Postcapitalism

May 3, 2016

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Paul Mason. Postcapitalism: A Guide to Our Future. New York: Farrar, Straus and Giroux, 2016.

Paul Mason is a British freelance journalist and economics writer. He is a bold, creative thinker who challenges a lot of mainstream economic thinking. Here he has written an especially insightful and thought-provoking book, one that deserves serious attention and debate.

Mason’s title may make his book sound like a speculative, utopian work, but the future he envisions doesn’t drop out of the sky. It emerges naturally from his understanding of both the recent and earlier history of capitalism. For those who think that something as pervasive and entrenched as capitalism cannot possibly wind down, he offers this observation: “It is absurd that we are capable of witnessing a 40,000-year-old system of gender oppression begin to dissolve before our eyes, and yet still seeing the abolition of a 200-year-old economic system as an unrealistic utopia.”

Another stumbling block for readers may be Mason’s frankly Marxian perspective, although his is a revised version with no “dictatorship of the proletariat.” (Today he sees the educated and networked individual as the key agent of change.) I have some reservations about a few of his arguments, especially concerning the labor theory of value, but that hasn’t stopped me from agreeing with many of his conclusions about the future.

Capitalism’s bleak prospects

Mason begins his book by saying that “the long-term prospects for capitalism are bleak. According to the OECD, growth in the developed world will be ‘weak’ for the next fifty years. Inequality will rise by 40 per cent.”

If we keep going as we have been, we face two alternative futures, neither very pleasant:

  1. Economic globalization continues, but only the wealthy in the developed countries get much benefit from it; or
  2. Popular opposition to globalization grows, global cooperation breaks down, and more nationalist and authoritarian governments emerge, as in the 1930s. Each country tries to save itself at the expense of others, such as by putting up trade barriers to other country’s manufactured goods [See Trump, Donald].

And either way, things get worse in mid-century when the full effects of climate change and demographic change (the challenge of supporting larger and older populations) are felt.

New technologies yes, capitalism maybe not

Mason believes that a better alternative is to take advantage of the potential for new technologies to end capitalism as we know it. Economic problems such as over-reliance on fossil fuels and stagnating wages result from trying to perpetuate a system that no longer works very well. “Capitalism is a complex, adaptive system which has reached the limits of its capacity to adapt.” Although capitalism has a long history of generating technological change, it can no longer adapt to such change because it is now creating technologies that are ultimately incompatible with capitalism itself.

“Information is different from every previous technology,” Mason declares. “Its spontaneous tendency is to dissolve markets, destroy ownership and break down the relationship between work and wages.” Information is different because, unlike other means of production, it can be reproduced at near-zero cost. If I were to give you my car I would lose a car, but what have I lost if I give you an idea? It costs me nearly nothing to share these thoughts with you, so why should I expect you to pay for them? Why would people buy an encyclopedia when Wikipedia is free, or buy a newspaper when so much news is available online?

In addition to widely disseminating “information goods,” the information revolution also “adds a high information content to physical goods, sucking them into the same zero-price vortex….” In a fully automated production system, the key resource is the set of instructions for turning raw materials into finished products. “The knowledge content of products is becoming more valuable than the physical elements used to produce them.” Once the knowledge exists, many users can apply it with little additional cost.

A world of abundant information should also be a world of abundant things produced by automated, information-driven processes. That undermines capitalist markets, since “markets are based on scarcity while information is abundant.” As industrial robots proliferate, the need for paid human labor should diminish. Earlier technological innovations like the assembly line already shortened the work week while simultaneously raising living standards for workers. The more radical change Mason envisions now will free vast amounts of labor from paid employment. Much of that labor can go into voluntary but socially useful activity, whether it is caring for a loved one or making music. Consumers too should experience some liberation from capitalist markets, as more goods and services become available at little or no cost. “We are seeing the rise of non-market production: horizontally distributed peer-production networks that are not centrally managed, producing goods that are either completely free, or which…have very limited commercial value.”

Capitalists can impede this transition, but only by monopolizing information in order to restrict its free flow and maintain its artificial scarcity. Intellectual property rights will be a key issue. Society will have to balance the need to grant such rights in order to reward the producers of new knowledge, against the need to limit such rights in order to facilitate the free spread of information. In the end, Mason doesn’t think that capitalists will be able to own or control the intellectual means of production the way they have owned and controlled other means of production. “The main contradiction today is between the possibility of free, abundant goods and information and a system of monopolies, banks and governments trying to keep things private, scarce and commercial.”

Dramatic changes, conflicts and crises have been common in the history of capitalism. As profit-making opportunities have declined in old industries, capital has repeatedly sought out new markets and new technologies. Always, however, the assumption of industrial capitalism was that people would depend on the owners of centralized means of production for both employment and products. What makes the current crisis different is that knowledge is so easily decentralized, and networked individuals can create so much of value on their own. Global corporations continue to make their profits for now, but they do so increasingly by squeezing the workers and damaging the environment. New technologies that could produce more freedom and abundance for all while better protecting the planet are not yet allowed to do so.

Mason’s argument that abundance will reduce market activity and expand non-market activity makes a lot of sense to me, but I’m not sure how far to take it. The most obvious example is the displacement of human labor from manufacturing production as automation takes control. Many low-skill service jobs could also be automated, although the availability of cheap labor reduces the incentive to make the transition. But I would expect there to be a continuing market for skilled services because not everyone will be willing or able to provide them. A lot of free legal information is available online, but that doesn’t mean that everyone is comfortable being their own lawyer. And although an abundance of goods and services may make them cheaper, only if they become entirely free will the need for money and marketplace exchanges disappear entirely. While some people, especially the more educated, may experience a reduction in paid work hours as a blessing, others may experience it as the curse of unemployment or poverty. Mason’s postcapitalist world will require massive investments in human capital and a stronger safety net for the economically displaced.

The limits of neoliberalism

Standing against Mason’s vision of the future is the set of ideas and policies known as neoliberalism. That is the most recent incarnation of the free-market economics that was considered liberal in the eighteenth and nineteenth centuries, but is associated with conservatism today. Mason defines it as a commitment to uncontrolled markets, the pursuit of self-interest through the market, the small state, and a high tolerance for financial speculation and inequality. On the one hand, he credits neoliberalism for unleashing the information revolution and promoting economic development, especially in poorer countries. On the other hand, he blames the uncontrolled pursuit of profit for aggravating economic inequality and endangering the global environment.

Although neoliberal policies have brought capitalism to a crisis point, neoliberal theory is poorly equipped to understand crisis or radical transformation. Neoliberals believe that markets are essentially rational and self-correcting. If left to their own devices, they tend toward equilibrium, not crisis. For neoliberals, capitalism is just the normal state of affairs, a “continuous present.” Writing with more than a little sarcasm, Mason says that neoliberal economics has a “brilliant model for understanding forms of capitalism that do not change, mutate or die. Unfortunately these do not exist.”

Neoliberal policy and practice has kept capitalism as we know it limping along by relying on loose monetary policy, dramatic growth of the financial sector, and global imbalances between creditor and debtor nations. Specifically:

  1. “Fiat money,” which is money that a state can create freely as long as people have confidence in it, has allowed central banks to counteract stock market drops by pumping cheap money into the economy. When this money inflates the prices of stocks and other assets beyond realistic earnings prospects, boom becomes bust.
  2. As real wages have stagnated, consumer spending has been sustained more by credit and borrowing. By the time of the 2008 financial crisis, 40 percent of corporate profits were coming from the financial sector. Profits must eventually fall if they depend too much on the accumulation of debt.
  3. Neoliberal policies have created debtor countries as well as indebted consumers. “For countries that smashed organized labor, offshored large parts of their productive industries and fueled consumption with rising credit, the outcome was always going to be trade deficits, high government debts and instability in the financial sector.” Debtor nations like the United States require other countries, such as China, Germany and Japan, to be creditor countries. When the burden of debt becomes too great to sustain, countries resist and the system breaks down.

Since the recent financial crisis, neoliberal policy has turned toward imposing austerity on the debtors, while not addressing the reasons for the expansion of debt in the first place. Mason regards the economic recovery as only a temporary fix, since the underlying weaknesses have not been corrected. The real existential crisis of capitalism itself is only beginning.

The most important limit on the neoliberal system is information technology, which is put to the service of the existing capitalist system in the short run, but undermines it in the long run.

And that’s just the introduction and Chapter 1! My next post will look at the historical part of Mason’s argument, his interpretation of the “long cycles” in capitalist history.

Continued

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When Should Parties Move toward the Center?

March 25, 2016

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Reading Brown Is the New White by Steve Phillips got me thinking about the general question of political party strategy. Should a party that wants more votes appeal to the center of the political spectrum, or should it focus on “firing up the base”? Phillips thinks that Democrats should do less of the former and more of the latter. Under what conditions is that good strategy?

To start with a simple conception of the electorate, imagine a bell-shaped curve with moderate, centrist voters outnumbering both distinct leftists and distinct rightists. Although opinions on single issues can be quite polarized, there are a lot of issues that can be used to classify voters on a liberal-to-conservative spectrum. People who are conservatives on abortion are not necessarily conservative on economics. If only voters who are consistently liberal or conservative score near the extremes, then the majority come out looking more moderate. If that’s the case, and assuming there are only two major parties, one could make a general case for appealing to the center, since that’s where the most votes are.

What that simple picture overlooks is that each party has its own political base, to which it must appeal in order to motivate its supporters to vote. Each party has its own distribution curve, one to the right of the other. Each curve will have its own peak, where the largest number of its supporters are found. In the simplest case, the two parties have the same number of voting members, both peaks are the same height, and the two peaks are equidistant from the national center. This sets up the classic dilemma. On the one hand, nominating someone a little more centrist than the typical party member might be good strategy, in the hope of getting all the votes of party members plus some support from more moderate swing voters. On the other hand, that strategy might lose some support from the party base. A “true conservative” or “true progressive” might really turn out the party faithful, which could be more crucial to victory than winning over a few swing voters. This, of course, is exactly Phillips’ point with regard to today’s Democratic Party.

Another variable affecting the outcome is party loyalty or discipline. If party loyalty is high, party members may turn out regularly in any case, so success may hinge on adding some swing voters as well. But if the base only votes when they are really excited about a candidate, a moderate candidate could be fatal. Democrats have long had a problem turning out minority and poor voters who lean Democratic but don’t make it to the polls.

Complicating matters further, there is no guarantee that the two parties are equally popular or equidistant from the national center to begin with. One party can be smaller and farther from the center, while the other is larger and closer to the center. This can easily happen because the center is a moving target as far as substantive issues are concerned. Today’s centrist may support policies that were once considered leftist, such as the Social Security system or the right of workers to bargain collectively. Sometimes the country changes, and a party is left behind. A party that finds itself in the minority may have no choice but to tack toward the center, while a majority party can be true to its base and still succeed. Phillips believes that the Democratic Party can now show its true progressive colors because, as his subtitle declares, “the demographic revolution has created a New American Majority.”

These considerations help us make sense out of the recent history of presidential elections. During the period of Democratic Party dominance from 1932 to 1964, Democrats could win the White House with frankly liberal candidates. Republicans were successful with the moderate war hero, Dwight Eisenhower, who accepted much of Roosevelt’s New Deal, but they lost badly with the arch-conservative Barry Goldwater.

Things changed after the Democratic Party became the party of civil rights and the War on Poverty. Democrats had to contend with White backlash, while at the same time dealing with an internal struggle over the Vietnam War. In 1968, the moderate conservative Richard Nixon narrowly defeated the liberal Hubert Humphrey, who lost votes both from young opponents of the war and blue-collar supporters of the southern segregationist George Wallace. When Democrats nominated the even more liberal George McGovern in 1972, Nixon won reelection in a landslide. In the aftermath of Watergate, Democrats elected a southern moderate, Jimmy Carter, whose presidency was marred by runaway inflation and the Iranian hostage crisis. Republicans then launched the “Reagan Revolution” with landslide wins in 1980 and 1984. They did so by appealing to the cultural and racial conservatism of White Southerners, blaming Big Government for the country’s economic problems, and interpreting the hostage crisis as a sign of military weakness.

The previously dominant Democratic Party had tried to keep moving to the left, but the country hadn’t gone with them. No wonder the conventional wisdom after 1980 was that the party had to strengthen its appeal to the center. The election of Bill Clinton, who conceded that the “era of Big Government is over,” marked the success of that strategy.

Now, however, the tables may be turning. Now it’s the Republican Party that keeps moving in one direction, but is having trouble getting the country to go along. This is partly because of the demographic revolution described by Phillips. But the Republican brand is also being damaged in other ways: loss of public confidence in free-market, “trickle-down” economics and waning public enthusiasm for conservative positions on social issues, notably gay rights. Republicans have now lost the popular vote in five of the last six presidential elections (including Al Gore’s narrow victory in votes, but loss of the electoral college due to the Florida debacle and Supreme Court intervention). Instead of moderating their positions, they have doubled down on conservatism, offering unusual resistance to the nation’s first Black president, perhaps to please their White Southern base. The result is a legislative gridlock that doesn’t please anyone, but the Republican controlled Congress is getting the brunt of the criticism. Current unfavorable ratings are Congress 61%, Republican Party 60%, Democratic Party 43%.

The Republican Party may now be so far to the right of the typical voter that its ability to win national elections is seriously damaged. If so, it makes sense that it is fracturing over the dilemma that confronts any minority party, whether to tack to the center by nominating a moderate with some hope of winning, or to appeal to true believers by selecting someone more extreme who cannot. Republican primary voters seem to be choosing the latter option, since the two biggest vote getters are among the most conservative (and nationally unpopular) in the race. Donald Trump seems to be a throwback to the nationalists of the 1920s and 30s, wanting to blame the country’s problems on foreigners, immigrants and minorities. And Ted Cruz is an evangelical Tea Party conservative who denies that human activity is contributing to climate change, encourages states to ignore the Supreme Court ruling upholding same-sex marriage, and wants to eliminate many federal government departments (Energy, Education, Commerce, Housing & Urban Development, Internal Revenue Service).

If it is now safer for the Democratic Party to move to the left, while it is hazardous for the Republican Party to remain on the right, that’s a pretty good sign that the balance of power in the country is starting to shift. Of course, I may have to eat those words if the country actually elects a President Trump or President Cruz!

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Brown Is the New White (part 2)

March 23, 2016

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Having shown how demographic changes are enabling Democrats to put together a coalition of progressive Whites, Blacks, Latinos, and Asian Americans, Steve Phillips discusses what this means for political strategy and policy. He believes that Democrats must acknowledge how much they have been “blinded by the White”: “Even at this time, when a racial demographic revolution has transformed the composition of the electorate and elected and reelected a Black president, much of the progressive movement and many progressive campaigns are still dominated by White leadership, fixated on White voters, and focused on policies preferred by White people.” Until that changes, the progressive movement cannot reach its full potential either in popular appeal or social impact.

Part of the argument for refocusing Democratic strategy and policy is practical. The Party has been concentrating too much of its attention on the small and shrinking proportion of White swing voters in the electorate, while failing to mobilize the growing segments of the population. When Democrats win the Presidency but then lose the next midterm election, the pundits assume that too many White voters shifted Republican, instead of noticing that too few people of color turned out to vote. The Democratic base is now large enough to win more elections just by motivating existing supporters to vote, even if support from White working-class voters remains under 50%. Money that is spent on campaign ads trying to sway undecided voters might be better spent on door-to-door voting drives targeting minority neighborhoods. But when 97% of the Party’s political consultants are White, outreach to minority communities may not get the attention it deserves.

As long as Democratic leaders believe that their success depends on appealing to White swing voters, they may fail to develop policies that excite progressives and bring them to the polls. President Obama developed a very moderate position on immigration reform, trying to bargain with conservatives by getting tough on border security and deportations in the hope of gaining their support for a path to citizenship. He wound up with neither Republican cooperation nor enthusiastic Latino support. Phillips feels that Democrats would have done better by taking a bolder position and turning out their base to vote for it.

Beyond the practical argument that Democrats ought to pay more attention to growing minorities, there is a deeper argument about social justice. “The New American Majority is inherently progressive because it is a direct outgrowth of centuries of exclusion and exploitation.” Americans who care about social justice should make common cause with historically marginalized and oppressed peoples. Phillips quotes sociologist Joe Feagin on the subject of racial inequality: “Social science research is clear that white-black inequalities today are substantially the result of a majority of whites socially inheriting unjust enrichments (money, land, home equities, social capital, etc.) from numerous previous white generations— the majority of whom benefited from the racialized slavery system and/or the de jure (Jim Crow) and de facto overt racial oppression that followed slavery for nearly a century, indeed until the late 1960s.” Social science research also documents the persistence of subtle forms of discrimination. For example, a recent study sent out job resumes with identical credentials but different names. “Those with more ‘Black-sounding’ names such as Lakisha and Jamal received 50 percent fewer callbacks for interviews than those with more ‘White-sounding’ names such as Emily and Greg.”

The country’s changing demographics create an opportunity to rectify such injustices, by reconsidering policies that impact most heavily on minority communities. For example, a majority of those who live within two miles of a toxic waste dump are people of color. Bill Clinton now acknowledges that the tougher federal sentencing guidelines he approved contributed to the over-incarceration of African Americans. And Phillips wants to change the narrative that we like to tell about poverty “from one in which poverty is seen as an individual failing to one that connects modern-day poverty to more than four hundred years of systemic, intentional injustice against people of color as a group.”

If one takes this quote and a few others too literally, they make it sound as if only people of color are poor, and only communities of color are victims of injustice. A close reading of the book reveals that this is not Phillips’ intention, since he also mentions social reforms that could benefit all groups, such as larger investments in public education and universal voter registration. Nevertheless, he seems most interested in “making major changes in priorities so that time, attention, and massive amounts of resources are directed toward the country’s communities of color.” He does not discuss the historical struggle of working-class White ethnic groups for decent wages and working conditions. He seems content to assemble his progressive majority without increasing White working-class support. Although that is mathematically possible, wouldn’t it be even better if the Democratic Party could appeal to more working-class people across the racial divide? Too many working-class Whites vote Republican because Democrats have not shown them how they would benefit from Democratic economic policies. Surely Democrats can do a better job in that department without sacrificing their progressivism.

Although Phillips sees a great potential for Democrats to benefit from the “New American Majority,” he warns that conservatives can also count. Republicans have been using two main strategies to counter the growing numbers of minorities: “suppression and seduction.” First, they pass restrictive voting measures that impact more heavily on the poor and minorities, many of whom lack government-issued IDs. Second, they seek out unusually conservative members of minority groups (that is, those who oppose progressive policies to combat inequality) and back them for public office. Some moderate Republicans are willing to entertain more authentic minority appeals. After President Obama’s reelection in 2012, the Republican Party’s “Growth and Opportunity Project,” popularly known as the “autopsy,” recommended more outreach to people of color and specifically endorsed comprehensive immigration reform. Phillips warns Democrats that they could miss an historical opportunity here, if Republicans nominate a moderate like Jeb Bush or Marco Rubio and get serious about appealing to Latinos. So far, the Republican base doesn’t seem to be getting the message, since their favorite presidential candidates are those with the most restrictive immigration policies. At this time, the prospects for a “New American Majority” to elect another Democratic president seem pretty bright.

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Brown Is the New White

March 21, 2016

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Steve Phillips. Brown Is the New White: How the Demographic Revolution Has Created a New American Majority. New York: The New Press, 2015.

Steve Phillips makes the case that the United States already has a progressive majority, if the demographic growth and voting patterns of the nonwhite population are taken seriously. In 2012, President Obama won reelection with only 39% of the White vote, but with 93% of the Black vote, 71% of the Latino vote, and 73% of the Asian American vote. Other things being equal, this Democratic coalition should grow because of the rapid growth of the nonwhite population. “Each day, the size of the U.S. population increases by more than 8,000 people, and nearly 90 percent of that growth consists of people of color.”

This is not to say that progressive Whites are an insignificant part of the coalition. If only people of color voted reliably Democratic, then any significant political shift could not occur until around 2044, when the U.S. is expected to become a “majority minority” country. But looking at it that way assumes more white-nonwhite polarization than actually exists, and it “overlooks the equation that’s been hiding in plain sight.” Add progressive Whites to progressive people of color, and “this calculation reveals that America has a progressive, multiracial majority right now that has the power to elect presidents and reshape American politics, policies, and priorities for decades to come.”

Historically, the growing political significance of people of color goes back to two major legislative acts of 1965. The Voting Rights Act enabled African Americans to vote in many states where they had been prevented from doing so. The Immigration and Nationality Act got rid of the old quota system that had favored European immigrants, thus opening the door to more Asians, Latin Americans and Africans. Illegal immigration has changed the electorate too, since the children born here are citizens with voting rights even if their parents are not.

Consider the demographics of the various groups:

Non-Latino Whites are 63% of the population and 71% of the Citizen Voting Age Population. They are a much larger portion of the older population than the younger, however, and their overall proportion will continue to decline. On the average they have voted 40% Democratic since 1972.

African Americans are 13% of both the total population and the Citizen Voting Age Population. They have an exceptionally strong allegiance to the Democratic Party.

Latinos are now 17% of the population but only 10% of the Citizen Voting Age Population, since so many are undocumented or not old enough to vote. However, young Latinos are turning eighteen at a rate of about 800,000 a year. Latinos surpassed African Americans in population in 2001, but they have not surpassed them in voting population. They vote much more Democratic than Republican, but not as Democratic as Blacks.

Asian Americans are 6% of the population and 4% of the Citizen Voting Age Population. Their rate of growth in the population surpasses all the others. They also tend to vote Democratic.

Phillips sees a “New American Majority” that is now at 51% of the electorate and growing. He bases this on a simple calculation that multiplies each group’s percentage of the country’s eligible voters by the group’s support for Barack Obama in 2012. (One has to accept the latter as a decent indicator of progressive sentiment.) For example, Latinos are 10% of the country’s voters and voted 71% for Obama, so it follows that 7% of the electorate may be considered progressive Latinos. Similar calculations reveal an electorate that includes 28% progressive Whites, 12% progressive Blacks, 3% progressive Asians, and 1% other progressives. Total: 51 percent!

Phillips identifies 33 states where this new majority “has an outright or soon-to-be-outright mathematical majority of eligible voters.” That’s a total of 398 electoral votes, far more than the 270 required to win the presidency. The new majority is especially influential in big cities, while what might be called the old majority is more prominent in rural areas. This urban-rural split, along with some very effective Republican gerrymandering, accounts for the pattern of governance in states like Texas and North Carolina, where Republicans control the state government and the Congressional delegation while Democrats control many large cities.

The next post will discuss the implications of these changes for political strategy and policy. How can the Democratic Party best consolidate a progressive coalition?

Continued

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Rewriting the Rules of the American Economy (part 3)

March 11, 2016

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Stiglitz and his co-authors argue that “the rules shaping our current economy were informed by an economic orthodoxy that we now know is incorrect and outdated,” namely, the “supply-side” economics that became fashionable during the Reagan-Bush era. They see that as an underlying cause of many of our recent economic problems, especially the concentration of economic benefits at the top. In the last part of the book, they make a number of recommendations for rewriting those rules. I will summarize them only very briefly here, since there are too many to discuss in any detail.

The recommendations include many familiar proposals that progressives will find more acceptable than will conservatives. I don’t think they can be dismissed as a “knee-jerk liberal” agenda, however, since there is a clearly stated rationale for the whole package based on the authors’ institutionalist understanding of how the economy works. Thus the recommendations have two main objectives: (1) “to tame rent-seeking behaviors that unduly reward those at the top while raising costs for the rest and reducing the efficiency and stability of the U.S. economy,” and (2) “to restore the rules and institutions that ensure security and opportunity for the middle class.”

Taming the top

The first goal here is to make markets more competitive. Limit corporate domination of certain markets by reforming intellectual property rights and giving government more freedom to bargain with pharmaceutical companies over drug prices. Strike a better balance between creditor and debtor rights by expanding bankruptcy laws to cover homeowners and students. Structure trade agreements so that companies can compete globally, but not in a race to the bottom where the most business goes to the worst employers. Require companies exporting to the US to have their labor practices certified by an organization such as the International Labor Organization.

Second, fix the financial sector to prevent abuses such as predatory lending and market manipulation, and to encourage useful financial services such as financing small business, education and housing. Require big banks to develop plans showing how they could liquidate assets in bankruptcy without clobbering the whole economy, and break them up if they cannot do so. Increase regulation and transparency in areas such as offshore banking and hedge funds, and more strictly enforce financial rules. Reduce the fees charged by credit and debit cards, which “do not reflect the cost of services provided but rather a monopoly rent on the country’s networked payments infrastructure.” Reform Federal Reserve governance to reduce conflicts of interest and keep the Fed from being dominated by the largest financial interests.

Third, increase incentives for long-term business growth, rather than rewarding executives so extravagantly for short-term increases in share value. Stop giving dividends and capital gains such favored tax treatment, and use the tax code to reward companies that keep the ratio of CEO pay to median worker pay within bounds. Discourage short-term trading by means of a transactions tax and a longer holding period for long-term capital gains tax treatment. Put workers on corporate boards. Require all retirement account managers to act in the long-run interest of account holders.

Fourth, make the tax and transfer system fairer and more progressive. Raise the tax rate at the top. Tax all forms of income at the same rate, since tax breaks on capital income don’t actually appear to increase investment. (This is not to be confused with proposals for a flat tax that would tax all income levels at the same rate; that usually means another big tax cut for the wealthy.) Stop taxing corporations when they take profits earned abroad and invest them in the US, but do tax them on whatever portion of profits they earn from activities here.

Growing the middle

The first goal here is to create more jobs by making public investments in such areas as infrastructure and public transportation. The authors also recommend placing the emphasis of monetary policy on reducing unemployment, but with interest rates already so low, I don’t see a whole lot of potential there.

Second, increase the power of workers. Strictly enforce the right of workers to bargain collectively, and hold employers who outsource and subcontract jobs more responsible for worker treatment. Give public contracts only to companies that have high labor standards and strong antidiscrimination policies. Raise both the minimum wage and the income threshold for mandatory overtime pay (currently, only the 11% of salaried workers earning less than $455 a week qualify).

Third, give people more access to labor markets and opportunities for advancement. Reduce the size of the prison population. Put more immigrants on a path to citizenship, rather than leaving them in the more exploitable position of undocumented alien or guest worker. Make it easier to balance family and work responsibilities by subsidizing childcare, legislating paid family leave and sick leave, and protecting women’s access to reproductive health services.

Fourth, expand economic security and opportunity in general. Start with early childhood by providing universal preschool and other child benefits. Make higher education more affordable by increasing public financing and restructuring student loans. Continue to move toward more universal and affordable health care by adding a public option (Medicare for all) to health insurance choices. Create a similar public option for housing lending. Set up a savings bank through the postal system to provide banking services to the “unbanked or underbanked,” giving them some protection from predatory lending. Expand Social Security to offer an option for additional annuity benefits, giving people an alternative to products of questionable cost effectiveness from financial firms.

The standard reaction to many of these proposals is that the country cannot afford them. But who knows what we could have afforded if we hadn’t given up trillions of dollars of revenue on tax cuts that were supposed to bring us widespread prosperity but didn’t, or wars that were supposed to make us safer but didn’t. The United States remains a wealthy country, but we could do a lot more to channel our resources into the most productive areas. Surely putting more money into good child care, education, health care, infrastructure, and decent wages would be at least as cost effective as what we’ve been doing. One example: “For an extra $50,000 taxed on every $1 million of a wealthy individual’s income [a tax increase of only 5%], the United States could make all public college education free and fund universal pre-K.”

Progressive economic reforms cannot succeed if political inequality is just as extreme as economic inequality. In theory, majority rules, but maybe not if a powerful minority can dominate the airwaves or induce politicians to pass restrictive voting laws. So the authors also advocate campaign finance reform and some measures to make voting as easy as possible, such as automatic voter registration, voting by mail, elections on weekends or national holidays, and online voting.

Given the many ways that voters are divided, those measures may not be enough to produce a progressive coalition either. Many working-class whites who might well benefit from more progressive economic policies nevertheless vote Republican, in the hope of being saved from higher taxes, immigrant competition for jobs, affirmative action, affronts to their religious beliefs, confiscation of their guns, or some other real or imagined misfortune. As the share of the national income going to the working class declines, many lose confidence in their party’s establishment, but even then they may not support constructive institutional reforms. Instead they may rally behind a candidate who gives voice to their frustrations and directs their anger toward immigrants, racial minorities and foreigners.

Well I seem to be drifting from economics to politics. The next book I discuss will deal specifically with progressive coalition building.

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