Tag Archives: government

What If? What Then?

Let me start this post with a caveat: I am not an economist. I don’t play one on TV. At most, I’m a reasonably well-informed consumer of economic news.

That news, however, is troubling. Following the various indicators could give you whiplash–housing may be recovering, but unemployment claims are up. No, unemployment claims are down, job creation’s up, but retail is down. No, retail is up this month, but…Well, you get the point.  If the economy were a car, it would be stuck in low gear.

There are as many theories about what ails the American economy as there are pundits and candidates for office. It’s too much government spending or not enough stimulus or the meltdown in the EU or GOP efforts to win the Presidency by delaying the recovery. And all of these  analyses clearly point to contributing factors.

But what if what we are seeing is the start of a long-predicted “structural change” brought about by technology? What if Europe calms down and we get past November only to discover that employment still doesn’t return to previous levels? And since I’m playing “what if” here, what if instead of the toxic political finger-pointing and infantile blaming that characterizes our current politics, we had a serious discussion about the appropriate response to that structural change?

Persistent high unemployment would present a huge challenge to social stability and economic health. Fewer people with money to spend would depress markets; more people needing social welfare support would stress the federal budget and make it more difficult to reduce the deficit. The existence of a persistent underclass would generate resentments and social unrest at a level that would dwarf today’s Occupy movement.

It seems to me–again, an admitted economic amateur–that such a scenario would require government to become an employer of last resort. Surely, hiring people to mow parks, clean streets, assist in classrooms and do similar jobs would be preferable to welfare, both for those being employed and society at large. The tasks being performed would improve the quality of life in our cities and towns, and productive employment would provide people with both self-respect and money to spend in the market.

Right now, of course, the rhetoric is all about heading in the opposite direction: laying off even badly needed government workers and pooh-poohing their value. If we are seeing the start of structural change, it’s going to be awfully hard to turn that tanker around.

Comments

Loss of Trust

In 2009, I wrote a book titled Distrust, American Style in which I argued that a loss of trust in our social institutions–and especially in our government–has had significant negative consequences for our ability to function as a productive society.

Things haven’t improved since 2009. If anything, our levels of distrust have continued to grow, and for good reason.

A couple of days ago, major news outlets reported the emergence of a legal memorandum generated during the George W. Bush Administration. There was evidence that the Administration had attempted to destroy all copies, for obvious reasons: the memorandum opined that the “enhanced interrogation” techniques being employed and defended by the Bush Administration were war crimes. Whether one agrees with that assessment or with the more accommodating analysis provided by John Yoo, it is clear that the White House was aware that their actions raised significant legal and constitutional issues, and that it was prepared to ignore both those issues and the rule of law.

It would be comforting to conclude that such actions were confined to one rogue Administration, or at least to the federal level, but evidence suggests otherwise; in fact, there has been a rash of disclosures of local-level prosecutorial misconduct recently.  In Illinois, a recent investigation of the criminal justice system uncovered evidence that–among other improprieties–prosecutors had failed to turn over documents in their possession proving that a man convicted of double murder in 1992 could not possibly have committed the crime he was accused of — because he was in police custody at the time. (But the police managed to get him to sign a confession. It is estimated that some 25% of criminal confessions are extracted from people who are actually innocent of the crime to which they confess–another rather disturbing bit of data.)

Add to such unsettling disclosures the constant drum-beat reporting corporate misdeeds, and the pervasive belief that wealthy individuals are able to “game the system” in their favor–able to buy favorable tax treatment, able to escape regulation, able to evade the consequences of predatory behaviors, able to elect public officials that will do their bidding–and you get a level of cynicism that undermines social cohesiveness and our ability to come together to address the issues that face us.

When people no longer trust our governing institutions, it is easy to sell them conspiracy theories. It is easy to turn groups against each other. (Want evidence? Look at the recent disclosures about the tactics employed by the National Organization for Marriage!)

We can’t rebuild trust by wishing it back. It will take a national effort to insure that our institutions are trustworthy–beginning with government. Because if we don’t trust our common institutions–government, yes, but also the church, major league sports, businesses and financial institutions, none of which have exactly covered themselves with glory lately–we certainly aren’t going to trust each other.

Comments

Pollyanna versus Gloomy Gus

Since I so often fill this space with depressing observations, I’m going to begin this week by indulging my inner Pollyanna.

My (non-scientific) theory is that the rash of efforts we are seeing around the country to break the backs of unions, ensconce anti-gay laws in state constitutions, and weaken government oversight of everything from financial institutions (the “banksters”) to the environment are motivated by a recognition on the part of the proponents of these measures that their window of opportunity to get the job done is fast closing.

It remains important to explain what is wrong and troubling about all of these assaults. (There is a very  good, very clear analysis of RTW here, for example.) But those of us who are astonished by the vitriol with which many of these measures are being pursued need to recognize that the sense of urgency being displayed by their proponents reflects a genuine reality: the culture is changing and they know it.

Bashing gays and union members, dismissing environmental concerns as evidence of “tree-hugging,” and characterizing all government action as “socialism” won’t have much traction in the America that is emerging.

I just wish it would emerge a bit faster.

Reaganism Triumphant

This morning, I made my usual mistake, and listened to the news.

The protests in Wisconsin–and to a lesser extent, Ohio–triggered by efforts to blame fiscal shortages on people who work for government. A story about a southern town that has stopped making pension payments to retired police officers and firefighters, because the town “ran out of money.” Various congresspersons of the Republican persuasion demanding ever-more draconian cuts in social programs we can no longer “afford” (while failing to explain why we can still afford all manner of military expenditures, including the Pentagon’s practice of sponsoring NASCAR races). You all know the drill–it’s drearily familiar.

So here’s my question: why, in all of these discussions, do we never hear anyone suggest raising taxes?

Now, I will grant that taxes can be a double-edged sword: depending upon who and what we tax, we can cause economic distortions. Tax policies can provide perverse incentives, or reduce incentives for behaviors we want to encourage. But that recognition hardly justifies taking taxes off the table, and that seems to be what we’ve done. Taxes have become a dirty word, rather than a revenue source.

The result is that we are strangling government’s ability to invest in the future of the country. When governors refuse federal dollars to built high-speed rail, they are not only refusing to create temporary construction jobs, they are ensuring that America will be less competitive for a generation. When they choose to “balance” budgets on the backs of pensioners and public servants, they are opting to weaken government’s ability to provide services and undermining the public’s trust in that government.

Ronald Reagan famously said that government is the problem, not the solution. Then he set in motion a political ideology that embraced a very selective version of Reagan’s Presidency and made that statement into a self-fulfilling prophecy.

Those who subscribe to “Reaganism” conveniently forget that even the Gipper raised taxes when necessary.

Comments