We Were Eight Years in Power (part 3)

March 24, 2018

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In his final chapter, Ta-Nehisi Coates reflects on Donald Trump’s election, a tragic turn of events from his point of view.

Race trumped class

Many commentators on the Trump election prefer to explain it more by class than by race. Focusing on Trump’s slim but crucial victories in industrial states like Michigan and Pennsylvania, they tell a story of working-class voters threatened by trends like globalization, loss of manufacturing jobs, and the declining share of national income going to labor. Although there is some truth to this interpretation, Coates has some good reasons to be skeptical.

As I pointed out in my post “Why Trump Won” shortly after the election, Trump won Michigan by less than one percentage point, but he won Alabama by 28 points. This is no surprise to Coates, who finds that race and racial attitudes were better predictors of voting than economic class. Although enough Obama voters switched their allegiance to Trump to swing the election, the bulk of the Trump voters were the same whites who never supported Obama in the first place.

There are plenty of working-class people in all racial groups, and “deindustrialization, globalization, and broad income inequality…have landed with at least as great a force upon black and Latino people in our country as upon white people.” Yet it was primarily whites who went for Trump, by a 20-point margin according to the exit polls. Clinton won blacks by an 81-point margin, and she won both Latinos and Asians by 38 points.

One study found that “the most predictive question for understanding whether a voter favored Hillary Clinton or Donald Trump was ‘Is Barack Obama a Muslim?'” This is not really surprising considering that Trump achieved political notoriety as a “birther” suggesting that Obama’s African birth disqualified him to be president. “Trump truly is something new,” Coates says,”–the first president whose entire political existence hinges on the fact of a black president.” Trump’s election was impossible without eight years of white fear and resistance directed against Obama despite his moderation and careful racial neutrality.

Considering all the talk about the Trump campaign as a populist working-class movement, readers may be surprised to learn that on the average, Trump voters had incomes a little higher, on the average, than Clinton voters. And why shouldn’t they? Trump voters were predominantly white men, who are still the highest earning group in the country.

In order to predict how someone voted, the first thing I would want to know is their racial identification. The second thing I would want to know is how threatened they feel by the ascendancy of minorities and women. (I would also want to know if they are evangelical Christians threatened by the secularization of public policies on issues such as abortion and gay rights.) Only then would I turn to economic status for an explanation.

The politics of racial identity

Our ability to see race as an issue is affected by white racial dominance itself. If white is the norm and black the exception, then blackness is what is noticed. Problems concentrated in black areas, like a crack epidemic, are black problems, while problems concentrated in white areas, like opiate addiction, are just problems. The second type gets a lot more sympathy than the first.

Although many commentators have criticized “identity politics” for polarizing the country, they apply the term more readily to black identity than white identity. If a black female voter votes for Clinton, they can easily see her as voting her race or gender identity, and they can readily blame Democrats for playing “identity politics.” If a white male votes for Trump, they say he is voting his working-class interests. So Trump is the working-class champion, while Clinton must be the elitist out of touch with “real people.” Never mind that Clinton did better among voters who saw the economy as the most important issue, as well as voters who were most interested in having a president who “cares about me.” And never mind that she won the popular vote, which Democratic candidates have now done in six out of the last seven elections. If Trump voters were real people, what were Clinton voters, aliens? Trump’s suggestion that he lost the popular vote because of fraudulent votes from illegal aliens goes exactly in that direction.

Identity politics is alive and well in both parties. Accusing the other party of narrowly appealing to blacks and women is an effective way of making one’s own narrow appeal to white men. And vice versa.

But class mattered too

Coates emphasizes that Trump was elected by a broad coalition of white voters–men and women, young and old, with and without college degrees. But his own numbers show that Trump won white college graduates by only 3 points, while winning white non-graduates by 37 points. No doubt economic issues played a role in that result, since people without college degrees are faring especially poorly in the new economy.

However, we cannot be sure that even people who are in the working class actually voted on the basis of their class interests. They could still be voting more as whites clinging to white privilege, as men with disparaging attitudes towards women, or as evangelical Christians hostile to gay rights. All of these tendencies are more common in the less educated white population, and especially in the less educated white Southern population. They may even be voting against their true class interests, if voting conservative on race, gender or religious grounds plays into the hands of economic elites pursuing their own agenda.

When less educated workers do vote their economic interests and insecurities, they may be drawn to an ugly, zero-sum, “beggar thy neighbor” kind of economics. The aim is to protect one group’s jobs at the expense of some other group, such as immigrants or foreigners or even U.S. citizens in other industries. Tariffs on steel may help U.S. steelworkers but hurt not only foreign steelworkers but workers in other domestic industries affected by higher steel prices.

Trump’s populist appeal continues a long tradition of appeals that do not so much help workers as a class as keep them fighting among themselves for meager benefits, while the interests of the wealthy are fully served. That’s a pretty good description of Trump’s fiscal policy, which cuts taxes primarily for the few while hurting programs beneficial for the many.

How to respond?

The fact that race and class are so entangled in our politics makes Coates’s emphasis on race both illuminating and limiting. How much to focus on race in our political discussions remains a delicate issue.

When Obama was interviewed by Coates, he said, “I’m careful not to attribute any particular resistance or slight or opposition to race.” He understood that calling his white opponents racists would only harden opposition to his policy agenda. Unfortunately, Hillary Clinton couldn’t resist calling Trump supporters racists, sexists and xenophobes–deplorables, in short–and that didn’t help her cause either.

I would like to see politicians promote their policies with positive appeals to egalitarian values and the general economic good. For progressives, that includes sharpening their economic message to persuade people that progressive taxation to support investments in education, infrastructure and universal health insurance is better than more trickle-down economics. To those who say the country cannot afford these things, progressives should challenge them to explain how we can afford still more tax cuts, extravagant military expenditures and deficits.

As an educator, I realized that I had to gently lead my students to raise their consciousness about race and gender, so they could gradually acknowledge and transcend their own prejudices. I would like to think that a good political leader would also be partly such an educator. We must call out political operatives who manipulate prejudices for their own advantage, but we must also have some faith in the majority of Americans to achieve greater racial understanding. Coates admits that his own experience–and his experience of the Obama years in particular–has caused him to lose that faith. I understand his pessimism, but I cannot endorse it.

 

 


We Were Eight Years in Power (part 2)

March 22, 2018

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My favorite essay from Ta-Nehisi Coates’s collection is “The Black Family in the Age of Mass Incarceration,” which he wrote in the seventh year of the Obama presidency. Here Coates insightfully connects two social developments–a policy debate over black families that started in the mid-1960s, and a dramatic increase in incarceration that started in the mid-1970s. He says he was excited about this story because “I believed that ‘family’ had been ceded to moral scolds who cared more about shaming people than actually helping families.”

Redefining the problem

Coates begins his story with the failure of Daniel Patrick Moynihan’s liberal vision for black family progress. Moynihan, who worked in both the Johnson and Nixon administrations before becoming a US Senator, wanted to go beyond civil rights legislation to help undo the damage to families resulting from centuries of racism and discrimination. In his own words, “Family as an issue raised the possibility of enlisting the support of conservative groups for quite radical social programs,” such as a guaranteed minimum income for every family. That turned out to be overly optimistic.

The so-called “Moynihan Report,” whose real title was “The Negro Family: The Case for National Action,” was originally intended for internal government discussion, but soon became public. Moynihan described the problem not just as poverty and discrimination, but as the “matriarchal” family structure that resulted from a shortage of successful male breadwinners. For him, achieving “family stability” was as important as achieving economic justice.

For conservatives, however, the report served as a golden opportunity to shift the blame for the plight of black families from racism and discrimination to their own family behaviors, such as bearing children outside of marriage. It didn’t help, I would add, that Moynihan had overstated the case by exaggerating the stability of white families, just at a time when the sexual and gender revolutions were starting to challenge conventional norms there too. Moynihan was surprised when civil rights advocates accused him of racism for contributing to a pejorative stereotype of black families.

As for the guaranteed minimum income idea, President Nixon proposed a modest one in his Family Assistance Plan, but it failed to pass Congress. Coates does not mention what I have read elsewhere, that Moynihan eventually soured on his own proposal when a pilot study found a higher rate of marital breakup for recipients of a guaranteed income than in a control group of non-recipients. Moynihan, whose own childhood Coates describes as “a tangle of poverty, remarriage, relocation, and single motherhood,” saw family stability as the key indicator of policy success. He was not prepared for the possibility that some individuals would take the opportunity provided by a guaranteed income to leave unsatisfying relationships.

Black vilification, then and now

The critique of black family “pathology” became part of a long history of black vilification. Earlier in the book, Coates defines black enslavement as a twofold problem:

First there is the actual enslavement and all that has followed from it, from Reconstruction to Jim Crow to mass incarceration. But then there was the manufactured story that was told to ennoble and sanctify that enslavement.

Racial domination has always been accompanied by stories that serve to explain and justify it. The common theme in these stories is that something is wrong with the oppressed people themselves, rendering them unfit for independence and equality.

Based on my teaching experience, I would add that these stories have changed in some important ways over the years. Almost never did I hear from my white students an explicit assertion of African racial inferiority. On the contrary, they much preferred a story of equal opportunity but individual failure. Now that anti-discrimination laws have been passed and racism is on the decline, the story goes, doors that were closed are now open. The corollary is that people who still don’t get through those doors have less reason to blame white society and more reason to blame themselves. The family and personal problems that Moynihan saw as effects of racial inequality can be interpreted as causes of inequality. Black people would be successful if they would just live right, not dropping out of school, getting in trouble with the law, or having children they aren’t ready to support. What is strongly implied if not explicitly stated is that there must be something wrong with these people after all. The critique of black family instability by Mohnihan and others helped reinforce those attitudes.

The Republican philosophy of limited government is not in itself racist. But its surge in popularity among whites during the Nixon and Reagan presidencies is at the very least somewhat suspicious. After the Democrats embraced civil rights and the War on Poverty, whites turned Republican by the millions, turning what had been the Democratic “Solid South” into the essential core of the Republican base. Coates quotes Nixon’s domestic policy advisor John Ehrlichman as later admitting that “subliminal appeal to the antiblack voter was always in Nixon’s statements and speeches….” At the same time, public policy turned away from the War on Poverty to the War on Crime.

Mass incarceration

Coates says, “One does not build a safety net for a race of predators. One builds a cage.” Stories of black inferiority and failure have always implied a need for strong social control, but the forms of control have varied. In the early twentieth century:

…Jim Crow applied the control in the South. Mass incarceration did it in the North. After the civil rights movement triumphed in the 1960s and toppled Jim Crow laws, the South adopted the tactics of the North, and its rates of imprisonment surged far past the North’s.

Since 1970, the number of people in prisons and jails increased seven-fold, from about 300,000 to 2.2 million. (Adjusted for population growth, that was still a five-fold increase.) The United States leads the world in incarceration rate, with Putin’s Russia a distant second. “The United States now accounts for less than 5 percent of the world’s inhabitants–and about 25 percent of its incarcerated inhabitants.” For males age 20-40, the black incarceration rate is ten times the white rate.

The rising incarceration rate is partly a response to an increase in crime that occurred after 1970. To see it as only that, however, overlooks some other considerations:

  • After the 1980s, rates of violent crime fell but rates of incarceration continued to rise.
  • Other countries also experienced a rise and fall in crime rates, but came through it without such a large increase in incarceration.
  • Who we imprison depends on what we choose to criminalize and where we choose to look for offenders. “Surveys have concluded that blacks and whites use drugs at roughly the same rates,” but arrests for drug possession are much higher for blacks.
  • A large proportion of the imprisoned are mentally ill, functionally illiterate, addicted and/or impoverished, suggesting that the U.S. relies on imprisonment to address social problems that would better be handled in the community.
  • Imprisonment has additional economic functions such as providing jobs for whites in rurally-located correctional institutions, and disguising our black unemployment problem. People in prison aren’t counted as unemployed because they’re not in the labor force.

Coates’s main point is that resources that could have been used to uplift and integrate black people were used instead to stigmatize and exclude them.

Criminal justice reform

Shrinking the prison population will require a lot more than just shorter sentences or earlier parole. We will need to think about what we define as crime, how else we might address social problems of mental illness, under-education, drug abuse and poverty; and how to reduce racial bias in arrests, prosecutions and sentencing.

Coates also points out that a smaller correctional system is not necessarily a fairer one. Among states, Minnesota has one of the lowest rates of incarceration, but one of the highest disparities between black and white incarceration. He ends by saying that we cannot pretend “that one can extract the thread of mass incarceration from the larger tapestry of racist American policy.”

Continued


We Were Eight Years in Power

March 20, 2018

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Ta-Nehisi Coates. We Were Eight Years in Power: An American Tragedy. New York: New World Publishing, 2017.

We Were Eight Years in Power is a collection of essays published by Coates over the course of the Obama presidency. Coates introduces each essay with a “notes” section written for this book. This format requires the reader to work a little to understand the author’s current thinking. Sometimes Coates uses his introductory remarks to express doubts about what he has previously written, especially in the earliest essays.

Changing views of the Obama presidency

One of the areas in which Coates’s views have evolved is the nature and significance of the Obama presidency. At first, he expresses some optimism that Barack and Michelle can rise above the racial divide and help bring about a post-racial society. Looking back on that phase now, he says, “In those days I imagined racism as a tumor that could be isolated and removed from the body of America, not as a pervasive system both native and essential to that body. From that perspective, it seemed possible that the success of one man really could alter history, or even end it.”

In his essay on Michelle Obama, “American Girl,” he describes her story less as a distinctively black story than as part of a common American story. She is not a victim of poverty, but a product of a “proto-middle-class group of blacks who held the community together.” She can remember her South Side Chicago neighborhood with pride and nostalgia, just as other ethnic groups can remember neighborhoods they may have left behind in their moves to the suburbs. “If you see black identity as you see southern identity, or Irish identity, or Italian identity–not as a separate trunk, but as a branch of the American tree, with roots in the broader experience–then you understand that the particulars of black culture are inseparable from the particulars of the country.”

Writing a year later, however, Coates is starting to the see the Obama presidency as part of a familiar cycle of “transracial spirit” followed by “retrenchment.” By then he has read works like Edmund Morgan’s American Slavery, American Freedom, which have led him to believe that white freedom, equality and wealth have long rested on a foundation of black oppression, an arrangement highly resistant to change. By the fourth year, he says that “the full dimensions of a tragedy were starting to come into view for me, with the movement to cast Barack Obama as alien as its first act.” This leads him to a renewed interest in Malcolm X’s critique of American society and his advocacy for black consciousness and black pride.  When Coates writes “The Legacy of Malcolm X: Why His Vision Lives on in Barack Obama,” he is struggling to reconcile Malcolm’s radicalism with Obama’s more cautious efforts at change, but in retrospect he admits that the “Obama-Malcolm parallel” in that essay is “strained.”

In “Fear of a Black President,” written in the fifth year, Coates’s disappointment in the Obama presidency is on full display.  Now he writes that “Obama’s racial strategy has been, if anything, the opposite of radical.” He has been forced into moderation by a “nation enlightened enough to send an African American to the White House, but not enlightened enough to accept a black man as its president.” When he reveals any identification with black people, as when he expresses sympathy for shooting victim Trayvon Martin, the issue becomes politicized and more whites take the opposing position. That “prevents Obama from directly addressing America’s racial history, or saying anything meaningful about present issues tinged by race, such as mass incarceration or the drug war.”

After interviewing Obama for “My President Was Black,” written in the eighth year, Coates seems to have lowered his expectations enough to admire Obama for how he has handled his job. “For eight years Barack Obama walked on ice and never fell. Nothing in that time suggested that straight talk on the facts of racism in American life would have given him surer footing.” At this point he is more accepting of what Obama has done, but still has no illusions about how much real change has occurred. “I don’t ever want to forget, even with whatever personal victories I achieve, even in the victories we achieve as a people or a nation, that the larger story of America and the world probably does not end well. Our story is a tragedy.” Coates describes himself as being resigned and at peace, accepting that “resistance must be its own reward,” whether it accomplishes social equality or not.

A tragic view

Coates is serious when he subtitles his book “An American Tragedy.” By his own admission, he can accept a rather bleak racial outlook with some resignation because “I am an atheist and thus do not believe anything, even a strongly held belief, is destiny.”

Coates thus explicitly rejects Martin Luther King’s assertion–paraphrased from the nineteenth-century Unitarian minister Theodore Parker–that “the arc of the Moral Universe is long, but it bends toward Justice.” For Coates, there is no reason to expect progress, nothing to have faith in. “There would be no happy endings, and if there were, they would spring from chance, not from any preordained logic of human morality.”

This is significant because it places Coates outside of a long tradition of black optimism, often expressed in religious language. In the words of the “Black National Anthem” (“Lift Every Voice and Sing”): “Sing a song full of the faith that the dark past has taught us/Sing a song full of the hope that the present has brought us.” Or as King said, “We as a people will get to the promised land.”

A focus on race

Coates’s relentless focus on race in telling the American story is both a strength and a weakness. It is a strength because it informs the reader by delving deeply into racial history. In “The Case for Reparations,” which Coates regards as the best essay in the collection, he documents the long history of discrimination that has kept black families in inferior housing and prevented them from accumulating wealth in real estate. They have been victimized by questionable tax claims and land seizures in the South, restrictive covenants forbidding sales to non-whites (my parents’ house had one), redlining of black neighborhoods for mortgage and insurance purposes, contract sales in which buyers accumulated no equity, discrimination in home loans (even for veterans under the GI Bill), as well as outright violence and intimidation.  Most recently, black loan applicants have been targeted for predatory loans with extremely risky terms, leading to disproportionate losses in the foreclosure crisis.

The effects of deprivation accumulate from generation to generation like compound interest, something that whites forget when they wonder why anti-discrimination laws haven’t led to instant black progress. Income disparities accumulate into larger disparities in net worth, so that black families have much less to fall back on in times of financial distress. Because of continuing patterns of segregation, “black families making $100,000 typically live in the kinds of neighborhoods inhabited by white families making $30,000.” That’s a sobering thought for anyone who has wanted to move into a better neighborhood for the sake of their children.

Once he appreciates the extent of the damage from racial segregation, Coates takes a dimmer view of black neighborhoods like the one Michelle Obama grew up in:

It is common today to become misty-eyed about the old black ghetto, where doctors and lawyers lived next door to meatpackers and steelworkers, who themselves lived next door to prostitutes and the unemployed. This segregationist nostalgia ignores the actual conditions endured by the people living there—vermin and arson, for instance—and ignores the fact that the old ghetto was premised on denying black people privileges enjoyed by white Americans.

Coates would like to see some form of reparations to compensate for the economic damage done to black people. He is open to different forms it might take, including Charles Ogletree’s proposal for “a program of job training and public works that takes racial justice as its mission but includes the poor of all races.”

Obviously any program that sounds specifically race-based will face significant white opposition, at least until white America faces up to the magnitude of the harm it has done. But even those who are skeptical about reparations can benefit from the information Coates provides in making his case.

A blind spot on class

On the other hand, the strong focus on race leads Coates to downplay the class factor in the American story. The point is not just that variables like class–and gender and religion too–are important in their own right. It is that they intersect with race to add new dimensions to the race story itself.

Because he draws the line so sharply between black and white, Coates tends to lump all whites together as beneficiaries of racism. The story he wants to tell, based on Morgan’s American Slavery, American Freedom, is a story of “rights gradually awarded to the mass of European poor and oppressed, at precisely the same time they were being stripped from enslaved Africans and their descendants.” These two developments are integrally related. “Enslavement provided…the foundation of white social equality.”

Ironically, the idea that whites are equal in their superiority is exactly what Confederate leaders liked to claim, as Nancy Isenberg discusses in White Trash. Jefferson Davis said that “white men have an equality resulting from the presence of a lower caste,” and John C. Calhoun said that all whites, “the poor as well as the rich, belong to the upper class, and are respected and treated as equals.” But is that fact, or part of racist ideology?

The alternative, advanced by critics of the South from Ulysses Grant to Lyndon Johnson, is that poor whites have been victims too, of a system that held down the cost of labor and set one part of the working class against the other. Whites who are low on education and income are especially interested in being respected as whites–and maybe as men and as Christians too. But that may lead them to vote their social identity instead of their class interest. What they don’t get for their support of the white establishment is collective bargaining rights or greater investment in public education. In this view, racism plays into the hands of economic elites by dividing and weakening the working class.

Coates is skeptical of race-neutral programs, since they may help both blacks and whites without necessarily closing the gap between the two groups. The counter-argument is that any program aimed at the disadvantaged should help black people disproportionately, since they are disproportionately disadvantaged! The expansion of Medicaid under Obamacare is a much simpler and politically feasible way of helping minorities than reparations.

Finally, the exclusive focus on race may be largely responsible for Coates’s pessimism. By seeing the problem just as a conflict between a black minority and a white majority, he paints himself and his people into a corner, unable to make common cause with other oppressed peoples. Cornell West goes so far as to accuse Coates of inadvertently serving the global elites by marketing fatalism.

Although I recommend this book for its racial insights and historical information, I prefer the vision of William J. Barber’s The Third Reconstruction. He calls for a “fusion coalition” uniting people with many different social justice concerns across racial and other lines.

Continued


Solving the Productivity Puzzle

February 27, 2018

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McKinsey Global Institute, “Solving the Productivity Puzzle: The Role of Demand and the Promise of Digitization,” 2018. 

This report discusses why the rate of growth in economic productivity has been so low in recent years, and how it might improve in the future.

Productivity: Why it matters

The report makes a fundamental assumption: “Productivity growth is crucial to increase wages and living standards, and helps raise the purchasing power of consumers to grow demand for goods and services.” That’s basic economics, but worth remembering at a time when people in many countries have grown accustomed to minuscule productivity growth.

Production and consumption are, of course, two sides of the same economic coin. The most obvious way for the average worker to receive more goods and services is for the average worker to produce more goods and services per hour of work. People can also get ahead by working more hours, but then they are paying for their economic gains with reduced free time.

The benefits of high productivity may not be distributed evenly, but that’s another issue. Workers may not receive their fair share of the benefits when productivity is rising, but they are even less likely to get ahead when productivity is not rising. Then the competition for benefits is more of a zero-sum game, and the haves will be especially resistant to redistributing benefits to the have-nots. The widespread assumption that anyone’s gain must be someone else’s loss is a big reason why our politics have become so ugly. (That last point is mine, not the report’s.)

Sagging productivity

The report is based on data from seven countries: France, Germany, Italy, Spain, Sweden, the United Kingdom, and the United States. Productivity is defined simply as Gross Domestic Product per hour worked.

The data show these trends for recent decades:

  • Productivity growth was strong during the postwar economic boom
  • In general, productivity growth has been much slower since the 1970s
  • A brief productivity boom occurred from about 1995-2005, especially in the United States, associated with applications of information and communications technology (ICT)
  • Productivity has stagnated since then, with near zero annual growth in both Europe and the U.S.

The report identifies three main reasons for low productivity growth, describing them as waves passing over the economy one by one.

First, the rate of innovation associated with ICT slowed after 2005. For example, big retailers like Walmart had used the new technologies to make their supply chains more efficient, but the biggest changes had already occurred by then.

Second, the financial crisis of 2007-08 ushered in a period of “weak demand and uncertainty.” Businesses were reluctant to make costly changes in production without confidence that the market could absorb the additional goods or services produced. Companies held back on new investments and held the line on wages. The economy recovered from the recession, but it was a “job-rich” and “productivity-poor” recovery. As long as there were people wanting to return to work, “companies met slowly rising demand by filling excess capacity and adding hours,” not by raising productivity and wages. Hopefully, the economy can now move beyond recovery into a new period of productivity growth and wage gains. The danger is that the economy becomes stuck in a vicious cycle, in which workers earn too little to raise demand, and businesses fail to invest in higher productivity because they can meet existing demand with low-cost labor.

Third, a revolution in digital technology is underway, but “the impact of digital is not yet evident in the productivity numbers.” Many sectors of the economy, such as education, health care and construction, are only beginning to digitize their operations. Transition costs can be high, including not only the costs of equipment and training, but the disruptive impact on existing operations. A retailer that adds an online store may suffer offsetting declines in business at its brick-and-mortar stores.

Prospects for digital-based productivity growth

As of now, the economy is in a paradoxical position: “…In an era of digitization, with technologies ranging from online marketplaces to machine learning, the disconnect between disappearing productivity growth and rapid technological change could not be more pronounced.” How long can it be before technological know-how actually translates into productivity gains and higher wage potential for the average worker?

The authors of this report see “the potential for at least 2 percent [productivity] growth a year over the next ten years, with 60 percent coming from digital opportunities.” But they also see some potential problems that need to be addressed if that potential is to be realized.

One of their concerns is the market power that digital technologies may bestow on a few hugely successful companies:

Various digital technologies are characterized by large network effects, large fixed costs, and close to zero marginal costs. This leads to a winner-take-most dynamic in industries reliant on such technologies, and may result in a rise in market power that can skew supply chains and lower incentives to raise productivity.

To put it more simply, once a company has made a large initial investment in new technologies, it may be able to turn out products so cheaply and maintain such a locked-in customer base, that it may no longer have to raise productivity to dominate a market. It might just become fat and lazy. I doubt if this phenomenon is unique to the digital age. It may be part of the dynamics of capitalism, helping to explain why productivity-based economic change comes in cycles of growth, maturation and stagnation.

Demand-side constraints on productivity

Another big concern is that weak economic demand may continue to exert a drag on investment and productivity growth. Some of the weak demand may be just cyclical, a normal after-effect of recession. But the authors of this report join other economists in worrying that some of it may be structural–that is, built into today’s economy. They express concern that “declining labor share of income and rising inequality are eroding median wage growth, and the rapidly rising costs of housing and education exert a dampening effect on consumer purchasing power.”

How digital technologies affect jobs also has implications for the demand side. In theory, the benefits of higher productivity could appear in the form of higher wages and shorter work weeks, as they did in the postwar era. If, on the other hand, a large segment of the labor force is simply replaced by smart machines, their loss of purchasing power could reduce economic demand and nip economic growth in the bud. “Unless displaced labor can find new highly productive and high-wage occupations, workers may end up in low-wage jobs that create a drag on productivity growth.”

This line of reasoning leads the authors to recommend public policies that focus on the demand side. That is in contrast to conservative policies that focus on helping the supply side (businesses and their investors) with tax cuts and looser regulations. The implicit assumption (perhaps rarely stated since it seems so counter-factual) is that the poor capitalists don’t have enough capital to raise productivity and grow the economy. If, however, the problem is more on the demand side, then the economy may be helped by government spending to supplement the purchasing power of low-income consumers, invest in public works like infrastructure repairs, make education and health insurance more affordable, and support worker retraining for new jobs.

The report also recommends that companies “rethink their employee contract in order to develop a strategy, potentially together with labor organizations, where people and machines can work side by side and workers and companies can prosper together.” If that sounds like pie in the sky in this era of anti-labor capitalism, we should remember that it is a pretty good description of the business-labor understanding that existed during the last great era of productivity growth. More of us knew then what many of us seem to have forgotten recently, that the economic engine runs best when its benefits are widely shared. In the 1950s, the “widely shared” part mainly applied to white men. Now we must learn to be even more inclusive.

Overall, the report is an optimistic, yet not unrealistic vision: “A dual focus on demand and digitization could unleash a powerful new trend of rising productivity growth that drives prosperity across advanced economies for years to come.”


White Trash (part 2)

February 16, 2018

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Nancy Isenberg discusses how pejorative stereotypes like “poor white trash” have served to stigmatize people as a “breed apart,” attributing their economic position to their own inherent deficiencies. Occasionally, however, the derogatory labels give way to more sympathetic portrayals, some of which can inspire economic reforms.

That was especially true during the Great Depression. In promising a New Deal for forgotten Americans, Franklin Roosevelt focused the country’s attention on poverty in general and Southern rural poverty in particular. He called the South “the Nation’s No. 1 economic problem.”

The Roosevelt administration explicitly rejected the conception of poor whites as a distinct breed, hopelessly confined to a mean and ugly condition by some hereditary weakness.

Secretary of Agriculture Wallace predicted that if at birth one hundred thousand poor white children were taken from their “tumble-down cabins” and another hundred thousand were taken from the wealthiest families, and both groups were given the same food, education, housing, and cultural experiences, by the time they reached adulthood there would be no difference in mental and moral traits.

In his Southern Regions of the United States (1936), Howard Odum supported this view with comprehensive data and sociological analysis. He showed how the Southern states had perpetuated poverty by managing land poorly, tolerating high rates of illiteracy, and depriving citizens of basic services. Among the groups the New Deal targeted for special assistance were tenant farmers, two-thirds of whom were white. They did much of the South’s agricultural labor but owned practically nothing.

The suburban frontier

After the Depression and World War II, the U.S. population was majority urban, and many upwardly-mobile Americans were moving to the new suburbs. Although the large metropolitan middle class may have created the impression of a classless society, “suburbs were turned into class-conscious fortresses. Zoning ordinances set lot sizes and restricted the construction of apartment buildings, emphasizing single-dwelling homes to keep out undesirable lower-class families.” [Early suburbs, like the one I grew up in, also had restrictive covenants in the deeds confining ownership to Caucasions.]

Among the groups left behind in the move into the new suburban neighborhoods were inner-city residents–now mostly nonwhite–and the rural poor. The latter might now be living in mobile homes instead of shacks, but they were still stigmatized as “rednecks” or “trailer trash.”

However, the discontents of suburban living gave an interesting twist to lower-class stereotypes. At a time when many social critics and young people were starting to criticize the suburban lifestyle as too bland and conformist, colorful characters with lower-class origins, like Elvis Presley, could achieve status in popular culture. Their uninhibited, undomesticated and macho personas could have broad appeal, at least in the expanding leisure and entertainment industry.

Varieties of identity politics

Lyndon Johnson’s “Great Society” programs tried to carry on the New Deal tradition, seeking to uplift rather than stigmatize the poor. As a Southerner himself, Johnson was well aware of how southern elites and politicians kept poor whites in their place, but held their support with appeals to white supremacy: “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”

Johnson tried to help both the rural poor and the inner-city poor. But he knew that his party’s strong stand on civil rights legislation was going to lose white votes in the South. That gave the Republican Party an opportunity to win over poor white voters who had voted Democrat since the 1930s. Another problem for liberals was that public assistance now carried more of a stigma than it had during the Depression–the stigma of a lazy dependency on Big Government. Republicans could invite voters–rich and poor–to identify with a much more positive image–Nixon’s “‘Silent Majority’ of Americans who saw themselves as hardworking, middle American homeowners dutifully paying their taxes and demanding little of the federal government.” This reinforces one of the main points of the book, that “identity has always been a part of politics.” Different parties just go about constructing social identities in different ways.

Negative stereotypes of the poor persisted, but they were more likely to emphasize a “culture of poverty” than hereditary deficiency. Social scientists no longer thought that poverty was inborn. But they became divided over whether children acquire an impoverished way of life mainly from their families and neighborhoods, or whether they are forced into it by oppressive economic conditions. That is a subject I wish Isenberg had explored in more detail.

The politics of social class

On one level, this is a book about how we stigmatize the poor instead of confronting the class barriers that keep them poor. More subtly, it is a book about how we co-opt the poor by offering them more positive identities to sustain them in the absence of real opportunity. The rebel soldier defending his Southern heritage, the fiercely independent hillbilly in coal country, the low-wage worker claiming to want nothing from government–All these politically enhanced self-images have served systems mainly profiting someone else.

Those who are profiting more than ever, the economic elites who claim an increasing proportion of the national wealth and income, work to channel the resentments of the poor away from actual elites and toward those who question the system.  The poor:

…are told that East Coast college professors brainwash the young and that Hollywood liberals make fun of them and have nothing in common with them and hate America and wish to impose an abhorrent, godless lifestyle. The deceivers offer essentially the same fear-laden message that the majority of southern whites heard when secession was being weighed. Moved by the need for control, for an unchallenged top tier, the power elite in American history has thrived by placating the vulnerable and creating for them a false sense of identification—denying real class differences wherever possible.

Donald Trump’s brand of populism is taking the co-optation of the poor and the vilification of liberals to an absurd extreme, hopefully absurd enough to expose the game for what it is. He appeals to poor whites not as low-wage labor in need of economic reforms, but as whites, or men, or Christians, or gun owners, or native-born Americans hostile to immigrants. And he is quick to brand his political adversaries and critics as “enemies of the people,” the people being the folks described above.

This is not a book about economic policy as such. It contains little analysis of what programs would actually uplift the poor today. It is more about the stereotypes that get in the way. What Isenberg wants is a sober class analysis unencumbered by such stereotypes:

…The most powerful engines of the U.S. economy—slaveowning planters and land speculators in the past, banks, tax policy, corporate giants, and compassionless politicians and angry voters today—bear considerable responsibility for the lasting effects on white trash, or on falsely labeled “black rednecks,” and on the working poor generally. The sad fact is, if we have no class analysis, then we will continue to be shocked at the numbers of waste people who inhabit what self-anointed patriots have styled the “greatest civilization in the history of the world.”

Neither stigmatizing the poor nor co-opting them with flattering stereotypes is helpful. As Tevye said in Fiddler on the Roof, “It’s no disgrace to be poor, but it’s no great honor either.” Poverty can become a cultural tradition and a flawed social identity. But policymakers need to see it first and foremost as an economic condition.