How About We Don’t Have a “Fair Fight”?

I may already have mentioned this, but Dean Baker has an excellent book titled The End of Loser Liberalism:  Making Markets Progressive that you can read for free here (although donations are welcomed).  It is filled chock-a-block with all kinds of economic data, analysis, and all the other number-crunching goodness one expects to find when reading Baker.

But it is the premise of the book that I think is particularly worthwhile.  Baker argues that Liberals need to start reframing, on a very basic level, the terms of the economic debate.  Right now, the conventional frame is that “Conservatives like the free market” and “Liberals like government control,” but as Baker points out this frame is a fairy story. 

By and large Conservatives don’t like the free market, what they like is monopolies and monopsonies (with themselves filling those roles), unfair information advantages over their competitors, government subsidies, and the “freedom” to defraud their customers.  (As to that last point, just think of Wall Street and the Republicans’ recent filibuster of Richard Cordray’s nomination to the CFPB; the GOP admits that Cordray is qualified for the position, they are just refusing to do anything that will empower an agency whose sole purpose is to protect the American people from being abused and defrauded by the big banks.)

Baker argues that Liberals need to do a better job of hammering this home:  that when Conservatives whine about “government intervention in the free market” what they really are whining about is anything that might prevent them from taking unfair advantage of their customers and competitors in an arena that – after all – was created and shaped by the government and all the rest of us to begin with.  What they are whining about is anything that might interfere with their efforts to cheat.

I was reminded of Baker’s book this morning whilst walking my dogs and thinking about how I’d like to see First Amendment jurisprudence change to better accommodate 21^st-century society, technology and media.  Contrary to what a lot of lay people believe, the law is not a static thing.  It is organic, constantly growing and evolving as its fundamental principles are necessarily re-interpreted to better fit the constantly growing and evolving human experience.  That is why legal scholars refer to the Constitution as “a living document.”  And it is the most fundamental reason why the law – at any given time – is never perfect:  because it is always playing catch up.

The latest big step in First Amendment jurisprudence, of course, was the Citizens United decision, which proclaimed that the First Amendment prohibits the government from restricting political broadcasts sponsored by unions or corporations.  I remember that only a day or two after the decision was handed down I was listening to a discussion about it on NPR that included either current Republican frontrunner Newt Gingrich, or Karl Rove, or Grover Norquist (all three are easily confused in my long-term memory; I think it’s the Hitchcockian profile they share).  Whichever GOP flack it was, he defended the decision, arguing that it “leveled the playing field” by making more political speech available to everyone, and harped on the fact that unions had just as much unfettered right to run political ads as do corporations (e.g., management).

And this morning I suddenly realized something that is so obvious I should have picked up on it immediately the decision came down:  the Roberts Court would never have handed down Citizens United before now.  Why not?  Because it has taken this long to destroy unionized labor.

Union membership – public and private – in the United States is now at a 70-year low.  Back in the mid-50s, fully 35% of the American workforce was unionized.  Thirty years ago, 20% of all American workers still belonged to a union.  Today it’s only 11.9%, but that’s only because of public unions (which is why they have been targeted for destruction by the likes of Govs. Walker and Kasich).  Today, only 6.9% of America’s private workforce is unionized.

Do you really think the Roberts Court would have issued Citizens United back in the ‘50s, when labor unions actually had the muscle to stand up to corporate management?  Do you think the Roberts Court would have done so even thirty years ago, when labor unions might at least still have put up a decent fight?  Of course not.  But today?  Now that thirty plus years of successively gutting the labor movement has shrunk the unions until they can be kicked around with impunity?  Oh, sure, now it’s no problem for the increasingly conservative Supreme Court to issue a ruling that “levels the playing field” by letting unions and management “compete in the arena of ideas.”

Now that management is Hulk Hogan and labor is Woody Allen, now it’s okay to get government out of the way, level the playing field, and “have a fair fight.”  And may the best man win.  (Wink wink, nudge nudge.)

Because that’s always the tell, you know.  Whenever you hear someone argue against government intervention because they want “a level playing field,” “a chance to succeed on the merits,” “a fair fight,” etc. . . . pay attention to who’s making that argument.  I’ll bet you that 9 times out of 10 it’s gonna be the guy who’s the biggest, richest and meanest prick on the block, which means that he knows he can take everything for himself and screw over everybody else if only he can convince the rest of us to throw out the rules.

He doesn’t want a fair fight.  He doesn’t want to compete on the merits.  He just wants the opportunity to pillage at will.

Update: Why Labor Laws Work for Everybody

I wrote a brief post back in October about the National Labor Relations Board lawsuit against Boeing for illegally moving production of its 787 Dreamliner from unionized Washington state to right-to-work state South Carolina in retaliation for Boeing's workers exercising their labor rights. 

The NLRB didn’t really have much choice in the matter, given that Boeing’s CEO pretty much had publicly declared that Boeing made its relocation decision in order to punish its workers for striking – which is flat-out illegal.  But, of course, the NLRB’s lawsuit became a cause celebre for the GOP presidential candidates, who thundered against this “government interference” with private enterprise, and the Republican-led House passed a bill to take away the NLRB’s power to enforce labor laws that regulate management.  (Presumably the NLRB would still retain the power to enforce the labor laws that regulate workers.)

But yesterday Boeing and its labor unions announced that they had reached a mutually satisfactory deal resolving this dispute.  Essentially, Boeing agreed to build its 737 Max aircraft in Washington, in exchange for the union dropping its opposition to Boeing assembling some 787 Dreamliners in non-union South Carolina.  If union members ratify the deal it will “alleviate the threat of strikes” and “pave the way for a planned jump in production by the aerospace giant.”  The union would also ask that the NLRB withdraw its complaint against Boeing.

This sounds like a win/win solution to me:  the unions and Washington state get to keep jobs and work in Washington, management gets to avoid labor strikes and a costly lawsuit, and South Carolina gets a new aircraft production facility.  Hooray!  Everybody wins!  (Except, perhaps, the non-union employees in South Carolina who will get paid less than their organized counterparts in Washington but - you know what? - those workers in South Carolina should unionize.  Oh wait . . . in a right-to-work state, they pretty much can't.  Bummer.)

But it should be stressed that one of the reasons a solution like this could be hammered out – maybe even the only reason a solution like this could be hammered out – is because the National Labor Relations Board still exists and still is charged with enforcing US labor laws, which are still on the books for very good reasons.  I don’t think there should be any doubt that if the NLRB had not been around to enforce the workers’ legal rights we wouldn’t be looking at a win/win situation like the one achieved yesterday.

So, yeah . . . labor laws are good laws.  They work for the benefit of everybody, and people who continue to insist that they should all be scrapped in the name of the mythical “free market” are fools and simpletons.

Randian Republicans: God IS the Free Market

I saw an article yesterday that may help me to understand something about which I've been puzzled for years:  how it is so-called "Randian Republicans" (like Rand and Ron Paul, Paul Ryan, etc.) can simultaneously embrace Ayn Rand and profess to be faith-based, dyed-in-the-wool Christians.  Ayn Rand certainly made no bones about her disdain for all religion, and explicitly declared that "her followers had to choose between Jesus and her teachings."  The American Values Network is now trying to make this a wedge issue for the GOP.

But a recent study by Baylor University sheds an interesting light on this issue.

Banks: Our Private Profit Trumps Your Public Interest

It isn’t often that I read an article about the political battles being fought over financial regulation and get reminded of an old girlfriend, but that is exactly what happened yesterday when I read James Suroweicki’s piece in The New Yorker about how banks are flexing their political muscle to derail the creation of the Consumer Financial Protection Bureau.  The CFPB is charged with bringing more transparency to consumer financial markets so that people looking to borrow money -- whether by accepting a credit card, taking out a home loan or otherwise -- have a very clear understanding of what the real cost of that new debt will be.

In his article, Suroweicki points out that the creation of the CFPB actually will benefit the banking industry, and argues that the banks are therefore acting counter to their own interests by opposing the creation of this agency.  

Unfortunately, I think Suroweicki is missing something important here.  I am sure that the banks fighting so ferociously against the CFPB understand quite well that its creation really will benefit the banking industry, but they also are profoundly aware that it will do so at the expense of the banks themselves.  These two interests are not identical, and Suroweicki misses part of the story by assuming that they are.

Also, Too

UPDATED BELOW

Following up a bit on yesterday's deconstruction of David Brooks and his disingenuous attempt to frame the Democratic and Republican approach to Medicare as a philosophical choice between "bottom-up" engineering and "top-down" central planning . . .

It occurred to me that the right wing in this county has a sort of schizophrenic take on how to address economic problems. On the one hand, they are filled with rhetoric about how "small businesses" and "entrepreneurs" are the heart and soul of our economy, and that if we only unleash the forces of the Free Market then those forces will solve any problem we might have cleanly and efficiently, without involving the government or any kind of central planning.

On the other hand, despite this rhetoric it seems pretty clear that they don't really believe in bottom-up solutions to anything when it comes to the economy. No matter the economic situation, whether boom or bust, whether the government runs a surplus or a deficit, their prescription is always the same: more and more tax cuts for the wealthy, large corporations and financiers, less and less corporate and financial regulation. And the justification is always the same too: these are the people and entities who create jobs and drive the economy. Not the people at the bottom, not the working class or the hard-working middle class -- nope, true wealth is generated by the wealthy at the top. Especially the banksters.

Sadly, the Democratic party leadership has bought into this idea nearly as much as the Repubicans have. Matt Taibbi warned us long ago to keep in mind that Wall Street financiers provided the largest part of Obama's presidential campaign donations, and despite Wall Street's public wailing whenever Obama says something that hurts their delicate feelings, Wall Street has made out pretty well under Obama. After nearly crashing the global financial system the banksters received what amounted to a strings-free bailout, and profits are now higher than ever on Wall Street, as are salaries and bonuses -- all at the same time the rest of America is still suffering through the worst economy since the Great Depression. And it doesn't strike me that this is entirely the result of political payback for campaign contributions. I get the sense that Obama really has bought into the idea -- as has pretty much everybody in the leadership of both parties -- that it is the Titans of Wall Street who are the fundamental drivers of our economy.

I think this is exactly wrong. America's FIRE (finance, insurance and real estate) economy is now the largest sector of our national GDP, but that doesn't mean it produces any actual wealth. Money is shifted around and interest is paid on debt, but no actual goods or services get produced by the FIRE economy. Nor does it employ a lot of people. Back when GM was the largest company in America that meant a lot of actual people were employed, both because automobile manufacturing was a (relatively) labor-intensive industry -- someone had to work the assembly lines -- and because all the suppliers to GM were also labor-intensive. But you don't need a 40,000 member workforce to shift money between electronic accounts. So while the vast amount of money that GM generated back in the 50's and 60's necessarily was spread out among many employees, all of whom then spent it themselves and thereby kept tons of other people employed, we don't have that with the FIRE economy. Now vast amounts of money are concentrated in the hands of relatively few people.

But the real wealth of any society resides in its natural resources and the goods and services that society can produce; while this wealth may end up concentrated in a few hands at the top level of society, actual wealth always -- always -- is created from the bottom up.

Whenever I think about this subject I am always reminded of feudal Japan. The Samurai class may have had all the wealth and the power in that society, but it didn't generate that wealth. The wealth was generated by the rice farmers at the bottom of society -- a circumstance recognized in Japan by the fact that up until the mid-19th century taxes were paid, not in money, but in actual bushels of rice. That -- the basic ability to feed its people -- was recognized as the nation's real wealth.

But I watch the fiscal and monetary decisions being made by our government today, and I don't get the feeling that anyone in charge really believes any longer that it is the great mass of people, toiling day in and day out, that actually created the wealth our society now has.

When the Fed is less concerned about doing something to bring down unemployment than it is about making sure inflation doesn't hurt the creditor class, when Republicans insist on shifting taxes away from the already wealthy because "they create the jobs" (a patent lie), when the salvation of the bond market is obviously more important to both parties than is our educational system, our infrastructure, our health care or -- as near as I can tell -- pretty much anything at all . . . .

Well, I get the sense that the people we put in charge really think that their job consists in making sure that the other elites in our society are basically free to do what they please because they are the only ones who "really matter." The rest of us -- the non-wealthy -- seem to be regarded more or less as livestock that can be herded, occasionally put to use (when the "real people" need consumers, debtors, or cannon fodder) but can also generally be safely ignored. The reasoning seems to be that if the richest of us are taken care of, then the rest of us will somehow naturally be taken care too.

How do they think that works? I dunno, but they seem to believe it. Maybe they think it's magic, or just a natural law of some sort. In any event, it is the epitome of a top-down approach to the economy and it seems to have infected everyone with a grip on any of the levers of power in this country.

UPDATE: In his column today Krugman hits on many of the same points I made here, albeit in a more erudite and slightly less despairing way. Representative quote: "Consciously or not, policy makers are catering almost exclusively to the interests of rentiers -- those who derive lots of income from assets, who lent large sums of money in the past, often unwisely, but are now being protected from loss at everyone's expense." But do click over and read the rest of what he has to say about how policy makers are protecting the creditor class by, i.e. choosing to curb (nonexistent) inflation over doing something to end unemployment, etc.

Why Does America Hate Free Market Capitalism?

Over at Balloon Juice, mistermix reports on how America’s internet service is being left in the dust by . . . wait for it . . . Lithuania.  Lithu – fuckin – ania.  Apparently, service (10/1 Mbps) that costs $40 - $60 here (depending on where you live) used to cost only $14.72 in Lithuania.  I say “used to cost” because Lithuania just doubled its speed with no increase in cost.  Which means that right now we in America are paying 3 or 4 times what Lithuanians pay and getting internet service at half the speed. 

(Click through and read mistermix’s entire post; weep at the fact that American internet service is half-speed compared to Lithuania’s worst service, and that if you were in Lithuania and willing to pay a little more you would have access to internet speeds that you can only dream about here in America.)

Look, I’ve resigned myself to the fact that the United States isn’t going to even make an effort to keep up with Korea or Japan – I mean, they’re supposed to be the high-tech havens of the world.  And I’ve even resigned myself to the fact that the United States isn’t going to even make an effort to keep up with Western Europe.  But when our tech infrastructure is being left in the dust by Lithu – fuckin – ania, a former Soviet bloc country . . . Jesus! we aren’t even trying anymore.

What really ticks me off about this is that there is absolutely no reason for us to lag so far behind the rest of the developed world.  But by our policy decisions we have chosen to do so – it didn’t just evolve this way in the United States, we picked this outcome because, basically, we don’t understand what “free market capitalism” means.