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Does Anyone Know the Democratic Plan for Creating a More Dynamic American Economy?
Some two-thirds of Americans think the US is on the wrong track. Stagnant living standards are at the heart of those concerns. Will our children have more opportunity than we’ve had? Upward mobility hasn’t gotten worse over the past four decades, nor has it improved. In a spot-on Financial Times comment, Ed Luce wonder what Democrats and their potential 2016 presidential nominee are offering worried voters beyond social issues:
Come the glamour of 2016, Hispanic, millennial, single female and African American voters will be back in force. All that Hillary Clinton need do – or whoever takes the Democratic nomination – is tick the right boxes and let demography fix the rest. Such is the US left’s world view. It is also a measure of its intellectual poverty. Whatever liberals are smoking, it is no stimulant to new ideas. The left’s sense of destiny is based on America’s shift to a minority-majority nation within the next 30 years. As the white vote shrinks, each presidential race will be harder for Republicans to win. What is missing is a compelling reason for people to embrace Democrats, as opposed to rejecting Republicans. For the time being, the latter can be relied upon to offend minorities – notably Hispanics. But Democrats have remarkably little new to say about the future of America’s middle classes, regardless of ethnicity. Without a credible economic plan, the US left risks being little more than a rainbow coalition.
What is the next-stage Democratic economic agenda to boost growth and opportunity? A higher minimum wage for the 3% of workers who currently earn it (more than half being part-timers)? Universal preschool? Beyond the cost, “analysts have yet to prove that expanding middle-class access to preschool has as much impact as it does for low-income children,” according to a recent piece in The Atlantic magazine. (And as a Slate piece on pre-kindergarten put it, “If you are reading this article, your kid probably doesn’t need preschool.”) More infrastructure spending? Larry Summers has been pushing this idea hard as a macro way boost to potential growth and current demand, but micro details of how much spending and on what are hard to come by.
Do those ideas meet the Schumer Standard? As New York’s senior US senator said last week, “Democrats must embrace government, not run away from it. … Together, Democrats must embrace government. It’s what we believe in; it’s what unites our party; and, most importantly, it’s the only thing that’s going to get the middle class going again.”
And how would that translate into policy? Perhaps a spate of Scandinavian-like social programs to relieve middle-class anxiety such as wage insurance, one-year parental leave, and a universal basic income among others — all financed with a value-added tax? Or maybe the pay-for would be dramatically higher taxes on the 1% ( or 2% or 3% or 4% …) given that many left-center economists have embraced the idea of sharply higher marginal tax rates without economic damage. Fingers crossed, I guess. Anyway, much of the emphasis here is on improving economic security through redistribution rather than economic dynamism. And without the latter, the former is far less affordable. What is the Democratic plan for growth and creating a more innovative American economy?
Published in General
Democrats don’t need to have a plan for anything. Of course, if Republicans don’t have an acceptable plan, even if they’ve got a plan, that merits executive action. Got it?
The Democrats have a simple plan for growing the American economy. It is just three steps.
Step 1: Find new methods of rent-seeking.
Step 2: ?
Step 3: Economy grows.
If it looks kinda familiar, it may be because, like many Democrats running campaigns this year (I am am looking at you Mary Burke), they borrowed the concept from somewhere else. A television show. Call it the Cartman Plan.
Seawriter
“To disagree with two thirds of the American public is one of the first requisites of sanity.” At least, that’s the modern version of what Oscar Wilde would have said.
The first problem here is that making “policy”, even “policy recommendations”, on the basis of what the “American public” thinks, perceives, feels, assumes etc…is probably a terrible idea.
The “American public” always thinks things are going bad, always thinks there is too much “stagnation”, always thinks the next generation will be worst off.
And they’re always wrong.
But, “calm down, go about your business, things aren’t doom and gloom” doesn’t win votes for any party. Unfortunately, the GOP has learned recently that populism wins votes. Woe unto us!
Now, the “conservative” reaction here would probably be to say that, despite the Dem’s policies, despite 6 years of this president, the US economy still managed to recover faster and more robustly than other major world economies. And still remains the most dynamic economy in the world. Because, guess what, the US economy actually functions outside of the realm of “policy makers”.
But doom and gloom it is.
You weren’t alive and cognizant in the Reagan era, were you?
I think we nearing the end of real GDP growth. What I see going forward is continuing productivity growth counterbalanced by a diminishing work force and hours worked. For the general middle class family a bigger house, more cars, and more gadgets are less desirable than more time off, less stress, etc. It used to be that income level and hours worked were largely uncorrelated (i.e. lower wage and high wage people worked roughly the same amount of hours on average), now it is highly correlated. The larger one’s income the more hours one is likely to work, I see this all the time in my area of high tech. For the lower middle class and poor, government assistance forms a large fraction of family income which enables a large amount of leisure time. Few people I know need to work more than 40 hours to make ends meet. Generally, if they are working more than 40 hours it is because they have the ambition to something more.
Especially the last half of the Reagan era, when it became obvious the economy was booming and we were winning the Cold War.
For that matter, in the 1950s and the first half of the 1960s no one worried about their children’s future. They knew things would be better for them. My parents believed that.
Seawriter
Consumer confidence (since that’s a metric we have data going back to that time, as opposed to this “direction of country” measure), today is about at the level it was in 1983…and higher than it was was for almost all of the early 90s.
You remember the early 90s? That time period during one of the highest economic booms in this country (and the world in general).
So what does this tell us about the “American public”?
That is a good thing, isn’t it?
I.e., when we say “make ends meet”, what we usually mean is be able to afford the mortgage on that house which is about 2 times bigger than their parent’s house, their 2 or 3 cars which they trade in for a newer model every 3-5 years, their cell phone bill for their 6 phones, that $160 cable TV bill etc etc.
I.e., “make ends meet” is a relative term.
As for “stagnation” and “dynamism”, take a look at this:
http://macroblog.typepad.com/macroblog/2014/11/for-middle-skill-occupations-where-have-all-the-workers-gone.html
Your parents didn’t have Drudge Report or 24 hour news channels telling them about the impending doom and gloom that is coming up at 5.
Perception, isn’t reality.
Robert Gordon makes a pretty convincing argument that the US is headed to a real GDP of .2 of 1% for long into the future. Check out one of his lectures on YouTube. I think Atlas may be coming close to shrugging.
All of those gentry liberals in Boston, New York, LA and Washington that have not moved to Vermont, New Hampshire, Montana and Virginia and are in the process of ruining those fine states should consider looking for alternative living space in the hills, On the other hand, maybe they should stay where they are and serve as cannon fodder for the masses.
I certainly can’t recall any period in time in the last 15 years at least when doom and gloom wasn’t the norm. You’ll have to forgive me if I don’t recall earlier than that. I was in a different country then.
That’s not what the consumer confidence numbers showed in the early 90s (up to 1994). They were at about the same levels as today, even though the economy was experiencing, or was about to experience, one of the biggest economic booms.
In fact, 1990-1994 was the longest period of low consumer confidence up to that point (only the current recession has longer lasting low consumer confidence).
How wrong were the ‘American people” in the 90s?
The 1970s had consumer confidence numbers which were pretty comparable with the 1980s, and pretty much on the same levels as with the 2000s (with the exception of two short-lasting valleys in the 1970s). You may have thought things were bad in the 70s. But the overall consumer confidence numbers indicate something else.
What does this tell us about “perception”?
For one, it tells us that popular perceptions, confidence and opinion…can’t see past its own nose. They react to momentary stimuli, but certainly have no predictive validity at all.
Well, if you say so, I guess it must be true. I mean, after all, all I have to go on is what I experienced. Which means I cannot trust them.
As H. Beam Piper once said, “You can’t argue religion with a priest.”
Seawriter
I don’t know why people think that this response somehow trumps all arguments.
I’m not making any claims on anything that isn’t purely a number from a chart measuring “consumer confidence”. I’m not saying it. You can go look it up yourself. Nothing mysterious about it.
If you don’t agree with the numbers, based on your experience. That’s cool. Then I can say that I don’t agree with the numbers today, based on my experience. Where will that get us?
Yeah, the people over at Zero Hedge say stuff like that all the time: “I don’t believe the numbers, cause…” That’s cool too.
The democratic plan for the future is that soon “whites” will be a minority.
Then, paradise.
Because we all know that what really makes the world an ugly place is white people, right?
Just ask them, or read comments at any leftist site.
I used to, then the endless racism and insane hostility to sanity just became too much to tolerate.
But they’re still around, raving, with all the vile idiocy that carpeted the planet with mass graves in places unfortunate enough to live under rule by leftists.
I have no doubt they’d like to do that here, except all the crazy people with guns just scare them too much…
Ah . . . maybe because there was a war in 1990 and a recession in 1991-92 which accounted for the low consumer confidence numbers. In other words there was a rational reason for the dip.
If someone is right that consumer confidence went down, but ignores, depreciates, or is unaware of a rational justification for the behavior, why should I be impressed by that reasoning?
Seawriter
A war that we won with the most lopsided victory in history? A “recession” that was one of the mildest on record? Yet one of the lowest, and longest lasting period of low confidence?
I don’t think so bud.
Because having some of the longest running and lowest “consumer confidence” periods after the US won the Cold War, entered into one the biggest economic booms in its history, right on the heels of a previous economic boom…is the definition of not being able to see past your nose.
That’s the problem with going off “public opinion”. But hey, it wins votes…or so you think.
It’s one thing to pander to low information voters to get them to vote for you.
It’s another thing to actually…believe…that.
Geeze — you really are a believer in the inevitability of history.
1. In 1990 people did not know we were going to win the war. The Iraqi army was “battle hardened” and the fourth largest in the world. In retrospect, they were so hardened that they were brittle, plus the US military had improved tremendously since the 1970s, really the last time the US had fought a war. (Remember the Mayaguez incident? Or Desert One? That was the perception.) So, yeah. Consumer confidence was low. Rationally so.
2. In 1991 people did not know the recession would be a mild one. That was only apparent in 1992-93. So, yeah. Consumer confidence was low. Rationally so.
As for 1992-1993? Well, those were the first years of the Clinton Administration. There was this little thing called a tax hike, plus the promise of Hillary-Care. People should be confident when their disposable income goes down, and a major hike in health care costs are on the horizon? Consumer confidence was low. Rationally so.
And what happens in 1994? A Republican Congress gets elected. Consumer confidence goes up. Rationally so.
If you just look at the numbers and assume the future is locked in concrete, you are correct. People are irrational and stupid. It is a mistake numbers people make all the time. But, rational actors have to go on the information they have in the present, not the future information that is as yet unavailable to them.
No one in 1990 realized how easily the Gulf War would be won. No one in 1991 knew how long or deep the recession would be. And no one in 1992-1993 knew there would be a Republican Congress in 1994.
Seawriter
In 1990 we also weren’t…in…a war. We had also just defeated the Soviet Union. You don’t really think that “consumer confidence” was impacted by some event far off in a place no one had ever heard of (Kuwait), to the point of creating one of the longest lasting and lowest periods of consumer confidence?
Hardly an explanation.
The US had multiple recession periods prior to that. Never did it result in such a prolonged and low level of confidence.
Hardly an explanation.
They elected Clinton precisely because their “confidence” was so low. Not the other way around.
They elected a Republican Congress because their confidence was low. Not the other way around.
No matter how you spin it, it makes no sense. It only points to a complete inability of the “American public” to see pat their own noses.
None of those events were even remotely “extraordinary” since the time when consumer confidence has been measured. In fact, all of those events can be found throughout every decade since it’s been measured.
What was extraordinary about the 1990s was that the US had just won the Cold War, achieved complete dominance on the planet, massive new economic activity was being created and the economy was booming.
And yet, the “American public” thought that was one of the worst times.
The same can again be said about the 1970s. Numbers that were comparable with the 2000s and the 1980s (except for a couple of years).
Rational? Clearly, rational isn’t the way to describe the way the “American public” views its current state.
PS: Of course, “rational” isn’t the right word to use here. One can be very “rational”, form their own perspective, when operating under fear, or under some perceived threat of security or perceived uncertainty. The problem is, that none of that was real.
But that goes to my point: whatever it is that the American public has been perceiving about the future is very often doom and gloom, for no apparent reason, and they are always wrong on that.
This is kind of what I was getting at as well. Fear works wonders at getting people to vote for you. Now obviously YOU would think that Clinton-low confidence, GOP Congress-high confidence.
But I suspect even you don’t actually believe that ;)
In both cases it was just knee-jerk reaction of the “American public” to vote for the “other guy”.
Which is why fear works wonders. Which is why we get absurdities like the…thousands…of Ebola scare stories printed and written by “conservative” commentators prior to the November elections. Complete nonsense. Completely cheap scare tactics. But anything to get “confidence” down, because everyone knows they will vote for whoever the “other guy” is in that case.
Doom and gloom works in politics. But it is also complete nonsense in reality.
And this brings me to point #2: If you think that the “American public” responds to…trivial political events…in such a way as to decrease its consumer confidence to such low levels, then clearly the “American public” is acting like a bunch of sheep.
If “consumer confidence” responds so strongly to whomever is in the White House, or in Congress, then clearly the “American public” isn’t very rational.
Because if you think that our economic lives depend so closely on whether the GOP or the Dems have a minority or majority in some house of the congress…then clearly this isn’t a very “rational” view of the US economy, or of people’s lives.