition of a spiffy and expensive corporate jet is unlikely to improve the bottom line.

When we invest tax dollars in improved infrastructure or education, those investments generate future productivity and economic growth.

When we play games with the tax code to subsidize profitable businesses (with influential lobbyists), not so much.

All debt is not equal.

Remember the American Dream?

Watching Donald Trump trash immigrants and refer none-too-obliquely to people who are less fortunate as “losers”—all while wearing a hat emblazoned with the slogan “Make America Great Again”– is depressing me. The fact that he is currently leading the GOP pack deepens that depression considerably.

Let’s deconstruct the notion of American “greatness.” Contrary to Trump’s (and others’) dog whistles, to the extent that the country’s greatness was real, it wasn’t because those who ran the show were white Christians of European origin. It was because we offered people who had very little a chance to improve their condition.

When I was growing up, the accepted description of America was “land of opportunity.” It was commonly believed that the American Dream could be attained by anyone willing to work hard; social mobility was the name of the game.

Cynics will point out—accurately—that the promise often exceeded the reality, but there was and is value in the widespread belief that personal responsibility and hard work could pay off, if not for yourself, at least for your children.

Knowing that poverty isn’t necessarily permanent is hugely important in a capitalist system. Inequalities may be inevitable, but they need not be paralyzing, they need not engender the sorts of simmering resentments that lead to social unrest, if they are seen as temporary and (fairly or unfairly) a reflection of the effort and entrepreneurship of the individual rather than an inevitable aspect of the system.

We are beginning to see what happens when belief in the possibility of social mobility declines, when it becomes all-too-apparent that no matter how talented, diligent and industrious they may be, Americans can no longer work themselves into the middle class.

Thanks to short-sighted and mean-spirited public policies, such social mobility as previously characterized our economic system is largely a thing of the past.

In a column written a couple of years ago, Gail Collins put it bluntly:

“We have no bigger crisis as a nation than the class barrier. We’re near the bottom of the industrialized world when it comes to upward mobility. A child born to poor parents has a pathetic chance of growing up to be anything but poor. This isn’t the way things were supposed to be in the United States. But here we are.”

Social scientists have documented the characteristics of stable democracies–the attitudes and institutions that keep societies from erupting, that strengthen the social fabric rather than shred it. A perception that the government “plays fair” and a belief in opportunity for advancement–a belief that effort and diligence will be rewarded–are among them.

When poor people lose hope–when the belief in the possibility of bettering their condition disappears, and they face the fact that social mobility is rapidly becoming a myth and the American Dream is out of reach–they become people with nothing to lose.

And that’s dangerous.

Bernie Sanders is drawing huge crowds, because he is talking about inequality and fundamental fairness, and offering specific policy proposals to address systemic issues.

The Donald is drawing sizable crowds by pandering to the resentments of people who have been unable to realize their own American dreams–by telling them that their problems aren’t due to systemic inequities, but to nefarious “others” (immigrants, minorities, women).

Neither of them is likely to be the next President, but they are stark representations of the choice America faces, of the fork in our national road. We can choose nativism, civic unrest and continued decline, or we can do the hard but necessary work of restoring the social contract, repairing the social safety net and breathing new life into the American Dream.



If You Think Immigration is an Issue Now, Just Wait….

The Donald’s anti-immigration rhetoric and ridiculous “policy” prescriptions–discussed here yesterday–have highlighted the resentment and nativism with which far too many of us respond to newcomers to our shores. It’s embarrassing, but hardly unique to America. Just look at the recent international headlines, detailing Europe’s response to the hundreds of thousands of people fleeing violence and poverty in Africa and the Middle East.

In the wake of those mounting conflicts in Europe, the Brookings Institution considered not just the dislocations and social issues involved, but the reasons for human movement across political borders. (Hint: those reasons aren’t likely to abate.)

One “take away” from the lengthy and somewhat abstruse paper:

Consider the potential effects of the recent IPPCC projections of a 4 degree Celsius rise in temperature expected by the end of the 21st century in the absence of aggressive mitigation. Then agricultural lands would be displaced by 1,000 km from the equator and sea level would rise another 70 centimeters by the end of the century, or about 3.5 times the rise in sea level over the past 150 years. This would put in jeopardy the 44 percent of world population currently living within 150 km from the coastline. Abstracting from other likely disastrous side effects (acidification of oceans, loss of biodiversity, possibility of life collapse), can we adapt to such changes? Since 72 percent of the population and 90 percent of world GDP is located on 10 percent of the Earth’s land, there is ample room for people to move if they are allowed to.

Translation: climate change is going to motivate massive movements of people across the globe. We can accommodate that movement physically, but unless something changes current highly protective attitudes about national sovereignty–unless we rethink the reflexive tribalism that currently motivates policies about immigration– political accommodation and assimilation will be much more difficult.

You’ve REALLY Got to Hate Brown People….

Politico recently calculated the cost of Donald Trump’s oh-so-realistic immigration plan. It came to 166 Billion dollars. (Billion with a B.)

I guess when you’re rich and delusional, a billion here and there isn’t daunting, but really– are the Republicans who are cheering Trump on really prepared to pay that much money to deport the people who–among other things– are picking their vegetables?

Here’s Politico’s breakdown– the price tag for each of Trump’s immigration policies:

• Mass deportation: $141.3 billion
• Triple the number of Immigration and Customs Enforcement (ICE) officers: $8.4 billion per year
• Building the wall: At least $5.1 billion (not including yearly maintenance)
• Nationwide E-Verify system: $2.15 billion
• Visa-tracking system: $7 billion
• Mandatory detention: $1.7 billion

These are just the cash outlays; the total doesn’t include the higher prices of produce and other economic “hits” to an economy that depends much more on the exploitation of undocumented workers than we–or The Donald– like to admit.

This is only one of Trump’s spectacularly stupid positions, of course.

Although it is really difficult to choose a favorite idiocy (and increasingly difficult to distinguish satire from reality), my favorite to date has to be this gem, uttered during an interview with Bill O’Reilly (who, next to Trump, actually looked reasonable): in a discussion of the Fourteenth Amendment provision granting “birthright citizenship” to children born in the U.S., Trump said that the Fourteenth Amendment “would never hold up in court.”

Putting aside the obvious–Trump doesn’t understand the difference between a Constitutional provision and a statute (or the operation of the American legal system, with the exception of bankruptcy law)–this effort by nativists to eliminate birthright citizenship has been embraced by a number of Republicans. Including Indiana Governor Mike Pence when he was in Congress.

A recent interview with WRTV included discussion of Pence’s sponsorship of the “Birthright Citizenship Act of 2009,” a bill to “redefine” birthright citizenship to prevent children born in the U.S. of immigrant parents from being considered citizens. (Fortunately, like virtually everything then-Congressman Pence sponsored during his tenure in Congress, the bill went nowhere.) Most Hoosiers had been unaware of Pence’s assault on that part of the 14th Amendment until Trump’s antics focused attention on the issue.

As for Trump–I don’t object to the spectacle of an yet another un-self-aware, self-aggrandizing, self-parodying jerk running for President. What freaks me out is that this one is currently leading the GOP pack.

An “Extra Long” Campaign…”

Okay–I am seriously considering a move to Canada.

A good friend who recently vacationed in Vancouver thoughtfully brought me a copy of the Vancouver Sun. The paper was thick with news and commentary, making me nostalgic for the days when we, too, had a real newspaper, but that wasn’t the reason for the gift.

The reason was the headline–first page, above the fold: “Long campaign officially on.”

Long, in Canada, is eleven weeks. Actually, that is “extra long”–an opinion piece in the same paper was titled “Harper bets extra-long campaign will favor Tories.” A few lines are illuminating:

With the longest federal election campaign in our modern history now grinding into motion, despite the electorate being mostly still in flip-flop and barbecue mode…

Harper’s decision to opt for more than twice the minimum 37-day length for a campaign held hints for what’s ahead….

Saturation media, especially web video, de facto makes this more a popularity contest than any previous election in our history…

Contrast that to the nonstop coverage of an American election that is fourteen months away. Here in the US of A, we are already being “saturated” with reports from the Iowa State Fair and the results of New Hampshire polls; partisans are already training their guns on opponents and digging for scandals. Obscenely rich power brokers are launching SuperPacs and spending unthinkable amounts of money to elect people who will preserve their government subsidies and tax loopholes.

And unless we can crawl into a cave somewhere, we won’t be able to escape any of it.

It is highly unlikely that the additional year of campaigning will make us a more deliberate or informed electorate than Canada’s. It’s more likely to make us crazier.

Canada has universal healthcare, great public transportation and short election campaigns. Sounds like heaven to me…