A Time for Dreaming

The often insufferable Keith Olbermann calls the Tea Party folks the something-for-nothing crowd – and of course that’s shorthand for those who want no new taxes, and massive tax cuts as we’re taxed too much already, and the government to do less of everything, but who don’t want anyone to touch their Social Security benefits or cut Medicare in any way. Yep, there were those signs – Keep Your Government Hands off My Medicare! You could even buy the t-shirt. It was a bit odd, and mockery may be appropriate. How would any of that stuff be paid for?

And, as true patriots, the same crowd wants a strong military – to slap around anyone in the world who gets too uppity – but also love it when the economist who invented Reaganomics, Art Laffer, says things like this:

No income tax, no corporate profits tax, no capital gains tax, no estate tax, no payroll tax (FICA) either employee or employer, no Medicare or Medicaid taxes, no federal excise taxes, no tariffs, no federal taxes at all… Can you imagine where employment would be today? How does a 2.5% unemployment rate sound?

Laffer proposes that for the next eighteen months. He does not suggest how government employees, like our troops, would be paid, or how we’d pay the incoming bills for, say, jet fuel for the drones, or for the food the guys over there need, or the upkeep of the federal highway system or for air-traffic controllers and all the ordinary every day stuff, much less the amount due each month on our already accumulating debt. Most of the column is about the necessity of cutting off unemployment benefits to all, and about the danger of the deficit, as there should be no deficit. One does not borrow from the Chinese. They are not nice people. They don’t have our interests in mind.

And of course the math doesn’t work. Leaving the lazy and whining unemployed – who refuse to take all the jobs that are obviously available – high and dry, would provide maybe one pne hundredth of one percent of the funds necessary for ongoing government functioning. But the theory is cool – if no one had to pay any taxes at all there would be lots more money floating around in people’s hands, and that’s always good for business. Whether not having a functioning government for a year and a half would be good for business is a matter he doesn’t address. It hasn’t worked out that well in Somalia.

But Senator Jon Kyl riffs on that same theme – Extend the Bush Tax Cuts for the Wealthy Even If They Add to the Deficit. In this senator’s mind, if you have to choose between continuing the massive tax cuts and a ballooning deficit – more like real life – it’s best to run a deficit, so long as you keep lots of money in the hands of the movers and shakers who are the key people who keep America thriving. You have to accept certain things, for more important things. Lots of money in the hands of the right people – that’s the ticket. Sure it might be painful to some. This will mean you have to cut services to those who aren’t wealthy, like any sort of social safety net for them, as such cuts will make the deficit a bit less, and thus a bit less dangerous. But they’ll understand. Their pain is for the greater good.

And the Tea Party folks do understand that. Some folks matter more than others – you don’t pick on big corporations or multimillionaires. Those are the folks who keep things humming. See this clip from the Chris Matthews show – Trish Regan doing the outraged and alarmed patriot thing – “Isn’t there something inherently un-American about the more money you make, the more money we’re going to take from you.” She is passionate. Who is going to stand up for the people who make something of themselves in this sorry world?

See Fox News contributor Laura Ingraham:

First they came for the rich. And I did not speak out because I was not rich. Then they came for the property owners, and I did not speak out because I did not own property. Then they came for the right to bear arms, and I did not speak out because I was not armed. Then they came for me and denied me my medical care, and there was no one left to speak for me.

That’s the Tea Party in a nutshell. She hits all the issues. Your Jewish friends who lost parents or grandparents in the Holocaust might be a tad offended considering the original – but she says it’s the same sort of thing, or even worse, so back off. When she sits in for vacationing Bill O’Reilly on Fox it’s always an adventure.

You know – it’s just not fair. That’s the general idea, no matter what the issue. And now, if the Bush tax cuts expire without a fight, the estate tax – what the right has always called the Death Tax – will revert to its usual fifty-five percent. The Tea Party crowd is apoplectic about that. It’s tyranny. It’s slavery – Michele Bachmann’s new formulation.

But here’s an interesting finding from John Sides:

The majority of Americans opposes the estate tax, even though it affects only a small number of wealthy people. Scholarly investigations of this puzzle have debated the role of knowledge about the tax. Do at least some people support the estate tax because they are ignorant of its limited scope? If people were better informed, would more of them support this tax? Via experiments, I demonstrate the casual effects of information about who pays the estate tax, as well as arguments for and against it. I find that this information does reduce opposition to the estate tax, and that it does so primarily among the poorer conservatives and Republicans. The combination of this information and various arguments also tend to shift opinion in favor of the tax. These findings contrast with previous research and suggest that knowledge (or lack thereof) is central to understanding public opinion about the estate tax.

You can figure these things out, not that many make the effort. But Olbermann’s mockery is not useful. Mockery – attempting to shame those who hold a view you find wrongheaded – is never useful in argumentation. They just dig in and you miss what is really going on, and certainly something is going on here. And what that is seems to have to do with what many have observed – someone is playing on the notion that one day you too will be rich beyond the dreams of avarice – Doctor Johnson’s sarcastic way of putting it – and then such impositions will enrage you too, with their unfairness.

But, with so many out of work and in distress, with no hope of turning into Donald Trump (with better hair) overnight, how can this be? They should know better.

But of course it’s the times – and the now quite dramatic inequality in American life, with the few rich far richer than ever before, and everyone else, losing jobs, or having their wages remain flat for a decade, and just generally stuck. All they have is hope, even if it is hopeless hope. It’s just something to cling too, as you watch the Porsche ads on CNBC and follow the Real Housewives of New York, or tell your friends that Paris Hilton really ought to wear underwear now and then. It’s a play on the American Dream, when the dream is far preferable to the waking reality. And it seems to work.

But how severe is the current inequality? It’s at record levels, and as much a cause of our problems as it is symbol of them, or so says Robert Reich:

Wall Street’s banditry was the proximate cause of the Great Recession, not its underlying cause. Even if the Street is better controlled in the future (and I have my doubts), the structural reason for the Great Recession still haunts America. That reason is America’s surging inequality.

Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation’s total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America’s total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928 – with 23.5 percent of the total.

And Reich notes that each of America’s two biggest economic crashes – 1929 and 2008 – occurred in the year immediately following such a peek:

This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing. America’s median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class can boost its purchasing power is to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn’t pay their bills, and banks couldn’t collect.

But we could dream, and we still do. It’s just that this time, like the last time, those at the top screwed up, in kind of the same way:

A second parallel links 1929 with 2008: when earnings accumulate at the top, people at the top invest their wealth in whatever assets seem most likely to attract other big investors. This causes the prices of certain assets – commodities, stocks, dot-coms or real estate – to become wildly inflated. Such speculative bubbles eventually burst, leaving behind mountains of near-worthless collateral.

The crash of 2008 didn’t turn into another Great Depression because the government learned the importance of flooding the market with cash, thereby temporarily rescuing some stranded consumers and most big bankers. But the financial rescue didn’t change the economy’s underlying structure. Median wages are continuing their downward slide, and those at the top continue to rake in the lion’s share of income. That’s why the middle class still doesn’t have the purchasing power it needs to reboot the economy, and why the so-called recovery will be so tepid – maybe even leading to a double dip. It’s also why America will be vulnerable to even larger speculative booms and deeper busts in the years to come.

But this time it’s worse:

The structural problem began in the late 1970s, by which time a wave of new technologies (air cargo, container ships and terminals, satellite communications and, later, the Internet) had radically reduced the costs of outsourcing jobs abroad. Other new technologies (automated machinery, computers and ever more sophisticated software applications) took over many other jobs (remember bank tellers? telephone operators? service station attendants?). By the ’80s, any job requiring that the same steps be performed repeatedly was disappearing – going over there or into software. Meanwhile, as the pay of most workers flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs – the so-called “talent” who reached the pinnacles of power in executive suites and on Wall Street – soared.

But we continued to dream on:

Government could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service: big-box retail stores, restaurants and hotel chains, and child- and eldercare, for instance. Safety nets could have been enlarged to compensate for increasing anxieties about job loss: unemployment insurance covering part-time work, wage insurance if pay drops, transition assistance to move to new jobs in new locations, insurance for communities that lose a major employer so they can lure other employers. With the gains from economic growth the nation could have provided Medicare for all, better schools, early childhood education, more affordable public universities, more extensive public transportation. And if more money was needed, taxes could have been raised on the rich.

Big, profitable companies could have been barred from laying off a large number of workers all at once, and could have been required to pay severance – say, a year of wages -to anyone they let go. Corporations whose research was subsidized by taxpayers could have been required to create jobs in the United States. The minimum wage could have been linked to inflation. And America’s trading partners could have been pushed to establish minimum wages pegged to half their countries’ median wages – thereby ensuring that all citizens shared in gains from trade and creating a new global middle class that would buy more of our exports.

But of course we did none of that – we just deregulated and privatized, and our government did all the wrong things:

It increased the cost of public higher education and cut public transportation. It shredded safety nets. It halved the top income tax rate from the range of 70-90 percent that prevailed during the 1950s and ’60s to 28-40 percent; it allowed many of the nation’s rich to treat their income as capital gains subject to no more than 15 percent tax and escape inheritance taxes altogether. At the same time, America boosted sales and payroll taxes, both of which have taken a bigger chunk out of the pay of the middle class and the poor than of the well-off.

Companies were allowed to slash jobs and wages, cut benefits and shift risks to employees (from you-can-count-on-it pensions to do-it-yourself 401(k)s, from good health coverage to soaring premiums and deductibles). They busted unions and threatened employees who tried to organize. The biggest companies went global with no more loyalty or connection to the United States than a GPS device. Washington deregulated Wall Street while insuring it against major losses, turning finance – which until recently had been the servant of American industry – into its master, demanding short-term profits over long-term growth and raking in an ever larger portion of the nation’s profits. And nothing was done to impede CEO salaries from skyrocketing to more than 300 times that of the typical worker (from thirty times during the Great Prosperity of the 1950s and ’60s), while the pay of financial executives and traders rose into the stratosphere.

No wonder people retreated to their dreams – their fantasies. That’s all that was left them. And others were running things anyway:

As money has risen to the top, so has political power. Politicians are more dependent than ever on big money for their campaigns. Modern Washington is far removed from the Gilded Age, when, it’s been said, the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. Today’s cash comes in the form of ever increasing campaign donations from corporate executives and Wall Street, their ever bigger platoons of lobbyists and their hordes of PR flacks.

And those paying for the politicians, of both parties, got what they paid for:

Legislation to improve America’s healthcare system illustrates the paradox. Initially, the nation was strongly supportive. But the president and Democratic leaders failed to link healthcare reform to the broader agenda of widely shared prosperity. So as unemployment rose through 2009, the public understandably focused its attention on the loss of jobs and earnings, to which healthcare appeared tangential. Consequently, the nation was not as actively supportive of reform as it needed to be in order to weaken the hold of Big Pharma and private health insurers, who demanded that any so-called reform improve their bottom line. The resulting law is fodder for the right, because it won’t adequately control future costs and requires Americans to pay more for health insurance than they would have had the deals not been made.

Much the same has occurred with efforts to reform the financial system. The White House and Democratic leaders could have described the overarching goal as overhauling economic institutions that bestow outsize rewards on a relative few while imposing extraordinary costs and risks on almost everyone else. Instead, they defined the goal narrowly: reducing risks to the financial system caused by particular practices on Wall Street. The solution thereby shriveled to a set of technical fixes for how the Street should conduct its business.

Even the disaster in the Gulf of Mexico could have been put into the larger frame of how giant corporations use their influence to capture regulators and impose risks and costs on the broader public, and the central importance of public health and environmental safety to widespread prosperity. But here again, the administration and Democratic leaders failed to connect the dots. The disaster morphed into a technical question of how to plug the gusher and a policy discussion of how best to regulate deepwater drilling.

And that is just a taste of what Reich lays out, which ends with this:

None of us can thrive in a nation divided between a small number of people receiving an ever larger share of the nation’s income and wealth, and everyone else receiving a declining share. The lopsidedness not only diminishes economic growth but also tears at the social fabric of our society. The most fortunate among us who have reached the pinnacles of economic power and success depend on a stable economic and political system. That stability rests on the public’s trust that the system operates in the interest of us all. Any loss of such trust threatens the well-being of everyone. We will choose reform, I believe, because we are a sensible nation, and reform is the only sensible option we have.

Good luck with that. Everyone else is just watching television, while sipping cheap beer, imagining being rich one day. Sometimes that’s all that sustains you – that and your imaginary Ferrari. And then you die.

Would facing the facts be helpful? Maybe so, but everyone seems to be reading Joe Keohane’s Boston Globe article on the fact that “facts don’t necessarily have the power to change our minds.”

That item is what everyone knows to be true, but is now being confirmed by all sorts of studies:

If people are furnished with the facts, they will be clearer thinkers and better citizens. If they are ignorant, facts will enlighten them. If they are mistaken, facts will set them straight.

In the end, truth will out. Won’t it?

Maybe not. Recently, a few political scientists have begun to discover a human tendency deeply discouraging to anyone with faith in the power of information. It’s this: Facts don’t necessarily have the power to change our minds. In fact, quite the opposite. In a series of studies in 2005 and 2006, researchers at the University of Michigan found that when misinformed people, particularly political partisans, were exposed to corrected facts in news stories, they rarely changed their minds. In fact, they often became even more strongly set in their beliefs. Facts, they found, were not curing misinformation. Like an underpowered antibiotic, facts could actually make misinformation even stronger.

And this evidence that facts can actually make misinformation even stronger is not just an amusing outcome:

On its own, this might not be a problem: People ignorant of the facts could simply choose not to vote. But instead, it appears that misinformed people often have some of the strongest political opinions. A striking recent example was a study done in the year 2000, led by James Kuklinski of the University of Illinois at Urbana-Champaign. He led an influential experiment in which more than 1,000 Illinois residents were asked questions about welfare – the percentage of the federal budget spent on welfare, the number of people enrolled in the program, the percentage of enrollees who are black, and the average payout. More than half indicated that they were confident that their answers were correct – but in fact only 3 percent of the people got more than half of the questions right. Perhaps more disturbingly, the ones who were the most confident they were right were by and large the ones who knew the least about the topic.

No comments about Fox News, please. It can happen to those who watch Olbermann and Maddow, as there something innate involved:

What’s going on? How can we have things so wrong, and be so sure that we’re right? Part of the answer lies in the way our brains are wired. Generally, people tend to seek consistency. There is a substantial body of psychological research showing that people tend to interpret information with an eye toward reinforcing their preexisting views. If we believe something about the world, we are more likely to passively accept as truth any information that confirms our beliefs, and actively dismiss information that doesn’t. This is known as “motivated reasoning.” Whether or not the consistent information is accurate, we might accept it as fact, as confirmation of our beliefs. This makes us more confident in said beliefs, and even less likely to entertain facts that contradict them.

We all know people like that, or know we too are like that. That’s just how it is.

But there are some ideas for how to counter this:

One avenue may involve self-esteem. Nyhan worked on one study in which he showed that people who were given a self-affirmation exercise were more likely to consider new information than people who had not. In other words, if you feel good about yourself, you’ll listen – and if you feel insecure or threatened, you won’t. This would also explain why demagogues benefit from keeping people agitated. The more threatened people feel, the less likely they are to listen to dissenting opinions, and the more easily controlled they are.

But there’s a fix for that too:

Instead of focusing on citizens and consumers of misinformation, he suggests looking at the sources. If you increase the “reputational costs” of peddling bad info, he suggests, you might discourage people from doing it so often. “So if you go on ‘Meet the Press’ and you get hammered for saying something misleading,” he says, “you’d think twice before you go and do it again.”

Wait – getting a politician to register shame? Dream on.

And things have changed, as Peter Beinart notes here:

The more fundamental difference between the Obama era and its New Deal and Great Society predecessors is this: Back then, progressives did not define the left end of the political spectrum. In the 1930s and 1960s, America featured honest-to-goodness alternatives to capitalism, home-grown radical movements that scared the crap out of the American establishment and sent some of its denizens scurrying into arms of reformers like FDR and LBJ. Because our entire ideological spectrum has shifted right since communism’s collapse, reforms that once looked like centrist compromises now look like the brainchild of Chairman Mao.

For confirmation see Lydia Saad at Gallup – Americans Unsure About “Progressive” Political Label – and Donald Douglas at American Power – Progressives Are Communists (If You Didn’t Know) – and Olbermann mocks on. And America dreams on. And key people are counting on you continuing to dream. Your dreams are paying for their real Ferrari.

But why would you want to wake up? To how things really are, that you’re stuck and that’s that? Dreams are preferable, even hopeless ones, or in these times, especially hopeless ones.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
This entry was posted in American Delusion, American Optimism, Americans' Ambiguity Regarding the Rich, Tea Party Economic Thought, Tea Party Movement and tagged , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

1 Response to A Time for Dreaming

  1. geo says:

    Terrific post. I wish every Tea Partier could read it.

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