1. I wish Pete could get before Republican leaders and yell at them about their rhetorical failings. They’re at least as clueless as he says.
2. Most people don’t care about the tax rate on the rich, because they assume they don’t really pay it. And usually they don’t.
3. Calling Obama a socialist or even a “progressive” isn’t effective. In some ways he’s for bigger government. But not he’s not for “History” and against the “individual” in the way the real socialists were. And the suspicion here that what this kind of rhetorical appeal really means is that the whole welfare state is unconstitutional because the Founders wouldn’t have wanted it.
4. Republicans somehow have to make the hard point that the entitlement structure of the current welfare state is unsustainable. It wasn’t so under the demographics of, say, 1962. We can’t afford what we have now, and so what we have has to be mended in ways that might or might not be intrinsically choiceworthy but are certainly necessary.
5. Someone might say an alternative to the approach of Levin and Capretta might be a huge tax increase on the middle class. An increase large enough to really make that big a difference difference would cripple the economy. And I don’t see it becoming popular. Obama or his successors generating a coalition of envious dependents is not a realistic scenario. So the Democrats these days aren’t really about implementing some brave new progressive vision but delaying the inevitable. They remain the reactionaries, even more than the Porchers. But the huge rhetorical problem is that people are always about delaying and diverting themselves from unpleasant futures.
6. So the Republicans have to work on the upside of devolving what entitlements there are to individuals. They actually need to talk about the benefits to the self-employed. The world coming into being is all about being self-employed, as opposed to career loyalty to a paternalistic employee or a personal corporation or a unionized industry or even government. Tenure and pensions of every kind are toast. This world is NOT in every respect a wonderful new birth of freedom, but our institutions have to in many ways be adjusted to it.
7. Can Republicans even talk candidly about the birth dearth without blaming it on anyone? They can be all for shoring up intermediary institutions by freeing up the family and religion and local government from bureaucratic regulation and sophisticating dissing. But finally we have a pretty intractable crisis in “voluntary caregiving”–intractable at least in the short term.
8. As Pete says, it seems to be above the pay grade of Republicans to focus attention on the degradation of American political deliberation caused by ROE. But before we get all psyched up about Robby George etc. say about who the embryo is and what marriage is we have to create the “space” by which these issues are decided by citizens talking to each other. When the Court decides, it WILL decide on a Lockean or “autonomous individual” understanding of rights.
9. So Republicans, I repeat, have to be for judicial restraint pretty much across the board. And so they have tone down, at least, wanting the Court to protect them from affirmative action or ObamaCare or abuses of eminent domain. Pete is right that the Republicans have the branding problem of seeming to want to protect white people (or rich white men) against a genuinely inclusive understanding of citizenship represented by our African-American president. Republicans can respond that there’s nothing more inclusive than their individualistic understanding of the Constitution. And that’s even true, but they have to accept the burden of trying to persuade blacks, Hispanics, and gays that it is true.
January 5th, 2013 | 10:35 am
As for how to talk about the birth dearth without blaming anyone, that’s easy. People in the medical industry do it all the time. They just say that the problem is nobody is as big as the Baby Boomers, the implication being that we’re not having too few children, the Greatest Generation just had too many.
That’s not nearly true, and it risks treating this situation like a temporary problem with a cause that has already been dealt with, but it’s a relatively non-threatening opening.
January 5th, 2013 | 11:06 am
[...] 1. I wish Pete could get before Republican leaders and yell at them about their rhetorical failings. They’re at least as clueless as he says. 2. Most people don’t care about Source: Postmodern Conservative [...]
January 5th, 2013 | 6:25 pm
All of these points together represent a very tall order for our politicians, professor. To do what you suggest would require a statesman with the talents of at least a FDR to communicate a very complicated message in a simple and accesible manner. Who of the current crop of Republican candidates has that capacity? None, as far as I can see.
January 5th, 2013 | 8:04 pm
I am not sure I agree with any of those bullet points.
2) That is the only reason I care about it. If you don’t have some feel for tax credits and deductions you actually will be led astray in your economic analysis.
4) Can’t be true because we are monetarily sovereign. That is we have a floating currency and the rest of the world decides just how much we can afford. On an objective basis accross several key indicators it seems like the case for being able to afford it is stronger than ever. (i.e. low interest rates and high imports) (Krugman’s points on the IS-LM curve and the zero bound in the short run, et al.) I don’t believe there is much to the “sustainability’ dogma on the grounds that you are making the argument. In terms of the affordability/sustainability component the part I can’t understand is why exactly we can afford it. But the market clearly says we can! I had been hopeing that somehow those who talked about “american exceptionalism” knew the ends and outs of global macro, and just why we were much different from Greece, and why we didn’t want to become like Europe and give up monetary sovereignty. Only now of course the unsustainability crowd is saying they want to be like Germany, minus sensible corporate and labor law. Of course you realize that for one country to be a net exporter another has to be a net importer? (hint: we are a net importer, therefore the world is saying we can afford to persue any policy that creates debt denominated in our own currency.)
5) That is relatively insane. Jokes about that cause 7, and would accelerate the trend.
6) This sounds bad. I also doubt it as a trend. Think of the products you create and the products you buy. How many of those are the product of the self-employed? Did you buy a painting from an artist? Did you bake cookies for a bake sale? Almost nothing we produce or consume is a product of the self-employed. If you mean that business is going to downsize the low alpha high risk elements and basically outsource these to the self-employed, well that is why it sounds bad. business will “privatize” the low margin activities, which might allow higher profits, but in the end will just result in more bankrupcies amond these self-employed, thus in effect socializing the loss. But more clarification on 6 is needed.
In terms of more clarification being needed I sort of wish Mitt Romney had been a bit more specific on exactly what he was thinking in terms of unfair trade.
In my opinion if you really want to combat the deficit, you have to tackle trade policy.
On reason to move to Krugman is that he talks about Germany, Japan and global macro. Also any policy that is really “unsustainable” is at heart really Malthusian. That it a lot of ecological arguments talk about unsustainability, those are good arguments. But this fiscal cliff, budget talk unsustainability is bad econ. You might say that something is unsustainable if it makes sense on economic grounds, but involves a mechanical/engineering process that consumes more energy than it produces. That sort of unsustainability I understand. But I don’t understand your unsustainability in #4. Maybe you are catholic and Malthus is heresy, so you have to backdoor a check on growth, without laying out a sustainable “unsustainability” argument. I don’t actually understand the “birth derth” argument within the larger framework of economic sustainability (in the very long run).
If deficits didn’t matter and you wanted to end the birth derth you could give a 250k refundable tax credit per child born. Don’t try to act serious and suggest something tiny as a stimulus and claim it won’t work(of course it won’t) Of course given the fact that this would be quite stimulative, we would certainly have to raise taxes eventually to ward off inflation, and this would certainly end up punishing those who weren’t nudged into having children but choose careers instead. You could try to fund it on an estate tax. As Baby boomers die they fund a baby boom (perhaps a bit too cute).
In any case if what you are really saying is that deficits are unsustainable, then you have to look at the root causes of such deficits. You can’t solve deficits by cutting spending. Spending is basically set in stone(law), so it is very hard to cut non-discretionary spending. Even if you did cut spending you wouldn’t necessarily reduce the deficit, especially in this environment.
The root cause of the deficit is probably the crash in home prices (which also leads to a birth dearth) which is also caused by growing income inequality, which is caused by increased efficiency from non hicks neutral technological change. The rich are getting richer, folks want to get rich, they must save, they must obey Eistein’s rule of compound interest being the strongest force in the universe. Ergo also fewer children. In any case there is a strong marginal propensity to save. If there is a strong marginal propensity to save that money must come from somewhere, it can either be returned to the U.S. from exports or it can come from deficit spending. That is if the consumer falls off and saves then deficit spending goes up, unless the U.S. runs a trade surplus(i.e. folks want american goods more than they want american dollars).
Of course currently the rest of the world wants U.S. dollars more than it wants american goods. This in my view is grounds for an unsustainability argument if I can question the almighty “market”!
But so long as the rest of the world wants american dollars and we are trapped in the zero bound and we have an ageing population that needs (and plenty of young college graduates that want employment in the medical/nursing fields) we should robustly increase if not maintain entitlement spending (i.e. it is not broke, but there are plenty of under-employed lawyers who are willing to sell any reform).
So basically given income distribution inequality, the middle class needs money+jobs more than kids, so there is a very high propensity to save, which means the U.S. government is going to run a deficit (if the middle class is going to achieve its savings objectives). Potentially the middle class could achieve its savings objectives without a budget deficit, if we ran a large enough trade surplus. (but which nation is going to run the trade deficit? in the case of the U.S. which nation(s), which foreign currency is trusted enough to accumulate?)
If you really want to ballance the budget what you need to do is get the middle class(all consumers actually) in a position where its marginal propensity to save is around zero and the trade deficit is around zero.
I don’t know how you can give the middle class enough savings such that they will want to have more children and also spend everything they earn. Maybe the 250k refundable child credit? But then what if they just buy more cheap goods from China?
As rediculous as this may sound to you guys, (and I for one am not sure the deficit is the problem you think it is). The best policy for getting the budget ballanced is to actually cap imports, or to solve the trade ballance.
So maybe the Ballanced Trade Restoration Act of 2006 should have been considered.
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.03899:
It basically creates import certificates. The idea is partially backed by Warren Buffet. I am not saying it is better than Ricardo, but you are already rejecting the market by saying that it is wrong about the sustainability of large deficits and entitlement programs given low rates of inflation and international demand for the U.S. dollar. (you need so much more work on #4) If in fact our deficit spending is unsustainable then we should do what we can to stop a large cause of it, namely our free trade addiction.
Once you ballance trade you actually get a situation where if the private sector runs a surplus the federal government runs a deficit and vice versa.
The absolutely insane thing about this and why I believe in american exceptionalism is that there is no prescedent for the United States of America, no nation has ever been able to run such large and persistant trade deficits. Of course it is possible that theorists in the old days were constrained by examples taken from practical considerations. A ship owner wasn’t leaving port without cargo. Trade was a tangible thing for a tangible thing. Buffet also thinks this is unsustainable.
But what exactly is the official republican macroeconomic argument supporting the contention that #4 is unsustainable.
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