Lyndon Johnson in 1915.
I'm linking this in here not because I agree with the article, but because I don't.
How Bidenomics Unites America: A quarter century ago, I and other members of Bill Clinton’s cabinet urged him to reject the Republican’s proposal to end welfare. It was too punitive, we said, subjecting poor Americans to deep and...
As can be seen, Robert Reich, an economist who was in the Clinton Administration, asserts by way of his caption in this piece that "Bidenomics" "unites America".
It'll unite it, alright. In bankruptcy, dependency and inflation.
Biden's COVID relief bill has been rightly criticized as the enactment of a set of liberal economic wish lists. It's level of expense, as noted in our last Zeitgeist issue, is beyond that of the last several wars fought by the U.S. combined and, amazingly exceeds the amount spent in Franklin Roosevelt's New Deal. It's as if Lyndon Johnson got every Great Society wish he ever had, and more so.
Billed as necessary relief to the economy during the pandemic, the bill ignores the fact that the American economy was actually little impacted by the pandemic in a universal way. It was impacted, but only in selective "service" industries. If you owned an airline, for example, you were hurt. If you owned a trucking company or a railroad, you weren't. If you were employed in IT, you were probably not hurt. If you worked in a restaurant, you likely were. Indeed, almost 100% of unemployment in the pandemic has been in the service industry.
This doesn't mean that we should simply forget people, or industries, in the hurt category, but what it does mean is that spending cash economy wide with wild abandon doesn't send the money where it's needed. It sends it into an economy that's otherwise doing pretty well, which will superheat it.
Indeed, we're repeating the errors of the late 1960s in all sorts of ways, that being one. In the 1960s the US superheated the economy with the combined Great Society and Vietnam War, an expense level which likely didn't match anywhere near what we're currently spending. We paid for that by inflating our way out of it, robbing the incomes of average Americans and depleting their savings by directly reducing their value. Some maintain that the high inflation rates of the late 1960s, which got out of control in the 1970s, were brought about intentionally as the inflation reduced the value of loans the government took out to pay for the era's massive military and social budgets. Nearly any economist who has looked at it has concluded the dual effort of trying to send Ho Chi Minh out of South Vietnam and poverty out of the United States was an economic strain that the US simply couldn't bear.
The dual expenses went on into the late 1970s when Ronald Reagan's presidency began to address them. The defense budget remained high, but Reagan campaigned against the Great Society, which had become unpopular with Middle Class Americans. The American welfare state came to an end, however, during Clinton.
Now its back, thanks in no small part to Donald Trump and the last four years.
Dating back to Reagan, but not really before then, the GOP was associated with "fiscal conservatism". Reagan was, of course, also a social conservative, but it's really the Reagan era in which both of these things united in Buckleyite conservatism. Richard Nixon, for example, was pretty content with big spending on the Vietnam War and social programs as well.
Reagan has been lauded over the past forty years as a great man, but he was hated in his own era and the latent anger at him really comes through in Reich's post. Liberals of the 1960s rejoiced in Lyndon Johnson's Great Society program, which did indeed have aspects of merit to it, but which also had elements of real social destruction threaded into its experimentation that the nation has never been able to recover from or ween itself off of. In some ways, many of the urban social ills afflicting the nation today and particularly afflicting some minority populations can be laid at Lyndon Johnson's posthumous doorstep, even though he very deeply desired to help those populations.
Now, as Reich notes, Reagan is gone, swept out the door by a petulant self loving Donald Trump who preferred to wipe out the GOP's chances of retaining the Senate rather than see himself go down in inevitable defeat. The only stolen election in 2020 was the one that Trump stole from the GOP in 2021. Georgia would have remained Republican but for Trump.
Not that Trumpism didn't have a massive, ironic, impact on the GOP over the last four years, although the seeds of that were sewn back as early as 2016. Whatever else the conservative Reagan GOP may have stood for, it really wasn't a party of the common man in a populist sense. William F. Buckley wasn't a guy you were going to invite over for a dog and a beer on the Fourth of July and he sure wasn't going to invite you over for one. . . ever.
The economic sense of that GOP was a "rising all boats" sense of things in which if capitalist were allowed free reign the economy would do well and everyone would do well with a good economy. By and large, while railed at against the time, that GOP was proven right overall. What it didn't worry much about, however, was the impact that exporting work overseas would have on the industrial laboring blue collar worker or the impact that a massive immigration rate would have on the same class.
The Democrats didn't take that view of the economy but they didn't worry about exporting work or immigration either. Indeed, their view was that you could always spend your way out of these problems somehow, with money from somewhere.
Thread through the GOP theme at the time was the belief that you ought to pay for what you agree to spend for, although the GOP was never able to really manage it. With yet another irony, the only President who did during the pre Trump era was Bill Clinton, who ran a budget surplus in at least one year. So, while hated by conservatives, Clinton was the only President since prior to the Great Depression who managed a balanced budget and who eliminated welfare.
When the populist seized the GOP and Trump agreed to fly their flag, he also abandoned any pretext towards budgetary restraint, bringing in a further irony. Trump played off of populist desires and indeed acted on some, but certainly not all. One thing he didn't do, however, was to worry about balanced budgets and the GOP simply quit worrying about them as well.
That Trump wouldn't worry about them is no surprise. People liked to say that "he's a businessman" and they therefore assumed he'd run the government like a business, something that no politician has managed to do that I can recall save for António de Oliveira Salazar of Portugal, who was an economist by training, and dictator by practice, and who didn't think that his governance style would survive himself. The departure from fiscal conservatism, however, was massively significant in that it destroyed any Republican credence to argue for it.
Of course, as noted, the Trump presidency didn't only destroy that. In its late state Trump effectively destroyed the GOP's retention of the Senate and reduced its image in the minds of non populist voters, many of whom have now departed the party. Right now, it's busy trying to restrict the vote in various states, a strategy that will prove disastrous. Hoping to take back the House in 2022, my prediction is that the infusion of free money, a rebounding economy, and grasping tightly to Trump will sink those chances and the GOP tide, which was rising but for Trump, will start to recede pretty quickly. With support for an insurrection dangling above its head, getting out any message will be difficult for an American culture that will rapidly get used to Uncle Sugar sending out cash.
And sending out cash it plans on doing. This year some parents will receive up to $3600 per child simply because they have children.
$3600 isn't enough to live on, so comments about it being a Universal Basic Income are very much overdone. But the direct cash payment is a disturbing concept. There's no imposed restraint on it. It's well demonstrated that the best indicator that a child won't grow up poor is if the child grows up in a two parent household. That's proven. It's also proven that the most dangerous person in a child's life is the non biologically related male who is shacking up, probably temporarily, with the mother of a child. Tragic proof of that can be provided by a recent toddler murder in Cheyenne. Linking a payment to marriage, preferably of the parents, or some other sort of logic social control, would make sense, but the Democrats do not believe in social controls. Lots of the payments will go to deserving parents. Lots of it will go to underserving parents as well and never make it to the child. It won't lift many out of poverty and by encouraging marrying the government, in essence, it will make more poor in the end. The trail is well blazed.
The payment, of course, is limited to just this year, but already Chuck Schumer is seeking to make it permanent, which has another element to it. An enthusiastic Democratic backer on Meet the Press repeatedly claimed that with this payment "we're just giving you back your taxes", but we aren't. We're giving money from other people's taxes and money that we borrowed from the Chinese who just this week launched a massive cyber attack on the United States and which is preparing for war against us. The morality of such a payment scheme is, therefore, questionable in the larger sense.
Here I do indeed depart from traditional Republican taxation views. I'm not opposed to taxation at the higher income rates disproportionally, which of course already occurs. I'm opposed to massive borrowing (and indeed any borrowing) to pay for the government. All taxes, in some ways, separate people's cash from their wallets by force. I'm not of the view that "taxation is theft", but I do think that any taxation based expenditure, which are all government expenditures , should implicitly come with the question of "would I voluntarily pay for that". If the answer to that is yes, maybe there's a way it could in fact be voluntarily paid for, which in fact most social expenditures were at one time.
Anyhow, this gets back to the concept of Distributism, but if you are going to tax to "redistribute", you aren't going to achieve that in this fashion unless you do it at a Scandinavian level. And if you are going to do that, you ought to spend the money in a manner which involves just handing people cash.
Spending it on actual projects that have societal value, like nuclear power plants., electrification of railroads, building a new modern Navy, education in science and engineering, and the like would achieve something needed and valuable. And indeed, having just passed one massive spending bill a massive infrastructure bill is just behind it.
Reich concludes his post with the following two paragraphs.
The economic lesson is that Reaganomics is officially dead. For years, conservative economists have argued that tax cuts for the rich create job-creating investments, while assistance to the poor creates dependency. Rubbish.
The first item (also a belief of liberal hero John F. Kennedy) may well have been wrong. The second, however, certainly wasn't rubbish. Indeed, that dependency helped bring about the Trump era. And, as for rubbish:
Bidenomics is exactly the reverse: Give cash to the bottom two-thirds and their purchasing power will drive growth for everyone. This is far more plausible. We’ll learn how much in coming months.
The bottom two thirds will soon be lower than that, unless the economy really tanks. But what is far more likely will be that Bidenomics will tank all of the other liberal spending wishes did, just as the Vietnam War did for the Great Society. The damage will have been done by then, however, and we'll be trying to find our way out of a new inflationary cycle that will destroy the savings of the very Middle Class that, in part, Reich asserts he wishes to see helped. Ironically, Donald Trump will share the blame with Joe Biden for that, and the GOP will be in a poor position to argue anything.
No comments:
Post a Comment