The intense interest that folks have taken in this blog for the last few weeks has convinced me that people want to hear from a variety of progressive voices. To that end, today’s post is by economist Marcellus Andrews,* from whose writing I always learn and whose critical voice gives me hope. Here are his thoughts on the economic future of US society during this year of the presidential election.
Department of Economics, Barnard College
The Republican presidential primary has been an entertaining, if ultimately baffling carnival from the perspective of an economist. What we are witnessing is the collapse of conservatism as the governing principle of public life in the United States. It is collapsing under the pressure of economic panic – the collapse of the housing market, high and sustained long-term unemployment, falling real wages for most American workers, and the greatest degree of economic inequality in a century, among others. This panic — born of the self-destruction of the Reagan program that led directly to the Lesser Depression of 2007-2009 and its aftermath has inspired the return of the racist and xenophobic politics of the 1990’s associated with the Republican capture of Congress [Nobel laureate Joseph Stiglitz has provided a superb, if depressing, analysis of how the Reagan program led directly to the crisis in a number of places, including his regular column, Unconventional Economic Wisdom]. Newt Gingrich’s heated rhetoric about Obama as the “food stamp” president are the sullen insults of a failed political movement that has disgraced itself and ruined the nation. Though Gingrich, with Bill Clinton’s help, ended “welfare as we know it” in the 1990’s, the political reflex of blaming the black and poor for the nation’s woes is always a sure way to win the votes of a portion of the Republican electorate, as demonstrated this past weekend in the South Carolina primary.
The collapse of the Reagan program means that the older white population of the US, which owns most of the nation’s wealth and forms the core of the Republican Party, has benefited from policies that threaten to cripple the American future. But rather than think seriously about how to rebuild middle class capitalism in America – albeit along conservative lines – the Right has opted to double down on Reaganism and revisit all the old racist rants. Thomas Byrne Edsall’s reporting on the racial conflicts at the heart of conservative economic policy in his books Chain Reaction: The Impact of Race, Rights and Taxes on American Politics and most recently The Age of Austerity: How Scarcity Will Remake American Politics demonstrate why this nasty but frequently unacknowledged fight over the racial distribution of income, wealth and opportunity across color lines could prevent the reform of American capitalism. Edsall’s deep point – that all modern economic policy invariably involves the redistribution of economic resources and opportunity across color lines – is the key to understanding the otherwise irrational political economy of contemporary conservatism.
The next model of middle class American capitalism requires conservatives to abandon the quest to restore the Old White Republic as population trends transform the US into a genuine “rainbow” society without a racial majority. The people of this country know that the era of small government not only led to the financial crisis and crash, but that the government rescue of finance proves, beyond any doubt, the utility and necessity for a large role for very big and intrusive government on modern economic life. Logic and evidence suggest that the important debate we face in this country is not whether the state should play a big role in economic life but what that role should be, for whose benefit, at what cost to whom.
The answer to that question is really very clear: government should pursue policies that maximize the economic wellbeing of the working majority by combining regulation, smart and progressive taxation and well thought through investments in the health, education and development of the citizens to promote genuine equal opportunity for all. The substantive fight between left and right in this country should be over the nature of the mixed economy, not over whether we need a mixed economy. What types of taxes do we need and how much should the total tax take rise to reduce our debt, pay for better schools, fixing our infrastructure and financing guaranteed health care for all? How do we share the burden of higher taxes and changing priorities in ways that are both fair and efficient? What is the balance between the needs of the young and the old in an economy that has save and invest more while consuming and borrowing less, all the while becoming smarter and fairer?
The American middle class has been and always will be the end point of government social engineering that insures that economic opportunity is available to all on the basis of effort and ambition, without regard to a family’s wealth, race, ethnicity, region or religion. Most middle class Americans are nowhere near rich enough to detach themselves from public goods or the many subtle middle class subsidies that form the basis of our odd welfare state. Mass homeownership, the opportunity to attend college and guaranteed retirement benefits are all the result of government social engineering. The entitlements so zealously and rightly defended by older whites against budget cuts – Social Security and Medicare – are financed by young workers who pay for the health care and retirement benefits of retirees. Economic arithmetic tells us that the only way these benefits can exist is if workers produce so much that they can satisfy their own needs as consumers and parents while paying taxes for themselves and their children to attend good schools, buy homes, rely on decent roads and bridges, and pay the retirement benefits of their aging parents.
Basic arithmetic puts modern conservatism in a terrible bind given its racial commitments. The Census Bureau estimates that the majority of children born in the United States from now on are more likely to be raised in black, Latino or Asian or interracial families than non-Latino white families. In time, these children will be the talent pool from which the future labor force and military will emerge. The strategy of inequality — low taxes, big budget deficits, a strangled and incompetent public sector — will insure that American workers are poorly educated, that the nation’s infrastructure remains broken and therefore that the nation’s intellectual and economic prowess as well as its productivity and competitiveness slips relative to the rest of the world. The pretense that our nation can restore its long-term economic health by savage cuts in education, public investment and the health of the young is economic folly. If the modern Right gets its way, the ever more diverse American labor force will be deprived of the skills and tools to join the ranks of the world’s most productive workers making the US an ever less prosperous and competent society.
Where is the rationalist business class that sees the need to repair the American economy and the social fabric in ways that extend markets and opportunity across all lines? Where is the conservative reformer who sees the need to quietly engineer a divorce between racism and conservatism in favor of a robust, post-racial capitalism? Of course, those among us who hope for a just and decent society will work for a post-capitalist as well as post-racial society, but one would want practical business people to see that their alliance with racial conservatives is a losing proposition.