Ever since the Great Recession and the subsequent financial collapse; those on the Right have made one unfounded claim after another about the cause of the recession and the sluggish recovery since. In the corporate news media, as well as with our Republican Representatives and Senators, dire warnings about everything from run-away inflation due to the Fed's loose monetary policies, to a collapse in the recovery because of the taxes and regulations found in the Affordable Care Act, all of which never seems to materialize. Yet, even though these unfounded predictions never come true. the accusations just keep coming.
Sometimes when I have nothing better to do, I'll sift through the endless array of Conservative pundit's letters to editors, magazine articles and CPAC speeches. Though vague in the way of policy prescriptions, somehow they never seem to explain how or when these imaginary fears will materialize, and yet I somehow never cease to be amazed by the parade of "experts" and "Serious" people in the news and on television whom I'm expected to take well, seriously.
I was recently amidst one of my Right-Wing ventures when I happened across an article in the National Interest by Christopher Whalen. In the article, "The Fed's Reckless Gamble," Mr. Whalen attempts to debunk just about every well established economic principal, especially the principals well founded in Keynesian Economic Theory.
Similar to other mainstream Economists trained in Keynesian Theory, Christopher Whalen begins by comparing today's economic situation to that of the 1920's and 30's, except instead of talking about the abuses of Big Business, he goes on to blame the 2008 crises on the result of easy credit and poor policy choices, resulting from Cold-War expansionary policy that continued even after the devolution of the Soviet Union. (He mentions this as if excusing Reagan but not Clinton)
Whalen claims that in the last period of sluggish growth, during the height of the Great Depression, Franklin Delano Roosevelt's New Deal further slowed economic growth, even claiming FDR's policies dragged down the economy further, as well as creating an economic dependency on the public sector. He claims that just as the New Deal was on the verge of utter failure, WWII saved the economy, continuing the stimulus spending and massive Government expansion during the Cold-War years. (like most neocons, Whalen believes in stimulus spending, as long as it is used militarily)
Never mind that these statements are contradictory by there very nature, Whalen continues to somehow frame loose monetary policy and Government spending as a kind of cocaine for the economy, going so far as to compare the US economy to a medical patient, one being sustained only through the machinery of artificial life-support. By Whalen's reckoning, the last 70 years of economic policy have been nothing more than a cheap magic trick. To understand where he gets his theories from, he refers to Milton Friedman (Famous among Republicans for his Libertarian Economics) and his book, A Monetary History Of The United States, 1867-1960.
Whalen continues along these lines, complaining that the Post-War growth through the 1970's were merely a product of constant growth of the public-sector. He fails to mention that the post-war boom can be explained by a combination of higher-taxes, new expansive public services as well as women entering the workforce and immigrants flooding into the US, further expanding the workforce and with it, the overall growth of American wealth, all of which helped fuel growth in the private sector.
Yet, Whalen insinuates that there was virtually no growth in the Private Sector during this time, making ludicrous claims that Private investment during the Post-War boom was near ZERO! In fact, private sector growth more or less kept up with the public sector during this period. As it turns out, a highly educated, immigrant friendly workforce with living wages for more than just the few is actually good for private sector! What a concept!
How many of you out there have a relative, or an older friend who started a successful business during this time? My own family ran a successful business until the late 1970's, just as NeoLiberal policies were implemented in response to the fiscal crises of the 70's and were quickly becoming the new normal. (thanks in great deal to the administration of Gerald Ford)
However, Whalen is under the impression that Government policies can inflate a sector artificially for a period of time, during which a bubble begins to grow and when it bursts, the average tax-payer is left to pick up the tab. Somehow, in his mind, this cannot occur in the private sector even with limited or no regulation. (every historical document suggests otherwise)
What's missing from Whelen's narrative, from beginning to end, is that he ignores decades of studies that point to a period unprecedented growth under the labor protections and services afforded under New Deal / Great Society era policies, all of which began to meet its end with the birth of Reaganomics and the "supply-siders". America watched and cheered as Reagan and his neocon goons and "supply-siders" began erasing policies that succeeded in deteriorating the "bloated walfare state." This included the massive tax breaks for the rich while leaving the average citizen's tax bill virtually unchanged, even as services for the poor disappeared. The so-called "Starve the beast" strategy.
(Remember the Welfare Queens?)
Reagan used the hyper-inflation of the late 70's to create a feeling of crises among average Americans, he used this crises to begin the process of dismantling the New Deal and Great Society piece by piece, replacing it with "Market-Based Solutions" which would rapidly become the norm even for Democrats like Bill Clinton. As we continued to destroy the New Deal era programs expanded under Truman, and then the Great Society under Johnson, many of the cyclical patterns under capitalism began to return. When previously, not a single major period of job loss occurred during the nearly 50 years between FDR and Nixon, who exclaimed, "We're all Keynesian's now!"
Recessions during this time were generally caused by an over-heating of economy, which was typically followed by a period of Fed induced increases in interest rates that served to slow down growth for a period of time to prevent run-away inflation.
As soon as legislators began to roll back these programs under Reagan and Bush Sr., along with the full repeal of Glass-Steagle under President Clinton, huge gaps began to appear between the rich and the poor. By the time President George W. Bush introduced his huge supply-side Tax-cuts, the steady erosion of high-paying jobs and opportunities, as well as a profound shrinkage of the middle-class had become commonplace, further feeding into a feeling of crises in America.
This feeling of deterioration of our society feeds directly into the Republican narrative, this gives them the leverage they need to further repeal domestic programs and shift tax-burden onto the poor and middle-class. For example, the attacks on the Progressive tax scale by the Republican leadership, as well as attacks on the "solvency" of Social-Security, Medicare, Medicaid and Food-Stamps, also known as SNAP.
None of these programs have to be insolvent. Social Security for example doesn't add a dime to the national debt, and even when its trust fund does eventually run out, it won't be because of abuse of the program or because the program is somehow unsustainable. What is unsustainable is only taking SS payroll taxes on income under $118,500. Just by simply lifting that payable tax cap, Social Security would be solvent indefinitely. Even if somehow the SS trust fund did run out, the program would still be able to cover 80% of its obligations for years to come, again, without ever adding a dime to the national debt.
Under Whalen's narrative, Democrats, the Fed and policy makers have been forcing an unsustainable level of growth. That somehow, instead of promoting growth, we should keep Government out of the regulatory and welfare business by accepting the violent cycles of Capitalism as well as an over-all lower level of growth. A sustained effort to focus on consumer prices instead of exports have led to years of trade deficits that are detrimental over the long-run to the economy, as well as a complete lack of interest on the the job growth or demand side of economics that has been neglected for nearly 40 years.
Today's unsustainable levels of inequality and low-wages are the product of this shift in priorities by Gov't officials, Big Business CEO's and lobbyists that are reaching to new heights to increase productivity without sharing the wealth with the workers who dedicate their lives to their jobs with the hope of being able to comfortably raise a family, own a home and one day retire with a decent pension. And yet, we are expected to except this new lower standard of living for the rest of our lives and our children's lives, the new "normal." In Whalen's mind, slow growth and slack in employment are a GOOD thing! (or at least for business interests it is)
In the article, Whalen claims,
Some on the left, like author William Greider, believe that a little inflation is good for working people and debtors, even if it erodes the purchasing power of wages. But just as a steady 2 percent increase in real wealth provides enormous benefits to a society, a steady 2 percent annual inflation rate can rob workers and families of the ability to meet basic needs in a matter of a few scant years.
Whalen, as a die-hard capitalist, should understand that a capitalist market depends on growth at all times, as well has high demand to sustain that growth. Though if inflation is low and demand even lower; so is wage growth, productivity growth, as well as business profits. As prices go up, so do profits; and as profits go up, theoretically with the proper regulations, so do wages.
It's a little strange that Whalen seems to believe that lower inflation will somehow create balance in the economy. It's as if Whalen expects wages to rise, business to boom and profits to increase without an increase in prices, as if this is a natural part of deleveraging private and public debt. Except it isn't. Japan has been stuck in a period of stagflation for more than a generation, its called a liquidity trap, and its very difficult to get out of once the cycle has begun. Europe is headed that way now. Stimulus spending has been the standard antidote for decades. Greece was forced to except austerity, and unemployment is reaching levels never before seen in modern times in a modern democracy.
Yet, how are American workers supposed to gain bargaining power to raise wages during a period of stagnant inflation and growth? The fact is, slack in the labor market is good for business profits, at least in the short term it is. By paying workers less, with fewer benefits, this temporarily increases profit margins in the short term, to the detriment of the low-wage worker. In the long term however, as the economy stagnates, so do eventually the profits of businesses.
Of course, none of this is Whalen's concern because, as a neoconservative pundit, workers are just expected to except lower wages, fewer benefits, receive fewer public services and pay higher property-taxes to make up for the loss of federal funding. We're all just pawns in the market capitalist game.
Whalen tries to sound reasonable, but his economic theories are anything but. America is quickly entering into a world where high unemployment, non-contract work and low-pay is rapidly becoming the new norm. Workers can't even leverage for higher pay because there's always an army of the unemployed waiting to take your job. Like Upton Sinclair's "The Jungle," low wage employees can try to go on strike only to find when the strike is over, your job has been taken.(though today there are laws to protect strikers, employers use more creative means to rid themselves of problematic employees or those worker protection laws will be repealed too)
Republicans don't say it aloud, but the fact is, their ultimate goal is the elimination of the minimum wage, one of the last protections workers have from corporate abuses, as well as other job protections that are being slowly eroded every day. Even as cyclical crises persists, the erosion of worker protections continues. Even Jeb Bush, the presumed "moderate" Republican candidate to be running in 2016, has suggested that the Market should set wages , going on to say,
Jeb Bush
Tuesday March 17, 2015
“We need to leave it to the private sector,” he responded. “I think state minimum wages are fine. The federal government shouldn’t be doing this.” He went on, “The federal government doing this will make it harder and harder for the first rung of the ladder to be reached, particularly for young people, particularly for people that have less education.”
Is this the world we really want for ourselves? Let alone for our children? It is past time that the workers of the world, and we are many, fight to push back against the Neoconservative / NeoLiberal vision that the few elite are pushing onto us. We can fight and together we can win. Fifty years of far more equal progress proves what we as a nation can to together. A New-New Deal is waiting to be begun, a more equitable world isn't a pipe-dream, it takes all of us doing our part to solve problems that go this deep.