SI 2012 Workshop: Budget and Revenue Policies Based On Human Rights

Anja Rudiger, National Economic and Social Rights Initiative

Link to video of this workshop

In an economic recession, progressives are often kept busy stemming the tide of budget cuts. How can we move from this defensive stance to a proactive solution that puts an end to the austerity paradigm and results in equitable spending and revenue policies? This workshop will explore how the human rights framework can be used to fundamentally change the way budget and revenue policy is made. It can be applied to federal, state and local budgets, enabling us to envision public budgets whose purpose is to meet everyone’s fundamental needs. As an example, we will look at the state of Vermont, which recently took a very first step toward a human rights-based People’s Budget. We will review the tools develop by community activists in Vermont and examine how these can be adapted for use in other states.

 


The Great Capitalist Heist: How Paris Hilton’s Dogs Ended Up Better Off Than You

Elites say that we need inequality to encourage the rich to invest and the creative to invent. That’s working out well — for 1% pooches.

Photo Credit: shutterstock
 Editor’s Note: When harmful beliefs plague a population, you can bet that the 1% is benefiting. This article is the first in a new AlterNet series, “Capitalism Unmasked,” edited by Lynn Parramore and produced in partnership with author Douglas Smith and Econ4 to expose the myths and lies of unbridled capitalism and show the way to a better future. 

Summer 2009. Unemployment is soaring. Across America, millions of terrified people are facing foreclosure and getting kicked to the curb. Meanwhile in sunny California, the hotel-heiress Paris Hilton is investing $350,000 of her $100 million fortune in a two-story house for her dogs. A Pepto Bismol-colored replica of Paris’ own Beverly Hills home, the backyard doghouse provides her precious pooches with two floors of luxury living, complete with abundant closet space and central air.

By the standards of America’s rich these days, Paris’ dogs are roughing it. In a 2006 article, Vanity Fair’s Nina Munk described the luxe residences of America’s new financial elite. Compared with the 2,405 square feet of the average new American home, the abodes of Greenwich Connecticut hedge-fund managers clock in at 15,000 square feet, about the size of a typical industrial warehouse. Many come with pool houses of over 3,000 square feet.

Steven Cohen of SAC Capital is a typical product of the New Gilded Age. He paid $14.8 million for his Greenwich home, which he stuffed with a personal art collection that boasts Van Gogh’s Peasant Woman Against a Background of Wheat (priced at $100 million); Gauguin’s Bathers ($50 million); a Jackson Pollock drip painting (also $50 million); and Andy Warhol’s Superman ($75 million). Not satisfied, Cohen spent millions renovating and expanding, adding a massage room, exercise and media rooms, a full-size indoor basketball court, an enclosed swimming pool, a hairdressing salon, and a 6,734-square-foot ice-skating rink. The rink, of course, needs a Zamboni ice-resurfacer which Cohen houses in a 720-square-foot shingle cottage. Munk quotes a visitor to the estate who assured her, “You’d be happy to live in the Zamboni house.”

So would some of the over 650,000 Americans sleeping in shelters or under highway overpasses.

By the time it was finished, Cohen’s house had swelled to 32,000 square feet, the size of the Taj Mahal. Even at Taj prices, cost mattered little to a man whose net worth is estimated by the Wall Street Journal at $8 billion — with an income in 2010 of over $1 billion. Cohen’s payday is impressive, but by no means unique. In 2005, the 25 hedge-fund managers averaged $363 million. In cash. Paul Krugman observes that these 25 were paid three times as much as New York City’s 80,000 public school teachers combined. And because their pay is taxed as capital gains rather than salary, the teachers paid a higher tax rate!

Back in the 18th century, Alexis de Tocqueville called America the “best poor man’s country.” He believed that “equality of conditions” was the basic fact of life for Americans. How far we’ve come! Since then, the main benefits of economic growth have gone to the wealthy, including the Robber Barons of the Gilded Age whom Theodore Roosevelt condemned as “malefactors of great wealth” living at the expense of working people. By the 1920s, a fifth of American income and wealth went to the richest 1 percenters whose Newport mansions were that period’s Greenwich homes. President Franklin Roosevelt blamed these “economic royalists” for the crash of ’29. Their recklessness had undermined the stability of banks and other financial institutions, and the gross misdistribution of income reduced effective demand for products and employment by limiting the purchasing power for the great bulk of the population.

Roosevelt’s New Deal sought to address these concerns with measures to restrain financial speculation and to redistribute wealth down the economic ladder. The Glass-Steagall Act and the Securities Act restricted the activities of banks and securities traders. The National Labor Relations Act (the “Wagner Act”) helped prevent business depression by strengthening unions to raise wages and increase purchasing power. Other measures sought to spread the wealth in order to promote purchasing power, including the Social Security Act, with retirement pensions, aid to families with dependent children, and unemployment insurance; the Fair Labor Standards Act, setting a national minimum wage and maximum hours; and tax reforms that lowered taxes on workers while raising them on estates, corporations and the wealthy. And the kicker: Through pronouncement and Employment Act (1946), the New Deal committed the U.S. to maintain full employment.

The New Deal reversed the flow of income and wealth to the rich. For 25 years after World War II, strong labor unions and government policy committed to raising the income of the great majority ensured that all Americans benefited from our country’s rising productivity and increasing income.

Advocates of laissez faire economics warned that we would pay for egalitarian policies with slower economic growth because we need inequality to encourage the rich to invest and the creative to invent. But the high costs of inequality in reduced social cooperation and wasted human capital point to the giant flaws in this view. A more egalitarian income distribution provides better incentives for investment, and our economy functions much better when people can afford to buy goods and services.

The New Deal ushered in a period of unusually rapid and steady economic growth with the greatest gains going to the poor and the middle-class. Strong unions ensured that wages rose with productivity, government tax and spending policies helped to share the benefits of growth with the poor, the retired and the disabled. From 1947-’73, the bottom 90 percent received over two-thirds of economic growth.

Then, the political coalition behind the New Deal fragmented in the 1960s. Opponents seized the moment and reversed its policies. They began to funnel income toward the rich. With a policy agenda loosely characterized as “neoliberalism,” conservatives (including much of the economics profession) have swept away the New Deal’s focus on employment and economic equity to concentrate economic policy on fighting inflation by strengthening capital against labor. That has worked out very badly for most of America.

The GOP has led the attack on Roosevelt’s legacy, but there has been surprising bipartisan support. President Carter got the ball rolling with his endorsement of supply-side taxation and his commitment to fight inflation by promoting labor market competition and raising unemployment. Carter’s policies worked to reverse the New Deal’s tilt toward labor and higher wages. Under his watch, transportation and telecommunications were deregulated, which undermined unions and the practice of industry-wide solidarity bargaining. Carter also campaigned to lower trade barriers and to open our markets to foreign trade. These policies were presented as curbs on monopolistic behavior, but the effect was to weaken labor unions and drive down wages by allowing business to relocate production to employ lower-wage foreign workers while still selling in the American market.

Carter also began a fatal reversal of economic policy by refusing to support the Humphey-Hawkins Full Employment Act. Instead of pushing for full employment, Carter appointed Paul Volcker to chair the Federal Reserve with the charge to use monetary policy to restrain inflation without regard for the effect on unemployment. Since then, inflation rates have been brought down dramatically, but unemployment has been higher and the growth rate in national income and in wages has slowed dramatically compared with the New Deal era.

Already in the 1970s, a rising tide of anti-union activities by employers led Douglas Fraser, the head of the United Auto Workers to accuse employers of waging a “one-sided class war against working people, the unemployed, the poor, the minorities, the very young and the very old, and even many in the middle class of our society.” Organized labor’s attempt to fight with labor reform legislation amending the Wagner Act found little support in the Carter White House and went down to defeat in the Democratic-controlled Senate.

Any residual commitment toward collective bargaining under the Wagner Act was abandoned during the Reagan administration, ironically the only union president ever elected to the White House. Reagan, of course, is known as the president who fired striking air traffic controllers in 1981. He is also known for the devastating regulatory changes during his presidency and those of his Republican successors (the two Presidents Bush). Their appointments to the National Labor Relations Board helped to turn this agency from one charged with promoting union organization and collective bargaining to one charged with ensuring that employers were free to avoid unions. Under this new regime, private sector unionism, the unions covered by the Wagner Act, has almost disappeared.

The 1970s also saw a shift in tax policy away from the principles of ability-to-pay and income redistribution toward those associated with supply-side economists who argued for lower taxes on the rich to provide incentives to accumulate wealth. After campaigning for tax reform, Carter signed the Revenue Act of 1978, which gave small tax benefits for working people and dramatic cuts in capital gains and corporate taxes and on the top marginal rates. Since then, major reductions on taxes paid by the rich enacted under Presidents Reagan and George W. Bush have dramatically reduced the tax burden on the richest Americans.

Government spending policies have also turned away from ordinary Americans. In 1996, under President Bill Clinton, a vital piece of the New Deal safety net was repealed with the “Personal Responsibility and Work Opportunity Reconciliation Act.” Abolishing the provisions of the Social Security Act that established the program of Aid to Families with Dependent Children, the 1996 law ended the national right to relief. Along with restrictions on unemployment insurance, the abolition of programs of public jobs for the unemployed and gradual reductions in the real value of Social Security benefits, this act was another blow for working people.

The New Deal showed us how to combine economic growth and lower levels of unemployment. But the widening gap between rich and poor since the 1970s has been associated with higher levels of unemployment and a slowing of economic growth. Had economic growth rates continued after 1978 at the same rate as during the decades before, average income would have been more than $14,000 higher than it actually was in 2008.

The slowdown in growth since the abandonment of egalitarian New Deal policies has cost Americans about 30 percent of their income. And the massive redistribution of income away from average Americans and toward the rich has destroyed the sense that America is a land of opportunity for all. Quality of life has plunged because the shredding of social protections has exposed average Americans to much higher levels of risk. The substitution of defined contribution pensions, such as Individual Retirement Accounts or 401K plans, for defined benefit pensions has reduced retirement security for individuals while reducing the risk borne by employers or other social institutions. Just as important as declining income for many Americans, the stress and anxiety associated with the risk shift has contributed to rising levels of depression and morbidity and a decline in life expectancy for Americans compared with residents of other countries.

Workers’ security has been abandoned. But the government has let financial markets run wild. In 1982, Congress deregulated the thrift industry, freeing thrifts to engage in reckless and fraudulent behavior. In 1994, it removed restrictions on interstate banking. In 1998 it allowed Citigroup to merge with Travelers’ Insurance to create the world’s largest financial services company. And in the Gramm-Leach-Bliley Act of 1999, it repealed the remaining Glass-Steagall barriers between commercial and investment banking. Acting with the virtual consent of Congress and the president, in 2004, the Securities and Exchange Commission established a system of voluntary regulation that in essence allowed investment banks to set their own capital and leverage standards.

By then our financial regulatory system had largely returned to the pre-New Deal situation in which we trusted financial institutions to self-police. Advocates of deregulation, like Federal Reserve chair Alan Greenspan, were unconcerned because they expected banks and other financial firms to limit their risk for fear of failure. Either they misunderstood the incentives facing company managers, or they did not care. In practice, financiers are playing with other people’s money (ours). When they do well, their compensation is tied to profits and they can earn huge sums. But when their investments fail, they are protected because monetary authorities and the United States Treasury cannot allow “too big to fail” financial companies to go bust.  So long as risky investments would have periods of high returns, the managers of deregulated financial firms have an incentive to increase their risk, profiting from success while passing the costs of failure to the public. We have all been suffering from the consequences of their failures since the financial crisis of 2007-’08.

The share of income going to the top 1 percent has doubled since the 1970s, returning to the levels of the 1920s. The greatest gains have gone to the very wealthiest and to executives and managers, especially of financial firms. From 1973 to 2008, the average income of the bottom 90 percent of American households fell even while the rich gained. The wealthiest 1 percent gained 144 percent or over $600,000 per household; and the richest 1 percent of the 1 percent, barely 30,000 people, gained over 455 percent or over $19,000,000.

That’s enough to buy a nice doghouse. Or a mansion in Greenwich.

Gerald Friedman teaches economics at the University of Massachusetts, Amherst. He is the author, most recently, of “Reigniting the Labor Movement” (Routledge, 2007).

Toward a People’s Budget

Vermont Adopts New Vision for State Spending and Revenue Policies

Anja Rudiger, Huffington Post
Posted: 05/04/2012 6:42 pm

Almost exactly one year after enacting the United States’ first universal health care law, the state of Vermont is once again showing the country that another world really is possible. In the wake of an impressively large and diverse May Day rally for human rights, the state legislature passed an unprecedented amendment to the budget bill that takes steps toward grounding Vermont’s budget and revenue policy in human rights. Adopting a key demand of the People’s Budget Campaign, run by the Vermont Workers’ Center, Vermont’s budget is now mandated “to address the needs of the people of Vermont in a way that advances human dignity and equity.”

This is the first time that the purpose of a state budget has been defined in terms of human rights principles. The new provision specifies that public money must be raised and distributed with an explicit focus on people’s fundamental needs, requiring that “[s]pending and revenue policies … recognize every person’s need for health, housing, dignified work, education, food, social security, and a healthy environment.” These human needs lie at the root of social and economic rights protected under international human rights law, which to date have been largely ignored in the United States.

Vermont’s first steps toward a People’s Budget mark an astonishing breakthrough for a grassroots campaign launched only a year ago, on the heels of the successful Healthcare Is a Human Right campaign. In May last year, Vermont’s governor signed a law that committed the state to establish a publicly financed, single-payer-style health care system by 2017. The planning process for implementing “Green Mountain Care” is ongoing; an important debate about the system’s financing mechanism will take place later this year. With spending and revenue proposals likely to dominate political discussions, the Vermont Workers’ Center aimed to sustain and build on the health care success by launching the People’s Budget Campaign under the broad umbrella of Put People First!, a multi-issue grassroots organizing effort designed to link a wide range of people’s struggles and unite them through a shared human rights vision.

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With an ambitious plan for equitable public spending and revenue policies, the People’s Budget Campaign, carried out in partnership with the National Economic & Social Rights Initiative (NESRI), has sought to tackle the austerity agenda head-on. Instead of fighting over increasingly smaller slices of the budget pie and thereby pitting different interests and communities against each other, the People’s Budget Campaign has united constituencies and allies in the demand for an entirely different, rights-based approach to budgeting. It has reframed the purpose of the state budget as meeting people’s needs, with revenue measures following from those needs. Rather than defending specific programs against budget cuts without challenging the underlying scarcity myth, the People’s Budget Campaign has called for a paradigm shift in the way spending and revenue policies are developed. While public spending is normally planned on the basis of whatever revenue happens to be available, a more rational and just People’s Budget process would require spending plans to take into account people’s needs and the cost of services and infrastructure to meet those needs. Revenue measures would then be designed on the basis of such a needs-based budget, not vice versa. In other words, a People’s Budget would identify and, if needed, raise the resources required to meet people’s fundamental needs.

Unsurprisingly, the language passed by the legislature this week does not yet accomplish this shift, nor does it embrace the comprehensive accountability framework put forward by the People’s Budget Campaign. But it provides a solid starting point: the new legal provisions connect spending and revenue decisions to people’s needs, require that indicators measure the budget’s success in addressing needs, and task the administration with developing a process for public participation in budgeting. In a country where public budgets are increasingly determined by inputs (available revenue) rather than outcomes (achieving a purpose), these measures offer a powerful springboard for launching a People’s Budget that raises and allocates funds to meet everyone’s needs in an equitable way.

To overcome the formidable obstacles to budgeting based on human rights — and to a health care system financed through progressive taxation — the People’s Budget Campaign will have to continue building the power of the people. It is encouraging how far the campaign has come over the past 12 months in shifting the discourse on budget cuts to a dialogue about government obligations to meet human needs and realize human rights. The inspiring May Day rally was the culmination of a grassroots process during which hundreds of Vermonters took part in a community needs assessment, thousands signed a petition for the People’s Budget, and more than 100 testified to legislators at the annual state budget hearings. As a result, Vermont now requires its budget and revenue policies to advance dignity and equity for all. This carries a tremendous promise not just for the state of Vermont but for the country as a whole. With a growing people’s movement for human rights, a fundamental shift in budget and revenue policies may become possible.

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Vermont Adopts Genuine Progress Indicator

Vermont is the first state to pass legislation to adopt a genuine progress indicator, which will measure things such as clean air and water and  volunteer work that are not otherwise accounted for in the standard gross state product. These things have a real value, but if they are not measured, then their degradation, for example air or water pollution is not counted as a cost. http://vtdigger.org/2012/05/30/an-alternative-to-the-traditional-bottom-line/

CPE at Occupy G8 People’s Summit

May 18, 2012          10:00 am to 2:00 pm
Community Room, C. Burr Artz Public Library
110 E. Patrick Street,
 Frederick, Maryland

CPE will participate on a panel at the “Occupy G8 Summit for the People.” This Summit is an alternative to the G8 that will have speakers (see agenda below) discuss the effect of concentrated wealth on global public policy, the effects of wealth inequality on peoples’ well-being and alternative economic structures that would close the wealth divide and create a more democratic, sustainable economy. The Summit will include time for hearing the voices of the 99% who will be in attendance.  The public and the press are invited.

For full schedule and further details, please visit: Occupy G8 People’s Summit

 

April Events!

CPE is happy to announce several special events coming to Western Massachusetts in the next few weeks!  Click the highlighted event titles below for more details.

 

“The Economic Crisis & the Fallout in our Communities – Part 2″

*Requires Prior Registration Online – 25 Person Limit*

April 25th, 2012
5:30 – 7:30 PM
SEIU 1199’s Main Office
20 Maple St, Springfield, MA

 

 

“Building a Solidarity Economy for People and Planet – Views from Brazil”

Special Guest: Daniel Tygel – Brazilian Solidarity Economy Organizer

Leading Brazilian Solidarity Economy Organizer

*TWO EVENTS*

April 25th, 2012
12:00 – 1:30 PM
Pioneer Valley Central Labor Council
640 Page Boulevard, Springfield, MA

April 26th, 2012
2:00 – 4:00 PM
3rd Floor Conference Room, Gordon Hall
University of Massachusetts, Amherst, MA

CPE Members Join URPE & Occupy Chicago to Protest Mainstream Economists’ Role in the Financial Crisis

Occupy Chicago teamed up with the Union for Radical Political Economics (URPE) to organize an “Occupy the American Economics Association” event at its annual meeting in Chicago, January 5-8. Economists streaming out of the conference hotel for lunch on the first full day of the conference were met by a large group holding signs such as “Economists — Complicit in the Financial Crisis,” “Occupy the AEA,” and “Danger! Capitalist Economists at Work!” as well as some street theater. Then, a spirited group of about 40 marched through the downtown, carrying a homemade banner poking fun at the concept of “trickle-down economics.” It showed a Very Important Man relieving himself over ordinary people standing below. An accusation from a Chicago police officer that the banner was blocking the sidewalk led to the arrest of one particularly active protester which provoked a loud outcry from the crowd.

The protest was followed by a teach-in at nearby Roosevelt University.  Local CPE member (and Roosevelt University faculty member), June Lapidus, arranged for the teach-in rooms. CPE member and UMass-Amherst professor, Nancy Folbre, gave a short presentation on “the political economy of human capital” followed by a great discussion with the participants. CPEer Elaine Mccrate also joined in. The teach-in continued on Friday and Saturday afternoons. Occupy Chicago is hoping to develop an economics education and outreach program in greater Chicago, and Lapidus will be the CPE liaison there.

Gerald Friedman Testifies to Massachusetts General Court About Healthcare

Gerald Friedman, professor of economics at UMass, testified in favor of a single-payer healthcare system at the Joint Committee on Healthcare Financing hearing held in Massachusetts General Court on December 15, 2011. He addressed the deficiencies of the current healthcare system, especially focusing on the fact that in our current system, the only profitable business model for healthcare companies is to provide coverage to fewer people and deny coverage to the sick. He also addressed the waste built into the current system: America’s average lifespan is no higher than countries that spend much less on healthcare. Despite the fact that we spend as much on healthcare as Canada, our average lifespan is 4 years shorter. Professor Friedman argued that a single-payer system would address these shortcomings and others. The full testimony can be read below.

Testimony to Massachusetts General Court, December 15, 2011

My name is Gerald Friedman.  I am a Professor of Economics at the University of Massachusetts at Amherst.  I have lived in Massachusetts since August 1978 when I moved to Cambridge to attend Harvard, where I was awarded a PhD in Economics in 1986.  Since 1984, I have taught at your state University at Amherst where I have specialized in Labor Economics, public policy, and Economic History.

Before studying Economics at Harvard, I was a History major at Columbia and my first book, State-Making and Labor Movements, is a historical study of the origins of the labor movement in France and the United States 1870-1914; my latest book, Reigniting the Labor Movement: Restoring Means to Ends in a Democratic Labor Movement, addresses union growth and decline in 16 advanced economies since the late 19th century.  I am a big picture guy and, as such, I do not envy your responsibilities because the big picture is grim: spending on health is swallowing the economy even while growing numbers are receiving inferior care.

This is not to dismiss your very real accomplishments, of which you should be proud.  With some help from Governor Patrick and former Governor Romney, you developed a health care program that has extended health insurance to most of our citizens even while insurance has become increasingly unavailable outside of Massachusetts.  Today, fewer than 5 percent of Massachusetts residents are uninsured, a rate barely a third that of the rest of the United States.  This is a signal accomplishment that dramatically improves life for hundreds of thousands of people.

Much of the expansion in health insurance coverage has been achieved through the Massachusetts Health Reform Law, Chapter 58 of 2006.  A compromise between reform advocates, Governor Romney, and various industry groups, the bill did less to reform health care in Massachusetts than to expand access by “plugging gaps” in existing insurance programs.  As such, it has done little to slow the seemingly inexorable rise in health care costs, and the resulting squeeze on the budgets of Massachusetts families, businesses, and governments.  Back in the days when Governor Dukakis tried to slow health care inflation, health care spending equaled 12 percent of the Massachusetts economy; today it is over 17 percent.  This increase, 5 percent of our income, is about $3,000 per person that we do not have to spend for other things because of rising health care costs.  If we continue the way we are going, we will be giving up thousands more over the next two decades.

While some of the increase in costs reflects improvements in care and is a consequence of rising life expectancy, most in Massachusetts, as throughout the nation, is due to waste within the health insurance and health care industries.  Compared with other industrial economies, the United States is peculiarly inefficient in our health care system. We spend more but receive relatively poor health care; compared with other affluent economies (members of the Organization of Economic Cooperation and Development), we spend thousands of dollars more per person to achieve life expectancy lower than 49 other countries (see Figure 1).  If we are only to have the life expectancy of Portugal, then we should be able to spend over $4000 less per person; or if we are to maintain such high spending, then we should have 4 more years of life expectancy (see Figure 1).

Figure 4.  Effect of single-payer financed with 7.5% payroll tax and 7.5% tax on unearned income.  Effect on income by quintile.

 

A ‘Care Socialist’ Speaks Out

An article about CPE member economist Nancy Folbre, by Joel Bleifuss at In These Times.

In her work, Nancy Folbre, a University of Massachusetts economics professor, explores the intersection of feminist theory and political economy, with a special emphasis on what she calls “care work” – the labor, often outside the money economy, that goes into caring for children, the sick or the elderly.

She is well known for her ability to explain these ideas in simple, accessible language, both in her work with the Center for Popular Economics-the collective of economists who put out the Field Guide to the U.S. Economy (New Press)-and with her weekly post to the Economix-a New York Times blog dedicated to “explaining the science of everyday life.”

Folbre talked with In These Times about the negative effects of ignoring care work in public policy, and what the future of our democracy might look like if we want it to strengthen our families and communities.

What key perspectives are missing from our national debates about budget deficits and the national debt?

First, there is little or no reporting on progressive proposals to address the deficit, such as the Peoples Budget, which has been mentioned only in a few opinion pieces in the mainstream print media, despite support from the Progressive Congressional Caucus and excellent reporting by In These Times. (Editor’s note: See “What Americans Want,” by David Moberg, June 2011.)

Second, there is little or no challenge (outside of op-ed pieces) to what one can call “the austerity story.” This story tells us that social spending in general is on an unsustainable path and needs to be cut. The debate is framed simply as one of levels and timing: The Republicans want us to cut more now, and the Democrats want us to cut less, later.

Only one big component of social spending is actually on an unsustainable path- healthcare spending. That’s one of the problems that President Obamas healthcare reform was intended to address – and would certainly ameliorate, if not solve. Yet Republicans want to repeal it.

My University of Massachusetts colleague Jim Crotty describes the austerity story as a rationale for increased redistribution to the rich.

That redistribution to the rich plays out on a global scale, doesn’t It?

The austerity story reflects a new phase of globalization, in which large corporations no longer have much incentive to invest in the health or education of a national labor force.

Global competition definitely plays a role: Social spending represents a “social wage” that is linked to citizenship. Downward pressure on wages in the advanced capitalist countries is now accompanied by downward pressure on social wages. Both skilled and unskilled labor are plentiful on the global level, and can therefore be treated as a kind of natural resource like oil or coal, to be simply extracted and depleted. Of course, the social consequences, or as economists put it, “negative externalities,” are huge. Global warming goes along with what one could call public-sector “chilling,” that is, reduced public commitments to social welfare – both of which reduce sustainability and health in the long run.

What role does the media play In aiding and abetting those we might call “public-sector chilling deniers”?

The mainstream media tends to limit its attention to mainstream opinions. But I don’t fault the media alone. Neither mainstream nor heterodox economists have developed a clear picture of the political economy of public finance. Heterodox economists- including most progressive economists – seem reluctant to acknowledge the complexity of the distributional struggle that takes place through the public sector, and the ways that it is shaped by race, gender, citizenship and age, as well as class. You can’t boü that struggle down to capitalists versus workers.

In my view, much of it also reflects bargaining over the distribution of the cost of caring for dependents – not just between men and women, but also between those who have dependents (or are dependent) and those who don’t (or are not dependent). For instance, people who aren’t raising children sometimes feel aggrieved about paying taxes to support schools.

Should individuals pay for their own education, their own healthcare, their own retirement, along with the needs of their own children and elderly parents? No, they shouldn’t. There are many reasons why social insurance is more efficient and more equitable.

But many people don’t understand the benefits they derive from educating “other people’s children.” And progressive social scientists and policy makers haven’t directly addressed the underlying issues: To what extent should these costs be socialized? How should they be distributed? Those are key questions.

How can progressives best address them?

First, we need to emphasize the intrinsic merit of investing in the development and maintenance of human capabilities. This is not just about kids! It’s also about capabilities to work productively as adults and age past retirement.

Second, we need to show that such investments pay off with greater overall productivity – even though the increased productivity may not show up in conventional economic statistics.

Third, we need to emphasize fairness and sustainability. We need to address issues of intergenerational equity – spending on elderly versus spending on children – and make sure that people have a clear sense of what they are getting back from government over their life-cycle compared to what they put in.

Where do the international issues fit in here?

The left has traditionally drawn the boundaries around national boundaries – citizenship. But as national boundaries become more permeable, other divisions also intensify.

So we shouldn’t be surprised by growing conflict over the major institutions of the welfare state. People ask themselves: “We don’t pay social insurance for citizens of other countries, so why should we pay it for recent immigrants? Why should we pay it for people who are not like us in other ways?”

The bottom line is that even if the austerity story is false, it resonates with people who feel they don’t have control over government programs. And it resonates with their fears – both rational and irrational – that others are benefiting more than they are from it.

This is a conflict between individual freedom (or the illusion of it) and social cooperation. In a society that worships the ideal of individual agency, does the ideal of working for the collective good stand a chance?

There’s less actual than perceived conflict here. Individuals benefit so greatly from social cooperation – especially from investments in human capabilities and the provision of social insurance to help support family care. And the “ideal” of individual agency doesn’t apply to young children or the sick, disabled or the elderly. It also doesn’t apply to people who can’t find a job because the economy is not functioning at full employment.

The problem is that many conservatives don’t see these benefits, while many of the left believe these benefits are selfevident I argue for a more sustained effort to demonstrate the economic benefits of social democracy.

Should the left put democratic socialism back on its agenda?

The left is reaching for new definitions of democracy and of socialism.

We’ve learned that institutions that appear to be democratic can be undermined by economic power – whether through over-centralization, as in the so-called socialist economies of the former Soviet Union, or through campaign finance corruption, as exemplified by the Citizens United ruling. We’ve also learned that institutions that profess to rest on majority rule can implement rules (like the filibuster) that lead to political stalemate.

Many local activists are drawn to cooperatives and worker-owned businesses, but they haven’t figured out how to scale their grassroots initiatives up in a national campaign.

The left doesn’t agree on any one definition of socialism. We have advocates for increased democratic participation at every level of the economy, like Mike Albert and Robin Hahnel. And we have advocates for market socialism, like John Roemer. And global climate change reminds us that we cannot simply focus on changes within the nation-state.

I am an advocate for a form of what I call “care socialism,” based on stronger collective commitments to the development of human capabilities and efforts to strengthen families and communities. We need to encourage more dialogue between left social scientists and activists. I hope that In These Times readers will weigh in

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