Bacevich on How we Got Here

On the way home the other day, after dropping our granddaughter off at her parents house, I told my wife I couldn't shake a sense of foreboding.  Part of it is purely personal.  We have been a part of our granddaughters life, and she of ours, since she was born.  My son's work is relocating him to Florida, and when that happens, we will be alone here, without family, in the midst of Idaho.  Neither my wife, nor I, belong here, and yesterday we took the first steps in preparation for another move.  Not to follow our children, but further west, to Washington or Oregon, and so part of the foreboding is a sense of impending dislocation, our family's, our own -- a sense of diaspora.  My son is being relocated to Florida, not for a promotion, per se, but as part of the overall tide of  corporate consolidation, the merger between Office Max and Office Depot, and they merged so they could better compete with another leviathan, Amazon.  The merger eliminated any number of jobs, my son's office here in Boise being among them.  He survived the cut in part because he has a very specific set of technical skills, computer forensics, otherwise he would have gone with the rest of them.  Instead, they are keeping him, and only him, which means he has done a good job, but he is also lucky.  One can assume the bevy of lawyers he worked with also did a good job, but they are replaceable, at much lower seniority and cost, while my son has a set of arcane skills that are needed, particularly in the current corporate circumstances.  We live in Idaho, not because we love Idaho, but because our kids are here, and when they leave, what then?  I know the thought has passed through both our minds, but we cannot follow them to Florida, nor do we want to.  While the increasingly urban Florida is a swing state, and a warmer climate has it appeals, especially in January, it remains a southern state, and the southern states are culturally alien.  It would no more feel like home than Mountain Home, and so we are planning to move west, toward the big blue, in hopes of finding a place a bit more amenable to our personal and cultural values.

One thing I like about Andrew Bacevich is the way in which he puts American political culture within the broader world.  He writes, "the fall of the Berlin Wall in October 1989 abruptly ended one historical era and inaugurated another. So, too, did the outcome of last year’s U.S. presidential election.  What are we to make of the interval between those two watershed moments?"  On a personal level, the fall of the Berlin Wall, for me, meant the end of a military career.  In the immediate aftermath of the fall, there was a down-sizing of the military, and I was given what felt like an offer I couldn't refuse, a buy out with diminished benefits or the boot.  I took the buy out, and moved into higher ed or the community college version of higher ed.  At some level, it was a relief.  Though I was a military brat and in many ways military culture was familiar, I also came of age in the early 70s, and the whole time I was in the military, I never quite fully fit.  I felt, not like a square peg, more like an octagonal peg, in a round hole.  I thought of myself, not as a warrior, but as a peace keeper, the other half of what really was a MAD equation, but one that kept the world, however tenuously, from obliterating itself.  As a community college educator, I could now dedicate myself to a peacetime pursuit, and I really did believe in the community college mission.  Politically, it bridged a gap.  It had the traditional liberal belief in the transformative power of education, along with the conservative belief in the social and ethical value of work.  I dedicated myself to the community college's work-force development mission with a glowing enthusiasm that slowly drained away as, more and more, I realized it was a sham.  We could point anecdotally to our success stories, but in the larger context of the larger economy, we made very little difference at all, and in many ways simply reinforced the emerging class structure as writers like Suzanne Mettler have amply demonstrated.  

So, when Bacevich suggested we call the interval between fall of the Berlin Wall and the election of Donald Trump "America's Age of Great Expectations," he spoke to me.  He has identified three themes for the Age of Great Expectations.  After the fall, "in remarkably short order, three themes emerged to define the new American age.  Informing each of them was a sense of exuberant anticipation toward an era of almost unimaginable expectations. The twentieth century was ending on a high note.  For the planet as a whole but especially for the United States, great things lay ahead."  Although, as Lora would tell you, I am much too reserved for "exuberant" anything, I did share in the over-arching optimism.  "Focused on the world economy," he tells us, "the first of those themes emphasized the transformative potential of turbocharged globalization led by U.S.-based financial institutions and transnational corporations."   I am pretty well decided that globalization is not solely a phenomenon of the Age of Great Expectations.  From the outset of recorded history, there have been global powers.  Great empires rise and great empires fall, and no reading of Gibbon will dissuade the exuberant anticipation of ever more promised by imperial expansion.   While the American revolution may have marked a weakness of imperial colonial expansion, one need only scan early American history to get some sense of how the need for trade entangled the emerging nation with the empirical powers of the day, particularly Britain and France.  The devil is always in the details, and it is the detail of the here and now, then and now, that differentiates each era from the past and makes the future uncertain.  Still, globalization is nothing new, but as Bacevich suggests, America's position within the scheme of global power had changed.  "Focused on statecraft," as he put it, "the second theme spelled out the implications of an international order dominated as never before -- not even in the heydays of the Roman and British Empires -- by a single nation. With the passing of the Cold War, the United States now stood apart as both supreme power and irreplaceable global leader, its status guaranteed by its unstoppable military might."  

Or so it seemed.  On the one hand, the Russian bear proved, well, a bear for the neo-liberal economic order. Around 2011, in the midst of the Age of Great Expectations, I traveled to Russia, representing our College, and community colleges in general for the Rhodes organization.  Putin and Medvedev had, so to speak, swapped places.  On an extended ride through the country side with a gaggle of Russian academics, I remember suggesting that, to use CNN's language,"The Kremlin's proposed game of musical chairs is the kind of change whose only purpose is to keep things as they are."  I had the naive belief that the Russian people would want to shrug off the rusting shackles of an authoritarian government. The Russian academic next to me quickly corrected me.  The Russian people, he explained, needed an authoritarian government, and that for them at least, it wasn't a bad thing, actually a good thing, that things had changed without changing.  If not the Czars, then the Communists.  If not the Communists, then the oligarchs.  Change without change, and Russia endures under an iron fist.  I paraphrase badly, but that was the gist, and it seems he had the right idea.  As Bacevich put it, "globalization created wealth on a vast scale, just not for ordinary Americans."   Although we would like to believe we are different than the Russians, that our political systems are "free" and "democratic," and all shared in the Great Expectations, it soon became clear enough that "the already well-to-do did splendidly, in some cases unbelievably so.  But middle-class incomes stagnated and good jobs became increasingly hard to find or keep. "  Prospective voters were indeed noticing, as Bacevich points out, "the United States looked increasingly like a society divided between haves and have-nots, the affluent and the left-behind, the 1% and everyone else."  In a nation already deeply divided, however, between black and white, rural and urban, educated and uneducated, the political response was hardly uniform.  Each of the major political parties sneered at the other, picking at the scabs and stitches of our wounds before they could begin to heal, and the result was our very own Putin, or perhaps more precisely our very own Putin wannabe, who with each passing day, more and more, reveals that he wants to be the CEO of America, ruling the American government with the same ham handed authority that the CEO of a privately held corporation rules their company.

On the other hand, the US might have stood apart as a supreme power, with a military capacity almost unimaginable, but instead of freeing us, it shackled us.  Bacevich is in his element when he suggests that "with U.S. forces continuously engaged in combat operations, peace all but vanished as a policy objective (or even a word in Washington’s political lexicon). The acknowledged standing of the country’s military as the world’s best-trained, best-equipped, and best-led force coexisted uneasily with the fact that it proved unable to win."  I want to say we didn't learn the lesson of Vietnam, but I would need to correct myself.  It is perhaps instructive to remember that the Roman order fell twice, first with the fall of the Republic, second with the collapse of the Imperium.  It is also instructive to note that under the Republic the legions of Rome were mostly "citizen" soldiers, if not exactly draftees in the modern sense, a close enough equivalent.  As the republic collapsed and the empire grew, so too did the need for a professional standing army.  The new professional Legions were conscripted by a variety of factors, not least economic need and opportunity, and they fought, not as "citizens" with a "citizens" concerns, but for the Imperium.  If Vietnam taught us that "citizen" soldiers would eventually rise up and resist engaging in protracted and ultimately pointless wars, the "professional," all volunteer military would not.  The "citizens" would go about their business and the military "professionals" would go about theirs in support of the American imperium.  Here, I have to say that I have heard "thanks for your service" on too many occasions, and I am always slightly put off by it.  The "thankers" don't want to appear ungrateful, but their gratitude always seems to carry the condescension of "better you than me," and the sanctimony of "how noble I am thanking you for serving me."  If the Vietnam war had a profound affect on the citizenry, the interminable wars of the middle east clearly have not, and as Bacevich put it, "the national security establishment became conditioned to the idea of permanent war, high-ranking officials taking it for granted that ordinary citizens would simply accommodate themselves to this new reality." For the most part, we have, and because these wars are not up close and personal for vast majority of the citizenry, are not an imminent personal danger unless one is driven by economic need and opportunity to enlist, we can go on about our business without confronting the almost undeniable fact that our warfare, as Tom Englehardt put it,  "doesn't work" and "doesn't solve problems."  Worse yet, our warfare has become a "destabilizing force," making matters demonstrably worse, and with each new terrorist attack, no matter where in the world, brought immediately to our attention, picked at endlessly on the cable news networks, "it soon became apparent that, instead of giving ordinary Americans a sense of security, this new paradigm induced an acute sense of vulnerability, which left many susceptible to demagogic fear mongering."  

The third theme, I think, Bacevich gets slightly wrong.  Richard Hofsteader, I think, gets it mostly correct when he identified the paranoid style in American politics, a style which had been around a long time before the Radical Right discovered it-and its targets have ranged from 'the international bankers' to Masons, Jesuits, and munitions makers."  In the opening paragraphs of his Harper's piece, "The paranoid style in American Politics," he reminds us "The paranoid style is an old and recurrent phenomenon in our public life which has been frequently linked with movements of suspicious discontent."  He cites Senator McCarthy, in particular a speech he made in June of 1951, as a defining example of the paranoid style:

How can we account for our present situation unless we believe that men high in this government are concerting to deliver us to disaster? This must be the product of a great conspiracy on a scale so immense as to dwarf any previous such venture in the history of man. A conspiracy of infamy so black that, when it is finally exposed, its principals shall be forever deserving of the maledictions of all honest men:' ... What can be made of this unbroken series of decisions and acts contributing to the strategy of defeat? They cannot be attributed to incompetence .... The laws of probability would dictate that part of ... [the] decisions would serve the country's interest.

Reading through his paragraph is instructive on a number of levels.  Except for the purpose hyperbole of the rhetoric, it would well have been uttered by our president elect, and not unlike McCarthy, his promise to "drain the swamp" parlays a discontent with the government into a suspicion of those in the government.  Of course, we are talking about the 1950s, as Tom Englehart put it, "that Edenic, Father-Knows-Best era that Donald Trump now yearns so deeply to bring back in order to 'make America great again.'"  McCarthy's rhetoric reminds us, however, "just how scary the good times were."  Part of it was, of course, the not unreasonable threats present during the Cold War, and like Englehart, I remember the 1950s version of the paranoid hysteria, and "it concerned the obliteration of the city I lived in via a Cold War nuclear confrontation (of the sort that did indeed come close to happening)" when my father, a Navy NCO and Marine medic, failed to come home one night, and my frantic mother finally put two and two together when she heard the news of the naval blockade of Cuba.  Like Englehart, I remember  "we kids all 'ducked and covered' in atomic drills," and I too can remember "crouching beneath my own, hands pathetically over my head, as if I could truly protect myself from an atomic attack."  It was terror on a global scale, which made it seem paradoxically as inevitable and ultimately as irrelevant as the second coming.  If the worst were to happen, if the rockets red glare were to reduce the world to ashes, life as we knew it would be over, including the consumer culture that was cranking into full gear -- a consumer culture epitomized and satirized by Janis Joplin in the 60s when she sang "Oh Lord, won't you buy me a Mercedes Benz."  If communism threatened armegeddon, oh well, but in the meantime it also threatened a god given consumerism on an international scale, and that was a more immediate concern.

Reading through McCarthy's paragraph is also a reminder that, as Bacevich put it, "during the protracted emergency of the Cold War, reaching an accommodation between freedom and the putative imperatives of national security had not come easily."  What was one to make of McCarthy's paranoia?  Anyone who has worked with people for any length of time knows that "a great conspiracy" is improbable in the extreme.  It is difficult enough to get two people, each with their own ambitions and self-interests, to collude for any length of time, but on "a scale so immense as to dwarf any such previous adventure" beggared belief.  Still, there was something to it.  If not a "great conspiracy," then a dawning realization that the "interests" served were not necessarily "security," at least not in any way that would make personal sense for the vast majority of Americans.  The "interests" served were those the likable Ike had worried over, the military-industrial complex, and for that to grow and expand, one needed, not security, but insecurity.  On the international front, there was plenty of insecurity to go around as the "third world nations" here and there attempted to come to grips with their allegiances in a tri-polar post-colonial order split between US, the Soviet Union, and Red China.  The international insecurity rationalized the expenditure of  "vast sums on weapons purchases that somehow never seemed adequate to the putative dangers at hand."  On the domestic front, however, things seemed to be going rather well, thank you very much.  Yes, the H-Bombs were there, but really?  It wasn't altogether clear why we should worry about Korea, and even less clear why we should worry about Vietnam.  Neither seemed to affect us personally.  McCarthy's hyperbolic rhetoric, his fears of communists lurking in the bureaucracy of the US government, was an attempt to bring the worry home, make the insecurity more immediate and more personal, and it worked, but not all that well, and only for awhile.  It didn't become really of personal concern until the Johnson era escalation of the Vietnam war and the implementation of the draft in the late 60s, early 70s.  The anti-war movement and the student protests succeeded in ways that McCarthy could not.  For the great "silent majority," the students seemed to reject not only of the "putative interests of national security" on the international front, but also "our way of life," where the freedom to consume as we pleased seemed a god given imperative.  The civil unrest brought the insecurity home, brought "the threat to our way of life" home, and made it seem altogether reasonable to accommodate the imperatives of national security while insisting on "law and order" at home.   The end of the Vietnam war relieved some domestic insecurity.  The 80s weren't quite as halcyon as the 50s, but they weren't bad.  The consumer culture once again thrived, this time with a disco up-beat, and the "evil empire" remained a looming concern, enough insecurity to keep the military industrial complex up and running.   All was as it should be, and would be for the foreseeable future.

Bacevich is right, "the end of the Cold War caught the United States completely by surprise."  I remember sitting on the sofa, watching the Berlin Wall come down with a sense of incredulousness shared by the newscasters.  I am not sure, however, that Bacevich is entirely correct in asserting that, once the Cold War ended, "the tension between individual freedom and national security momentarily dissipated."  That tension almost certainly existed, and the times will favor one over the other as the paranoid style takes ascendency, but the tension has existed right from the outset of our "free" republic, the Alien and Sedition Acts being a case in point, and it probably shouldn't surprise us that a large segment of our population wants "the president to imprison and deport non-citizens who were deemed dangerous (Alien Friends Act of 1798), or who were from a hostile nation (Alien Enemy Act of 1798)."  It wouldn't surprise me either, given the temperament of our new president, if he didn't move to criminalize statements "critical of the federal government (Sedition Act of 1798)" now that the GOP controls the federal government.  I don't really think "reigning conceptions of what freedom could or should entail underwent a radical transformation," as he suggests, or if they did, it was more of the same.  "The removal of restraints and inhibitions," had been underway for quite some time in "modes of cultural expression [around] sexuality and the definition of the family," and it probably shouldn't surprise us that the "law and order" backlash against the 60s would generate its own backlash in the 80s.  The 60s released a Dionysian Thoreau into the mainstream from Woodstock, the 80s released an equally Dionysian version of the Carnegies, both Dale and Andrew, into the mainstream from Wall Street, expressed perhaps most succinctly in the Wolf of Wall Street.  The cultural expressions, coupled with the on-going threat of the "evil empire," however, obscured what was happening for most Americans -- a growing insecurity.  If the prosperity of the 50s had come to seem the norm, and the realization of the American dream a national birth right, during the 70s, the 80s, the 90s, the climb to get back to where we once belonged has grown ever steeper.  At the turn of the millennia, it seemed impossibly steep, a sheer rock face that only a lucky few can climb.  Many Americans feel as though they are dangling from frayed ropes that may give way any moment, and then, on top of that, there is "radical Islamic terrorism."  For those of us raised on the great ideological conflicts, there is something at once pathetic and personal about the current about the war on terror -- pathetic insofar as it seems a poor substitution for the cold war, but personal insofar as any nutcase, fueled by resentment, justified by jihad, can really strike right here, right now.  The communists really did have WMDs, and the investments in defense could be rationalized, but their "sleeper agents" didn't drive aircraft into buildings or trucks through the local Christmas bazaar.  Radical Islamic terror doesn't have WMDs, and calls for defense spending at cold war levels more than a bit hyperbolic, but the jihadist wannabe's do buy up arsenals and massacre their co-workers.  It's not surprising, then, that our president elect, piling one insecurity on top of another, is advocating a slightly updated version of the Alien and Sedition Acts.  

So, the Age of Great Expectations has morphed into the Age of Insecurities.  Our globalization has gob smacked us with diminished economic expectations, particularly in those sectors of our economy dependent upon labor in a more traditional sense of the word.  Our imperial reign as first among nations hasn't worked out so well empirically, the attempt to play 'whack a mole' with the awe inspiring shock of a sledgehammer has done considerable damage and the moles keeping right on popping up with increasing frequency.  We seem to be living in a nation and a world coming apart at the seams, like a cheap garment "Made in Bangladesh."   We have suffered a wardrobe malfunction and our insecurities are showing, and so it isn't surprising that someone would come along and promise to make Americans secure again.  Here again, I think Bacevich is right when he suggests that "as a complement to these themes, in the realm of governance, the end of the Cold War cemented the status of the president as quasi-deity" -- or, perhaps, a quasi-messiah, someone to secure our daily bread and deliver us from our enemies.   Having said this, however, one man's christ is another's anti-christ, and never the twain shall meet.  "Within hours of Trump’s election," I like many other progressives, expressed "fear and trepidation at the prospect of what he might actually do on assuming office."   His ascent to office, however, has seemed more chaotic than purposeful, not unlike his campaign, the only constant being his narcissistic faith in himself.  If his cabinet picks reveal anything, they reveal the messianic need for apostles, those faithful willing to follow, more than any apostolic creed of the sort we might have expected from a Paul Ryan type.  And yes, even "those who had actually voted for Trump were also left wondering what to expect," as Bacevich suggests, in part because their vote was an expression of faith in a father figure, if not exactly the heavenly father of the mormons, who most definitely inhabit the father knows best world of the 50s, then the George Michael version, who promises to take their tiny hands in his and give his faithful anything they have in mind.  

Nevertheless, I still have "premonitions of incipient fascism," and like Bacevich, though perhaps less optimistically, believe Trump to be a more transitional figure, more a harbinger of our republic's factious death throes, a Caesars Palace Caesar before the emergence of an Octavian.  I could be wrong, and hope that I am, but the "hopes that he will engineer a new American Golden Age are likely to prove similarly misplaced."  It is interesting to note, along with Bacevich, that Trump's "is almost entirely negative."  If I've said it once, I've said it a thousand times, it is one thing to run for office.  Then, one can be wholly negative and focus one's energy on rejection, "of globalization, of counterproductive military meddling, and of the post-Cold War cultural project."  And there is, of course, a good deal that should be rejected, or at least questioned in "this triad of themes."  Having said this, however, it is one thing to critique governance, quite another thing to govern.   It's simple, really.  Governance requires commitment.  When one comes to the fork in the road, one cannot simply take it.  One must either sit down and the end the journey, go left, or go right.  In the end, one has a headline like "Trump's education pick, lauded as bold reformer, called unfit for job." In short, it is one thing to reject, quite another thing to offer "coherent alternative[s] to the triad of themes" that run through "the last quarter-century of American history."  Although  Bacevich believes a "focus on the man himself" is a mistake, it should be pointed out that Trump himself, the man, seems incapable of governance.  We have, as David Brooks suggests, elected the class clown, the carnival Lord of Misrule, as president.  We have elected a tweeter.  "His tweets are classic fool behavior," as Brooks suggests.  "They are raw, ridiculous and frequently self-destructive. He takes on an icon of the official culture and he throws mud at it. The point is not the message of the tweet. It’s to symbolically upend hierarchy, to be oppositional."  Here, shortly, Trump will need to decide, however, whether he wants to BE and DO president, or continue being and doing the class clown routine.   We should, as Bacevich suggests, focus on "the circumstances that produced him," but it is not entirely  "to miss the significance of what has occurred" if one focuses as well on the man himself.  As Brooks, along with many others, has suggested, "we live at a time of wide social inequality. The intellectual straitjackets have been getting tighter. The universities have become modern cathedrals, where social hierarchies are defined and reinforced" -- that is to say, "we’re living with exactly the kinds of injustices that lead to carnival culture, and we’ve crowned a fool king."   

The circumstances produced the man.  The man will, if current chaos is at all indicative of what lies ahead, exacerbate the circumstances.  What then?  "Concerns about what he may do" are "worrisome," perhaps more than worrisome.  "The larger question of where we go from here," still looms before us, and if we descend further and further into chaos, if we continue to withdraw from rational argument to the snide cynicism of the tweet storm, the larger question will become harder and harder to answer.   Trump may well be transitional, but transitional to what?  As recent Russian history reminds us once again, social and political and economic chaos are the breeding ground of tyrants.  One can agree that "the principles that enjoyed favor following the Cold War have been found wanting," but "the principles we need -- an approach to political economy providing sustainable and equitable prosperity; a foreign policy that discards militarism in favor of prudence and pragmatism; and an enriched, inclusive concept of freedom -- will have to come from somewhere else."  Where?   I see little evidence of it emerging here.  

Pay Up -- Or else: the Offer We Can't Refuse

The other day I came across a TED Talk video by Nick Hanauer.  It was entitled "Beware, fellow plutocrats, the pitchforks are coming."  I was struck and impressed by it for any number of reasons, not least for the complete contrast that he makes to our president elect.  He begins his talk with the admission that "You probably don't know me, but I am one of those .01 percenters that you hear about and read about,and I am by any reasonable definition a plutocrat."  Our president elect would assume -- probably rightly so -- that every did know him, and he would never describe himself as "one of those .01 percenters," in part because it is the language of the more democratic opposition, in part because he is the anti-Kardashian.  He is "a proud and unapologetic capitalist"and has been rewarded obscenely for that with a life that most of you all can't even imagine: multiple homes, a yacht, my own plane, etc., etc., etc."  The point of his TED Talk, however, is not to make my inability to imagine his life irrelevant by parading it before the cameras, nor is it to market the secrets to his success.  By his own admission he was "not the smartest person" nor "the hardest working.  He was "a mediocre student," and was  "not technical at all," which he proves by saying he can't "write a word of code."   His success rather was "the consequence of spectacular luck, of birth, of circumstance and of timing," none of which can be replicated.  It is perhaps not surprising then, that Tim Worstall of Forbes would object.  Forbes' business is, for the most part, marketing the American dream, the idea that you too can be successful if you possess the right character, have a good idea, and sufficient grit to make the idea a reality.  Those who have been "rewarded obscenely"are paraded on their pages for envy and emulation.  If Hanauer risks coming off as "some liberal do-gooder," Worstall and the writers of Forbes risk coming off as "some conservative booster."  There was some controversy about the posting of Hanauer's talk to the TED site -- a controversy in which I am deeply uninterested -- but apparently, according to Worstall, they didn't post it because it was "categorically mediocre."  Worstall takes it a step further, saying "I'm afraid I must disagree. It was worse than mediocre: it was deeply ignorant of the very subject under discussion," and he sets out to demonstrate and respond to that deep ignorance. 

So there you have it, point/counter-point.  Hanauer's core argument is two-fold.  First, here is rising inequality, and "if wealth, power, and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th-century France."  Second, he believes "no free and open society can long sustain this kind of rising economic inequality," asserting  "You show me a highly unequal society, and I will show you a police state or an uprising.  The pitchforks will come for us if we do not address this. It's not a matter of if, it's when."  This is, in effect, one explanation for the emergence of Trumpism as the initial harbinger of the "uprising."  I believe much of the anger is both delusional and misplaced, and to see Trump as the ubermensch to fix it all is equally delusional and misplaced, but there is no denying the anger.  It might be something of a worst case scenario, but Trump will betray that anger, either cynically through direct support of policy that further exacerbates the sense that "the other 99 percent of our fellow citizens are falling farther and farther behind," or narcissistically through a political ineptitude that cannot admit failure and, confronted with failure, doubles down with a literal vengeance on those who revolt against the failure.  Either way, the betrayal may tip the rally to an actual revolt, and the a failed leadership characteristically invokes the necessity of a police state to reclaim "law and order," casting a wide net of conspiracy and scapegoating blame that may well include the very people who supported him (consider his response to the Carrier union leadership).

There are two assumptions guiding Hanauer's argument.  The first, touched on above, is the challenge to the prevailing assumption that the vast differences in wealth are inherently "merited."  We cannot do away entirely with the idea of a "meritocracy," and the notion that, with hard work and persistence, we can rise to the level of our dreams is deeply American.  If there is an admiration of wealth, it is the admiration bestowed on the self-made man, and it is not surprising that wealthy politicians often down play their inherited wealth while playing the self-made card.  The former counts for little in the American psyche, except perhaps a suspicion of the degraded excesses associated with the likes of a Paris Hilton, while the latter counts for "merit," the suspicion that their acquired wealth reveals a man stronger, smarter, and, yes, altogether better than the mass of Americans.  We should, however, face facts, and the facts darken the American dream and our admiration of wealth.  Social and economic mobility are on the decline, and the decline is not unrelated to the growing disparity of wealth.  In today's world, our children are much much more likely to inherent the relative position of their parents.  As the gap widens, a few may achieve great wealth on merit alone, but it will be the very few, the .000001 percent.  More will receive it simply as a matter of inheritance, and the inheritance of great wealth, along with the social, economic and political power that accompanies great wealth, is simply an aristocracy.  We may have done away with the titles of 18th century aristocracy -- the Princes and Princesses, the Dukes and Duchesses along with the Marquis and Counts --  but the "aura" surrounding Ivanka and the Trumps is not at all unlike the "aura" surrounding the aristocracy in a neo-feudalist society. 

The second assumption, the one Forbes disputes, is that the current policy environment that allows, even encourages the riising economic inequality is "stupid and ultimately self-defeating."  We need to "put behind us the trickle-down policies that so dominate both political parties" and embrace what he calls "middle out economics."  Hanauer's argument is part plea, and  ultimately he is pleading with the capitalists to save capitalism.  He invokes the example of Henry Ford, who "famously introduced the $5 day, which was twice the prevailing wage at the time, he didn't just increase the productivity of his factories, he converted exploited autoworkers who were poor into a thriving middle class who could now afford to buy the products that they made."  It is this act of noblesse oblige that created a virtuous cycle, where bulging wallets of the workers increased demand, which in turn the increased production and sales, which in turn increased the need for and competition for workers, which in turn created the wealth of a burgeoning middle class.  Increased production and sales, of course, also meant increased profits, not only making the rich richer, but also the capital needed to invest in further expansion of production to meet human needs real and imagined.   As Robert Reich and Paul Krugman in the popular press, and Piketty in the academic press, all have reminded us, to use Hanauer's words, "an economy is best understood as an ecosystem and characterized by the same kinds of feedback loops you find in a natural ecosystem, a feedback loop between customers and businesses. Raising wages increases demand, which increases hiring, which in turn increases wages and demand and profits.  Everyone benefits.  

There are two aspects to the current policy environment, however, that have put us in a vicious cycle -- one might call one aspect the labor and the other the tax policy.  Both the Trump and the Sanders campaigns brought attention, rightly, to the prevailing "bi-partisan" consensus on trade, and the prevailing notion, as the Schumpeter columnist put it in the October Economist, that "globalization is both inevitable and irreversible -- the product of technological forces that mere human decisions cannot reverse."  The focus on trade was less about trade, more about jobs and wages, more about the politically sanctioned export of American jobs to low wage areas of the world, and this, in part, has created a vicious cycle for the American worker.  Although it shows some signs of improving, demand has been soft for some time, and its uncertain whether current up-ticks can really be sustained, and as a consequence "productivity growth is dismal in the west,"  and "the more business copes with uncertainty by delaying investment or moving money abroad," the more returns on what little growth remains are "captured by an ever narrower section of society," the more powerful the populist appeal to "do something," the more likely the people will fall victim to a demagogue who promises to "make America great again" on the strength of unsustainable promises, misplaced blame, and a messianic narcissism.  In the meantime, everyone wants to retain the wealth they have, few want to give it away in taxes, because, yes, most citizens have no choice but to live from paycheck to paycheck, from day to day, indulging the small pleasures and burgeoning necessities of the moment.  "Everyone," of course, includes the wealthy, facing diminished returns on investment, not unreasonably want to hang on to what they have and pass it on to their children.  It is, essentially, the same feedback loop between customers and businesses, but diminishing wages has diminished  demand, which in turn diminishes hiring, which in turn diminishes wages and demand and profit. No one benefits, except perhaps those who have "made a science of gaming the system to produce private benefits." 

It is here, on taxes, that Forbes objects.  They quote Hanauer as saying "That’s why our current policies are so upside down. When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer."  Forbes objects as follows: "It isn’t actually true that the claimed link is between taxes on the rich and job creation. Rather, that marginal tax rates have an effect on labour supply: raise those marginal rates too high and people will decide to do something else rather than go to work. Appear unpaid on stage at conferences to make a video perhaps."  First, let me say that snark is not an argument, and his off-hand dismissal of Hanauer's exercise in political commentary is neither clever nor to the point.  It IS actually true that the claimed link is between taxes on the rich and job creation as in, to paraphrase the 1001 iterations of the claim, "decrease taxes on the rich, increase the supply of capital available for investment in enterprises that will, in turn, create jobs."  There is, to my knowledge, little evidence that the supply of capital accumulating at the tippy top of the scale necessarily creates investment in enterprises that produce jobs.  Quite to the contrary, there is considerable evidence that it is invested in financial instruments that bear interest or produce "rent."   Think of it this way.  Middle Americans like to believe they have ownership of their homes, their cars, their "stuff" in general, but in reality a good deal of that "stuff" is merely "rented."  If you don't believe this, stop making payments and see what happens.  When middle Americans pay interest as debt service on their homes, on their cars, on their credit cards, where does that money go?  It goes, of course, to those financial institutions that hold the debt, and to a certain extent, those financial institutions DO increase demand, debt fueled demand that allows people to "rent" homes, cars, stuff for a small monthly payment.  As the recent recession has demonstrated, however, there are limits to how far one can fuel demand with debt, and when that small months payment exceeds the debtors ability to pay, it all tends to collapse in on itself.

In another respect, however, Forbes is correct, or so it seems to me.  The marginal tax rate is important, but we need to think of "taxes" a bit differently.  Think of it this way.  There are two sorts of taxes, public and private.  The first is what we would normally call taxes, money paid to government for government services.  The second we wouldn't normally call taxes, the money paid to private enterprise or business for to maintain a certain standard of living.  In both cases, we get stuff.  In the first, we get stuff like police and military protection, roads and other infrastructure, education and the programs that provide a social safety net.  In the second, we get stuff like our homes, cars, and TVs.  There are differences.  The first seems compulsory, the second voluntary, but in a democratic society the taxes paid to government are compulsory only to the extent that the people allow.*  Assuming a debt free, pay-as-you-go government, the people and their representatives could choose to forego, say, the social safety net and the taxes that support it.  Typically, however, governments, no less than private citizens, have some difficulty living within their means.  The demands of election tends to support "over-promising," and as the Schumpeter columnist put it, "democracies overspend to give citizens what they want in the short run, whether tax cuts or enhanced entitlements."  Governments take on debt to pay for the services they provide, which means of course that a portion of our tax dollars goes to interest and debt service.  Private taxation, likewise, is only voluntary to the extent that we are willing to do without.  It too is a negative freedom in the sense that one could live wholly within one's means.  One is perfectly free NOT to mortgage a home, free NOT to finance a car, free NOT to swipe the visa for that TV, but to do so means giving up most of the conditions of modern life and most would prefer not to do so.  I am suggesting, of course, that we think of "taxes," not as the money paid for stuff, the principle, but as debt service, the interest.  For those who are biblically minded, there was a reason why usury was considered criminal (Deuteronomy 23:19).  Those of modest or moderate means are not in a position to lend money.  Those of considerable means, however, are in a position to lend money, and they do so to those of modest or moderate means.  Interest is "money for nothing."  For those of modest or moderate means, it is money paid out for "nothing."  For those who hold the debt, it is money received for "nothing," neither goods nor services nor labor.  So, yes, the marginal tax rate does have an impact on the labor supply.  For those of modest or moderate means, usually fixed modest or moderate means, as interest consumes more and more of the available income, the less is invested in principle, diminishing the demand for goods and services that fuel job creation.  

So, yes, when you have a tax system, in the usual sense of the word "tax," where most of the exemptions and the lowest rates are assigned to the sorts of income derived from "nothing," it tends to benefit the richest, those who hold the debt.  It tends also to punish those of modest or moderate means, with a double whammy.  They pay the lion's share of interest on private debt, but also the lion's share of both the principle and interest on public debt, and as interest consumes more and more of the available income, the less is invested in principle, the actual distribution of government services.  Indeed, those of modest or moderate means may not even have access to the sorts of government services (e.g. medicaid) that would make a real difference in their lives, fueling a resentment of those who do have access, the poor, who do get the services and get them for "nothing."  In many respects, it is easier to resent the poor who get their "money for nothing," than the rich who likewise get their "money for nothing."  The poor are closer to home and more visible in their penury.  One sees them at Walmart, paying with food stamps.  We see them in the waiting room at the hospital, getting free care for their sniffles when the same visit would take $150 from a hard working American-- actually more, because the cost of the visit will likely go on the VISA with interest.  In a society that wants to believe in virtues of the self-made man, that wants to believe that the poor can and should do "something" to relieve their condition, the poor, if we are honest with ourselves, elicit repugnance.  We cannot help but feel they should be ashamed of themselves, taking "money for nothing" from hard working Americans.  The rich, however, live "in a gated bubble world."  We never see them in Walmart or the waiting room.  If we are given glimpses into their world, the rich, if we are honest with ourselves, elicit envy and perhaps just a twinge of shame.  In a society that wants to believe riches follow character, it cannot be that those of us who play by the rules, those of us who work hard, those of us who have aspirations -- it simply cannot be that we suffer a lack of character.   And so, the rich are what we would be if only the poor didn't rob us blind, if only the system weren't rigged against us, if only the immigrants didn't take our jobs, if only the liberal elite weren't so smug and self-serving, and the list goes on, bubble bubble, toil and trouble, into a toxic potion of populism, the attempt to relieve a growing sense of shame with blame.

But to be fair, Forbes is making a slightly more sophisticated argument.  The idea that one can raise raise those marginal rates too high and people will decide to do something else rather than go to work  is "the Laffer Curve argument in part. Economic production and thus total taxes raised will be maximised by having marginal tax rates that are not too high."  I do not want to dispute the Laffer curve, or for that matter defend it.  The basic idea, though, is this:  at a 0% marginal rate, government obviously collects no tax revenue.  Also, at a 100% marginal rate, government  "theoretically collects zero revenue because taxpayers change their behavior in response to the tax rate: either they lose their incentive to work, or they find a way to avoid paying taxes. Thus, the "economic effect" of a 100% tax rate is to decrease the tax base to zero. If this is the case, then somewhere between 0% and 100% lies a tax rate that will maximize revenue."  There is a certain common-sensicality to the argument across a number of domains.  For example, raise the income tax to 100% and I would ask myself "what's the point of working?"  At what point between 0% and 100%, however, do I begin to question the validity of working?  At what point do I decide to do something else?  One suspects that the devil is in the details.  If I am working at or close to the minimum wage, that point would come fairly low on the scale, again for commonsensical reasons.  If one is actually trying to make a living, at a monthly income of $290, it hardly pays to go to work in the first place.  Take away any portion of that income, and there is little incentive to work.  If I am working at a seven figure salary that point might come further up the scale.  With a monthly salary of just over $80K, would one simply quit working if the marginal rate were even, say, 50%, leaving one with a net monthly income of $40K?  Would a surgeon quit performing surgery because, at $40K a month, it just doesn't pay to go to work?  It's hard to say, but giving up on $290 a month is qualitatively different than giving up on even $40K a month, and it is this qualitative difference that makes all the difference.  It justifies the graduated income tax.  

Again, though, let's be fair.  We are talking about income derived from actual "work."  When we consider "money for nothing" -- that is to say, returns derived from capital gains, dividends, carried interest, et cetera -- one suspects the devil is again in the details.  For illustration, think of a one million dollar "savings" account.  At a 5% interest rate, it would pay $50K a year.  At what point on the scale of 0% to 100% would I say "hell, it isn't worth it," withdraw my money and bury it in a coffee can in the back yard?   Would it happen at 50% where one is left with a net income of $25K?  Even at 100%, if there were other compensatory services for holding the money in a bank (e.g. security for the one million in principle) it's unlikely that I would resort to the coffee can. Nevertheless, we live in the real world, and the implicit goal in the real world is to maximize the return on capital.  If returns on "savings" were taxed at 100% in the US, we might seek other countries with more amenable tax rates -- say 98%, because 2% is better than nothing.  Also, if returns on "savings" were taxed at 100%, we might seek other forms of investment, with comparable returns, that are taxed at lower rates -- say real estate, where capital gains are taxed at, say, 50%.   Anyone with any sophistication would know my examples are bogus.  In the real world, as Forbes implies, the investment opportunities are myriad and the actual tax code associated with them is all a jumble with incentives and disincentives for different types of investment.  In truth it takes a team of tax lawyers to keep up with it all.  

There are, however, a few points to be made here.  First, unlike income earned from actual work, there is no point of diminishing return, only a differential return on capital.  A 98% tax rate is "better" than a 100% tax rate, and assuming that all other things are equal (e.g. the risk to and return on one's capital) money would flow to the opportunity taxed at 98% from the opportunity taxed at 100%.  Of course, there's an objection to this, so second, in the real world, all other things are not exactly equal, and there is a sort of Laffer curve associated with risk.  In a free market, some investments are riskier than others (e.g. the stock market as opposed to savings accounts).  Typically, the greater the risk the greater the return, and since all investments carry some risk of loss, it wouldn't make sense to invest at all if the potential returns on capital were taxed at 100%, so again the tax rate should be between 0% and 100%.  Where exactly is a matter of dispute.   At some point, risk overcomes the potential return.  This point is subjective and will vary by circumstance.  Professedly risk tolerant investors like Hanauer, who can afford some loss of principle, may accept greater risk in exchange for higher returns.  Risk averse investors, like pensioners, may elect safer investments.  How much risk depends on a wide variety of factors, but generally taxes diminishes returns and is simply one factor, among others, in the risk/reward calculation.   

So third, what Forbes calls the big blooper.  Hanauer writes, "the extraordinary differential between a 15% tax rate on capital gains, dividends, and carried interest for capitalists, and the 35% top marginal rate on work for ordinary Americans is a privilege that is hard to justify without just a touch of deification."  Forbes takes exception, saying "the actual rates can be argued over for sure but the idea that there should be a difference between the tax rate on returns to capital and the returns to labour is not a privilege it's just plain common good sense."  Why so?  He goes on to write, "These are not taxes on the rich. They are taxes on the return to capital.  And it is most assuredly so that it is the investment of capital that creates jobs. Which is why, if we'd like to create jobs we'd really rather like to have lower tax rates on those returns to capital."  The syntax is a bit difficult to follow, but I believe he is saying "the investment of capital creates jobs."  Well, yes, but not all investment creates jobs.  For example, it is hard to see how the capital gains derived from the appreciation of real estate, in and of itself, creates jobs.  As another example, it is hard to see how return from derivatives, in and of itself, creates jobs.  It strikes me that many profited, both by a derivative fueled escalation of housing costs and by its collapse.  Job creation does require investment, but for job creation, demand will out.  Business thrives and hires employees in climates of greater demand.  Business retrenches and fires employees in climates of weak demand.   Neither the hiring nor firing of employees, however, in and of itself, affects the return on capital.  Indeed, the profitability of a company may actually increase during periods of retrenchment and firing, which in turn raises the demand for and the price of their stocks, which in turn makes those invested in the company just a bit richer.  An investor, in short, may actually profit from job losses, which, given off-shoring, automation, or the like, may never be recovered, in part because labor itself is an expense impacting on profits.  By equating job creation with investment, however, Forbes implies, that the 15% tax rate on "money for nothing" is in reality a tax on job creation, but that is most assuredly not necessarily so.  They are, as he implies, taxes on the return to capital, and the return to capital may or may not derive from the creation of jobs, and indeed the return on capital may actually increase when productivity is improved without the bother and expense of an actual labor force.  

Forbes too has something of a point when they write that the taxes on "money for nothing" is not necessarily a tax on the rich.  Most Americans do have some form of "investment," but if I have $100 in savings and $100 balance on my credit card, I am going backwards in terms of actual returns.  Having said that, low tax rates on "money for nothing" disproportionately favor the rich, particularly the very rich.  It doesn't take a genius to see how or why?  For those of modest or moderate means, savings and investments are all about deferred consumption, generally an anticipated retirement when one is no longer part of the labor force.  For those of modest and moderate income, high taxes on both earned income and investment income simply makes it more difficult to save for a comfortable retirement.  The tax code recognizes this, and provides low tax incentives for such savings.  For those of substantial means, however, investment is not about deferred consumption, at least not in the way that 99% of the population thinks of deferred consumption.  It is about the limits of consumption.  Forbes poked fun at Hanauer when he suggested that "I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff, do I?  I actually bought two pairs of these pants, what my partner Mike calls my manager pants. I could have bought 2,000 pairs, but what would I do with them? (Laughter) How many haircuts can I get? How often can I go out to dinner? No matter how wealthy a few plutocrats get, we can never drive a great national economy."   Forbes suggests, "Hanauer seems to be complaining that as his consumption doesn't make up for the fall in other peoples' consumption there is something wrong with the system."  Again, the syntax is a bit hard to follow, but I don't think he is complaining about his consumption.  He does consume, and consume lavishly, with "multiple homes, a yacht, my own plane, etc."  No doubt he would like to continue consuming in that way. He is merely suggesting that the very rich, although they consume lavishly, still do not consume enough to drive demand across a broad economy, and it is demand, not his "richness" that creates jobs.  He is also suggesting that there is, literally, an end to consumption.  At some point, for the very rich, one has consumed all that one can consume, the accumulation of wealth beyond that point is, well, pointless.  The money is invested because, well, they have nothing else to do with it.  

Although he claims not to be making "a moral argument that economic inequality is wrong," Hanauer nevertheless uses moral language to describe, not only himself, but also those who "have been rewarded obscenely."  He suggests their quasi-deification as "job creators" may ultimately be seen as a sham, and a shame, just as the divine right of Kings was eventually seen as a sham in 18th century France,  as an inherited aristocracy indulged themselves beyond "the dreams of avarice," not on income derived from actual work, but with income derived from "interest" and other forms of "money for nothing."   Again, as Hanauer reminds us, the extraordinary differential between a 15% tax rate on capital gains, dividends, and carried interest for capitalists" -- that is to say, the various forms of "money for nothing" -- and the 35% top marginal rate on work for ordinary Americans is a privilege that is hard to justify without just a touch of deification." It is also a tax structure that encourages the sort of aristocratic, rentier society that the founding fathers of this nation loathed.  Think of it this way.  Given an income of $100K, it is better to have derived that income from investment than work.  If one derives that income from various forms of "investment," one is left with 85K after taxes.  If one derives that income from work, one is left with 65K after taxes.  It makes sense, then, to save and iconvert as much of one's income as one can as quickly as one can to "investments."  

One might say it encourages investment, and that's a good thing.  Well, it depends.  If it is invested in enterprises that actually workers, perhaps, but let us say, just for the sake of argument, that it is invested in "mortgages."  One directly or indirectly lends out one's money to those who want to buy property.  The poor, of course, do not buy property, so we can ignore them for the moment.  The very rich do buy property, but they would simply buy it outright unless debt service on a mortgage provided some other strategic advantage for the increase of profit.  Those who take out mortgages are those of modest and moderate means, and consequently those who pay "interest" to those holding the mortgage, the capital.  It's a good deal insofar as those paying the interest get a home they would not otherwise be able to afford, and those receiving the interest get a return on their money.  The investment does create some employment in banks, mortgage companies, and construction if there is an insufficient supply of housing, but not nearly enough to offset the impact on demand.  For those of modest and moderate means, it represents a doubled burden.  Since nearly all of their income is derived from work, they not only pay state and federal taxes upwards of 30% on that income, but also the private tax of interest, both of which decrease the income available for demand.  Here again, then, it makes sense to save and convert as much of one's income to "investments" as one can -- be on the receiving, not the paying, end of interest.

But ultimately, that isn't what happens.  Let's be honest.  A person making $7.25 an hour isn't going to save and make investments.  They must consume, at a very basic level, simply to survive.  In the meantime, those of modest and moderate means are moving in the opposite direction.  They are not converting income into investments.  They are converting income into more debt.  There are any number of explanations for this.  Part of it is no doubt invidious greed as we attempt to emulate so-called life styles well beyond our means -- a bigger and better home, a more luxurious car, more electronic bling than we actually need -- but part of it can be attributed to the erosion of real income from wages and its replacement by debt.  As Richard Vague reports in the Atlantic, there has been a rapid growth of private debt relative to the GDP, and that growth may actually seem a good thing "until the moment of reckoning."  Indeed, "things may seem wonderful.  Rapid private-debt growth fueled what were viewed as triumphs in their day—the Roaring Twenties, the Japanese “economic miracle” of the ’80s, and the Asian boom of the ’90s—but these were debt-powered binges that brought these economies to the brink of economic ruin."   We think of the 2008 crises as one of mortgage debt -- as Vague put it, "We all know that a growth in home mortgages preceded the crash, and home mortgages are one kind of private debt—along with other consumer borrowing and borrowing by businesses," but it seems that "almost all instances of rapid debt growth coupled with high overall levels of private debt have led to crises."   Here again, this is just common sense.  Initially, at least, the new credit card is a boon, allowing us one again to consume -- whoopee! -- but there comes a day reckoning when we have reached the "credit limit" and we are left only with the debt.  Excess income goes, not into savings, but into debt service, and if "shit-happens,"  if one has a major illness, if one loses all or a portion of one's income, the house of cards come tumbling down.   Those of modest or moderate means are no longer servicing their debt.  Those of substantial means are no long collecting "interest."  As Vague tells us, "what’s alarming is that, of the two ingredients for an economic crisis—high private debt and rapid private-debt growth—one is still with us even after the 2008 collapse.  Private debt in the U.S., relative to GDP, stands at 156 percent. That’s lower than the 173 percent it reached in 2008, but it’s still nearly triple the level—55 percent—it was at in 1950."

So here we are.  Both Hanauer and Vague are making the same essential claim, "it's demand stupid!"  The former reminds us that the middle class "are the source of growth and prosperity in capitalist economies:"

When workers have more money, businesses have more customers, and need more employees. When businesses pay workers a living wage, taxpayers are relieved of the burden of funding the poverty programs like food stamps and medical assistance and rent assistance that those workers need. Low-wage workers make terrible taxpayers,and that when you raise the minimum wage for all businesses, all businesses benefit yet all can compete.

This is not to say that taxes and their reduction are not important.  They are, but we need to expand our thinking.  It should include not simply and not only taxes, per se, that inhibit growth.  A It should also include levies in the form of interest that inhibit growth.  Indeed, and "excessive private debt may contribute to one of the great problems of our time: growing income inequality and the hollowing out of the middle class."  It shouldn't be surprising,  Vague is astonished at

how little attention the global debt problem—the extremely high ratio of private debt to GDP—has gotten. Not only does it leave the U.S. and other countries vulnerable to crisis should brisk growth in that ratio resume, but, quite apart from any crisis, the accumulation of higher levels of private debt over decades impedes economic growth. Money that would otherwise be spent on things such as business investment, cars, homes, and vacations is increasingly diverted to making payments on the growing debt— especially among middle- and lower-income groups that compose most of our population and whose spending is necessary to drive economic growth. Debt, once accumulated, constrains demand.


It is no doubt too late to take Polonius' advice and neither "a borrower or a lender be," and the reason of course is simple -- "removing liabilities from the borrower’s balance sheet means removing assets from the lender’s balance sheet," and the lenders, right now, have political power. 

I must admit, I do have a sense of impending doom, but more optimistically speaking, we have reached, I think a fork in the road.  On the path to the north, there is little that resembles a paradise, but we escape the doom.  We need to drop the illusions that supply-side, trickle down economic policies work.  They don't.  We need to adopt demand-driven economic policies.  This would require democracy to assert itself and save capitalism from itself.   People of modest and moderate means, "the lower and middle income groups that compose most of our population and whose spending is necessary to drive economic growth," must reject economic policies that will continue to "hollow out the middle class," to include tax policies that place the burden of debt service on their shoulders, both public and private.   They must reject economic policies that encourage the growth of an inherited economic (and political) aristocracy, to include tax policies that favor conversion of income from labor to investment, particularly those forms of investment that do little to promote (and may actually inhibit) job growth.  On the other hand, they must accept a certain level of austerity.  Government debt is bad, and few I think dispute the need to better balance government programs with tax revenues, which means accepting a certain level of government austerity and perhaps more judicious choices among government programs, to include the military.  Government debt is bad, but private debt is even worse.  "Rapid private-debt growth fueled what were viewed as triumphs in their day," as Vague points out, "the Roaring Twenties, the Japanese “economic miracle” of the ’80s, and the Asian boom of the ’90s—but these were debt-powered binges that brought these economies to the brink of economic ruin."  This means, in part, restraint on the issuance of private debt, and self-restraint has never been particularly effective, either on the part of borrowers or lenders, even when self-restraint is so clearly in one's own best interest. 

Having said that, on the path to the south, there is the promise of paradise, easy loans with no credit check, and we rush headlong into doom.  It is, of course, as the Schumpeter columnist put it, unmitigated "nonsense that 'the people' are infallible repositories of common sense."  It doesn't take a finely tuned historical sense to develop a healthy, Hamiltonian skepticism of the demos, who all to easily fall prey to the latest version of the demagogue with simplistic solutions to complex problems.  If the "socialist alternative [to capitalism] that loomed large back in 1942 has imploded," that does not mean the facist alternative to socialism is the answer.  It is altogether too easy to blame the victim for their victimization, particularly when the victim has some ethical and moral culpability in their victimization.  Think of it this way.  Whether out of sheer desire or desperation, one turns to the loan shark, and he gives a way out -- for the moment.  In the grip of a loan shark, one pays up -- or else -- and given the option, one pays up only to insure an increase in one's desperation.  When the simplistic solutions go south, and they will, what then?  The two options that Hanauer sees, the mob with pitchforks or the police state, my money is on the police state.  The mob has already materialized, and it has given over power to a plutocrat, one brimming over with simplistic solutions and conspiratorial suspicions, and when the solutions fail, as they inevitably will, we already know that the Russians will not be the targets of conspiratorial suspicion, not when we have jews, blacks, muslims, and immigrants so much closer at hand.  Failure will bring, not change, but the enforcers.  

From one Leviathan to Another

What does "privatization" really mean?  Before I answer, right from the outset, a detour.   Who should be eligible to vote in federal and state elections?  Setting aside arbitrary restrictions that target more the ability than the eligibility to vote, we more or less take it for granted today that  any citizen who has reached the age of majority (18) is eligible to vote.  One person, one vote, and all weigh equally in the result.  When I talk about the US being a "democracy," this very broad definition of voting rights are at the core of it.  I do understand, of course, that we have a "representative democracy" -- that is to say, we vote for those who will "represent us" in the actual passing of legislation that binds us all.  There is also an element of democracy within the legislature, where the actual passing of legislation most often requires a majority vote within the legislature.  Because this ability to weigh in on matters of import represents real power, it is not surprising that there are all sorts of partisan machinations to influence the selection of particular representatives.  Once elected, it is not surprising that there are all sorts of partisan pressures to insure the representatives actually represent the partisan interests.  There are any number of fault lines between the individual "voter" and the "representative" that pervert the process, and the significant distrust of elected officials represent an awareness of, if not an actual understanding of, those fault lines.  As the recent presidential election demonstrates, the role of "money," for example, in the outcome of an election is at best ambiguous.  Although money for advertising and campaign infrastructure is important, and without monetary support one cannot hope to run for statewide or federal office, it is not decisive.  Spending the most money no doubt helps, but does not guarantee that one garners the most votes.  Once elected, the role of money becomes even more ambiguous.  I do not believe that corruption of the common sort, outright quid pro quo bribery, is common within government, at least not yet, but there is little question that money and monied interests have more "access" to legislators than the average, individual voter.  Money may not buy a particular vote outright, but it does buy the time and space necessary to educate and persuade the legislator to a point of view.  The more technical the legislation -- i.e. the more it deals in arcane matters of importance to a particular industry -- the more significant that time and space become. 

So again, who should be eligible to vote in federal and state elections?  It was not always the case that any citizen had the right to vote.  Generally speaking, "The United States Constitution did not originally define who was eligible to vote, allowing each state to determine who was eligible. In the early history of the U.S., most states allowed only white male adult property owners to vote."  For many of the founders, of course, this was precisely as it should be.  Although there has always been the desire to exclude "deplorables" from the voting franchise -- e.g. "in several British North American colonies, before and after the 1776 Declaration of Independence, Jews, Quakers and/or Catholics were excluded from the franchise and/or from running for elections" -- and the impulse to exclude is alive and well, even if the legal framework no longer permits it.  I am still struck the Public Policy Poll that revealed  "only 53% of Trump voters think that California's votes should be allowed to count in the national popular vote. 29% don't think they should be allowed to count, and another 18% are unsure."  To the best of my knowledge PPP didn't ask whether Muslims, particularly black Muslims, should be allowed to vote, but one can perhaps guess the result.  Setting aside, however, this impulse to exclude "deplorables," the more fundamental reason why "adult property owners," in particular, were enfranchised to the exclusion of others was a belief that those who "owned" America should also "control" America.   At issue were property rights.   I do not know how deep it goes in the human psyche, but this fundamental notion of "what is mine is mine" runs deep in the American psyche. One didn't want to extend voting rights to those without property, in part because they constituted a majority of the people, and there was a fear that the "majority" would exercise their voting right and the taxing power of government to divest the property owning minority of their property.  It is probably not surprising that those who own a good deal of America today hold similar views.  "What is mine is mine," after all, and their fears have been borne out across time.  The progressive income tax is the first apostasy, and the redistribution of those tax revenues to social programming was the second apostasy.

There is, in other words, a fundamental tension between "democracy," defined broadly as the extension of voting rights across all citizens, and those who feel that voting rights should be restricted to the "propertied."  No one, of course, is completely without property, and the line one draws differentiating those who  do (from those who don't) have sufficient property to qualify for voting rights, and consequently governing rights, will always be somewhat arbitrary.  Generally speaking,  "democracy" has been winning, and "each extension of voting rights has been a product of, and also brought about, social change."   The property qualifications for white men were nibbled away from 1792 (Kentucky) to 1856 (North Carolina) during the periods of Jeffersonian and Jacksonian democracy  In 1870, the fifteen amendment extended the franchise to non-white men and slaves. In 1920, the nineteenth amendment gave women the right to vote.  And there were other victories for inclusion leading to the present day.   One might suggest that the victories are only apparent.  While technically able to vote, there are any number of ways, legal ways, to prevent the undesirables from exercising their franchise, the Jim Crow laws being the most egregious case in point. While the Jim Crow laws have been challenged and over-turned, the impulse nevertheless remains, and new ways to limit the franchise are sought -- the current voter ID laws, for example, while technically applicable to all disproportionate affect African Americans and others at the low end of the economic spectrum.  Likewise, while "democracy" seems to have prevailed against property qualifications, the impulse nevertheless remains.  One might, for example, look to conflicts over the size and role of government as a dog-whistle for the idea that only the propertied should be allowed governing rights.  Those who advocate for a strong, activist government are on the side of "democracy," while those who advocate for limited government are for the propertied.  For many reasons, my previous statement will seem counter-intuitive, particularly for those on the far right who more or less advocate for a federal government limited to border security.  They imagine a "free" world where governments don't intervene in our lives.  Unless, however, they are willing to forego most of the conditions of modern life, there are any number of "private" agencies, under "private ownership," that intervene in and to one extent or another control our lives, and do so for their own benefit.  These "private" interventions are not necessarily to the detriment of the people.  The "private" interest of the owners and the broader public interest may coincide very nicely, thank you very much.  Theoretically speaking, a free market insures the convergence of interests as people buy what they need and want, and competition between suppliers insures that prices do not escalate beyond the means of the people.  The goal of private agencies within capitalist societies, however, is not to maximize benefit to the people, but to maximize profit, and the interest in profit will always trump the interests of the people when the two come into conflict.  A strong, activist "democratic" government can help insure profit does not trump the people at large.

Consider, for example, wages and the environment.  In a previous post, I argued that as Americans, we have grown accustomed to exploiting China for cheap goods, predicated on two factors, low wages and lax environmental standards.  As the Tiananamen Square protests demonstrated, the Chinese do not have a strong "democratic" government.  They may have a strong government, but its strength was used autocratically to forcibly suppress the protests "after the government declared martial law. In what became widely known as the Tiananmen Square Massacre, troops with assault rifles and tanks killed at least several hundred demonstrators trying to block the military's advance towards Tiananmen Square. The number of civilian deaths has been estimated at anywhere between the hundreds to the thousands."  Unless we are willing to accept "Chinese" conditions of low wage employment and virtually uninhabitable cities, which the limited government GOP seems to actively endorse with its opposition to raises in (or the abolition of) the minimum wage as well as the environmental regulation of the EPA.  We could, in relatively short order, become China!  Imagine,  as Marc Lallanilla  of Live Science reports, "thousands of dead, bloated pigs floating down the river that supplies Shanghai with its drinking water.  Air pollution in Beijing so impenetrable the U.S. Embassy's air quality measuring station can only call it 'beyond index.'  Industrial towns where rates of cancer are so high they're known as 'cancer villages.'"  What's a bit of lead in the drinking water of Flint, when we can have that?  And, like China, we wouldn't want to regulate away the boon, so we too should adopt "the Chinese government's stony silence about anything that might imperil the country's economic development — including environmental regulation." Although a significant segment of American society seems to yearn for a "strong" government, on the Chinese model, it is questionable whether we could also accept the Chinese conditions of low wages and an uninhabitable landscape.  And how low is low?  As the NY Times reports, even "Chinese shoemakers are building factories in Africa, where wages are about $40 a month, compared with $400 in China."  Could Americans live on wages less than $500 a year to steal back the factories from outsourced Chinese factories in Africa?  

Consider, for example, the current debate over health care.  The editorial board of the Washington Post asked, "Americans are dying younger.  Will the government do anything about it?"  The pretext for the headline was a decline in life expectancy, for the first time since 1993. "According to the National Center for Health Statistics," they report,  "Americans died at a younger age, on average, because of increasing mortality from heart disease, strokes, drug overdoses, diabetes, accidents and other causes, pushing the death rate up 1.2 percent."  As they go on to suggest, one focus could be on diseases of despair, and they have dedicated a series to the rising toll of Drugs, alcohol, marketing and lax federal oversight and how they are working to "defy modern trends of mortality, perhaps most starkly among middle-aged white women."  Of particular concern is the rise in opioid and alcohol addiction in white, rural America, the heartland that voted for Trump.  While one should not jump to conclusions, it perhaps interesting that the top ten states for life expectancy include California and New York, with only one reliably red state, Utah.  The bottom ten states for life expectancy are reliably red states, including Mississippi and Louisiana.  Although one shouldn't read too much into the correlation, it is striking that lives are longer in the bluest of the blue states, shorter in the reddest of the red states, with all those "swing" states falling out between.  Likewise, one can't tell if a single year of data represents a trend, but as the post goes on to point out, "even if not, the public-health challenges are huge: Too many people are dying of preventable causes, and many more are dying of diseases for which research could eventually deliver cures."  And it seems clear that government, both state and federal, have a role.  "The next Congress and president appear set on significantly curbing government health programs," and while it is debatable how government can and should intervene, I agree with the Post that "They should target real waste, not hobble the government’s ability to improve Americans’ health."  

The Washington Post noted that the US spends more on health care than any other country, and listed three drivers of the high cost.   "Chronic -- and often preventable -- diseases are a huge driver of personal health spending," they reported and one of the three most expensive diseases in 2013 was diabetes  at $101 billion.  Not all diabetes is preventable, but those forms associated with obesity and alcoholism are.  While I don't think government has a role regulating the size soda we drink, even so, as they report elsewhere, the cost of treating diabetes keeps rising.  "A version of insulin that carried a list price of $17 a vial in 1997 is priced at $138 today," they report, and "another that launched two decades ago with a sticker price of $21 a vial has been increased to $255."  And why?  The reason is  fairly  simple, and reminds us again that the goal of private agencies within capitalist societies is not to maximize benefit to the people, but to maximize profit, and the interest in profit will always trump the interests of the people when the two come into conflict.   In today's world, one of the more valuable pieces of "property" that one can own is a patent, particularly a pharmaceutical patent, in part because it eliminates a core element of the free market, competition.  Others cannot infringe on the pharmaceutical's intellectual property rights, and consequently the pharmaceutical companies can charge what the market will bear.  In the case of life-saving drugs, like insulin, the market will bear quite a lot.  So "seventy-five years after the original insulin patent expired, a point at which drug prices usually decline," in part because competition between suppliers drives down prices, "three companies have made incremental improvements to insulin that generate new patents and profits, creating a family of modern insulins worth billions of dollars."  One might argue that the improvements, insofar as they actually are improvements, justify the costs, and we do want the pharmaceutical companies to continue investing in research that leads to actual improvements.   Not all improvements, however, are actually improvements.  As David Nathan, a Harvard Medical School professor suggests, “I don’t think it takes a cynic such as myself to see most of these drugs are being developed to preserve patent protection.  The truth is they are marginally different, and the clinical benefits of them over the older drugs have been zero.”  Nevertheless, insofar as insulin is a life-saving drug, the consumer is held hostage as "older drugs" are discontinued or priced to match the newer, patent-protected versions.  The pharmaceutical companies are not going to call themselves out on the exploitation of the consumer, and curbing government health programs of the sort that could independently call them out does not seem like a prescription for a healthier system.  That we spend more on health care than any other country, and are dying younger for all our expenditure, seems the real waste. 

So, back to the initial question, what does "privatization" really mean?  It means decreasing the size and/or effectiveness of "regulatory" government, particularly those agencies that serve to restrain and hold capitalism accountable on behalf of the people -- agencies like the Department of Labor, the Environmental Protection Agency, the Food and Drug Administration, and the Centers for Medicare and Medicaid Services.  In doing so, power is transferred to any number of "private" agencies, under "private ownership," that intervene in and to one extent or another control our lives, and do so to maximize profit.  These "private" agencies are not "democratic" in any meaningful sense of the word, and those who benefit most from them are those who own and those who run them.  This might be OK, if we lived in the free-market world of our imagination.  The Schumpeter editorialist for the Economist, lists a couple of basic ideas, "repeated ad nauseaum in every business book," that have little bearing on reality.  The first is that "business is more competitive than ever."   He points out that "the most striking business trend today is not competition but consolidation," and consolidation is "particularly advanced in America" where those engaged in monopolistic activities "are enjoying record profits."  This impacts the second basic idea, that "we live in an age of entrepreneurialism."  He points out that "the evidence tells a different story," and "the rate of business creation has declined since the late 1970s" in America, and "in some recent years more companies died than were born."  Technology seems to be the glowing exception to this decline, with the outsized fortunes of the Mark Zuckerbergs, the Steve Jobs, the Bill Gates of the world serving as companies on the hill.  Having said that, however, high growth start ups are rare, and "technology is high on the list of industries that are concentrating."  As the Schumpeter columnist points out, "In the 1990s Silicon Valley was a playground for startups.  It is now the fief of a handful of behemoths."  Although the Schumpeter columnist addresses the myth that "business is getting faster" by suggesting that "firms often waste months or years checking decisions with various departments (audit, legal, compliance, privacy and so on) or dealing with governments' ever expanding bureaucracies" -- suggesting of course that we should decrease the size of regulatory government -- but it could be that the  emerging handful of behemoths are less efficient simply because they are outsized behemoths.  Privatization means transferring power, not to small, lithe, competitive and entrepreneurial companies, but from one leviathan to another -- the large, lumbering, monopolistic private sector.