'To My Fellow Plutocrats: You Can Cure Trumpism'

[zoogs]

http://www.politico.com/magazine/story/2017/07/18/to-my-fellow-plutocrats-you-can-cure-trumpism-215347

 

 

Yet, I find myself in deep disagreement with almost everyone I talk to about Trump and Trumpism. I firmly believe that Trump, by himself, is not the problem. Indeed, the lefts maniacal focus on Trump confuses cause with effect. Yes, Trump is a manifestation of a serious civic sickness. But treating the symptom by removing Trump wont cure the disease, even if it temporarily makes us feel better. No, to heal the body politic we must confront the disease itself. (...)

 

A century ago, as communism and fascism threatened to overrun Europe, our nation struck a grand bargain: We plutocrats would continue to be toleratedeven celebratedas long as broadly rising incomes meant that each new generation of Americans continued to do better than the last. But through the policies we championed in the corridors of power and through the longstanding social norms we violated in the corporate boardroom, we broke our end of that bargain. And now the pitchforks are coming for us, my friends, from both the right and the left.

This is a stirring and delightful manifesto. I'm buying what he's selling.

 

Many aspects of this are so incisively well-stated. This line in particular resonates:

 

People have never been paid what they are worth...They are paid what they negotiate. And working people have lost their ability to negotiate decent wages.

[Danny Bateman]

Lots of difficult truths in that article. Well worth a read and some reflection.

 

Specific to where we find ourselves with regards to the current POTUS:

 

Three years ago, in these pages, I warned you that the pitchforks were coming. I argued that 30 years of rising and accelerating inequality would inevitably lead to some sort of populist revolt that would disrupt the fantastic lives we elites enjoy. I cautioned that any society which allows itself to become radically and indefensibly unequal eventually faces either an uprising or a police state—or both.

And here we are.

 

Our new president was swept into power through exactly the kind of populist anger I predicted. He was an historically terrible candidate, and his behavior and actions as President have confirmed my worst fears. There is a thuggish, violent undercurrent to everything he says, tweets and does. Even scarier, his supporters relentlessly attack our democratic norms and institutions. The free press (and reality itself) is under assault. But given the stunningly insufficient way in which Hillary Clinton spoke to the economic and status concerns of so many voters, it shouldn’t have surprised us that Trump won. People are hurting, and they lashed out—by voting for the guy who was lashing out too.

 

Don’t say I didn’t warn you. And don’t console yourself for a minute that in electing a fellow plutocrat, our side won. President Trump isn’t on any side but his own. And his strategy to make America great again by bringing back an old industrial economy that no longer exists is as substantive as his early morning tweets about Cable news hosts. After his trickle-down policies—like ripping away heath care from tens of millions of Americans so plutocrats like us can get giant tax cuts, or just enacting giant tax cuts for us, and calling it tax reform—inevitably exacerbate the already extreme inequality that helped sweep him into office, those pitchforks will be angrier than ever.

 

So Trump rode the angry tide into office by being just as angry and turning himself into a symbolic wrecking ball. But he has no intention of doing anything to quell the tide, and will instead operate as a standard Republican, with a tinge more self-interest than usual.

 

To me, the overriding theme of the article is greed. Our inability to face inequality with clear eyes stems mostly from greed. Those who have the means to make a substantial difference don't want to risk what they already have. It's easier to just hoard it and continue as usual. That leaves the rest of us to put for our efforts to bring about change, despite our comparatively disparate resources.

 

He directly takes on Warren Buffett's view that expanding the EITC is enough to solve this problem. Interesting theory.

 

Overall, Trump's antiquated approach to juicing the economy will not work. The economy, as a whole, is doing well as it stands right now. Trump's plans to slash tax rates for the wealthy and corporations, renegotiate trade deals (anybody noticed he hasn't done a single one yet?) and try to force a reboot of lagging manufacturing at the expense of other growing sectors may show some marginal gains to GDP growth. But inequality continue to worsen, sharply, under his watch.

[zoogs]

His original piece from 2014: http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014

 

No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.

 

Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. (...) And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction. (...)

 

What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly.

[TGHusker]

Good honest soul searching and well written article

 

good quote here:

I believe that we in the American political and economic elite face an extraordinarily inconvenient but undeniable truth: Our country will not get better until our fellow citizens feel better; and they will not feel better until they actually do better. And this is the hard part for many of you: The American people will not do better until they are actually paid more.

And they won’t be paid more until we change the way we manage our economy. This is the stark, simple fact at the heart of our ailing political system. Nothing is going to get better until we enact laws and standards that persuade or oblige every business to pay every worker a fair, dignified and livable wage. Everything else, from Trump on down, is a distraction or a lie.

 

 

I also would like to see the #s that support the claim that increase min wages increases jobs and does not delete jobs. Perhaps it is true and has been documented someplace:

 

President Trump promises to restore the middle class to its former glory by bringing back old industrial-era jobs—as if slashing environmental regulations could somehow make coal competitive again with plummeting solar prices, let alone our fracking-induced glut of cheap natural gas. This is magical thinking. Manufacturing as a percentage of the overall economy, and of jobs, has been declining globally for decades. This trend will not reverse. Trump cannot restore the middle class with empty promises to bring manufacturing jobs back from the dead.

No, the only realistic near term way to insure Americans do better is to make existing jobs into good jobs by requiring they be paid adequately. There is no earthly reason why an entry-level job at low-wage employers like Walmart or McDonalds could not pay $15 or even $20 per hour with full benefits, the way an old factory job used to. There is nothing “unskilled” about a barista or a home health care worker, and no economic principle that prevents these workers from earning a living wage. The only difference between today’s service workers and yesterday’s manufacturing workers is that most service workers have no union, and thus have no power. People have never been paid what they are worth, despite what the trickle-downer’s will tell you. They are paid what they negotiate. And working people have lost their ability to negotiate decent wages.

Union jobs that used to pay people middle-class wages and that delivered the job security and benefits that enabled a dignified, stable and secure life have been eliminated and replaced with minimum-wage jobs. Low-wage employers tell us that this is all they can afford. That, too, is a lie. When Starbucks and Walmart and McDonalds say they cannot provide their workers with middle class wages and benefits like General Motors and IBM used to, they really mean they’d prefer not to do so. Why? Because if wages are low, profits and bonuses are high.

I want to underscore that I do not think it reasonable for any company, even the size of Walmart, to be expected to unilaterally raise the wages of their workers to double the national minimum wage. In a viciously competitive market, such an action is unrealistic. What is unforgivable (and in a sense, inexplicable) is the failure of Walmart’s leaders to lead the charge to level the playing field by raising the federal minimum wage, so that every company is required to pay their workers fairly. After all, who would get the biggest share of these extra consumer dollars? Our nation’s largest retailer: Walmart.

To be clear: raising wages simply does not kill jobs. Raising wages will no more kill jobs than eliminating slavery killed jobs, or giving women the right to vote killed democracy (both of which arguments were made at the time). In fact, the opposite is true. Despite what our good friends at the Chamber of Commerce and the National Restaurant Association (the other NRA) may tell you. If raising wages really killed jobs, the empirical evidence would be abundant. We’ve raised the federal minimum wage 22 times since 1938, and unless the economy was already in or heading into recession, employment always increased. And if you look further into the data by sector, the results are even more dramatic. The more effected the industry sector by the increase, the better it did. The lowest wage sectors had better employment effects than higher wage sectors.

[zoogs]

I agree with you about more support being needed for those claims. However, I generally share his concerns about an effectively feudal system and his appeal to consumer power. We live in a capitalist, consumer-based economy. Of the "rising tide lifts all boats" arguments, having consumers with more spending power far defeats having the wealthiest ('job creators') accrue even more wealth than they have. Part of this the evidence seems strong that this wealth is not used to actually job create; the additional gains are sat upon.

 

And, incidentally, this is an argument against "tax cuts for the middle class" -- at least in my reading of it. This isn't about giving middle class people a thousand extra bucks a year to spend, funded out of the public. He's talking about much, much bigger scale, and he's talking about targeting people on the lower end of the spectrum. The ones who are most constrained from participating not only in the American dream, but also in the functioning economy. It's an interesting argument and I hope he's correct.

 

At the same time, I appreciate that he's not Bernie. In fact he issues a clear rebuke to Bernie-ism here by saying he's under no illusion that economics provides all solutions. Yet, he's also right that improved conditions are a big distraction against people who might otherwise have reason to act on their baser impulses.

 

I'm glad you enjoyed this, TG!

[TGHusker]

I agree with you about more support being needed for those claims. However, I generally share his concerns about an effectively feudal system and his appeal to consumer power. We live in a capitalist, consumer-based economy. Of the "rising tide lifts all boats" arguments, having consumers with more spending power far defeats having the wealthiest ('job creators') accrue even more wealth than they have. Part of this the evidence seems strong that this wealth is not used to actually job create; the additional gains are sat upon.

 

And, incidentally, this is an argument against "tax cuts for the middle class" -- at least in my reading of it. This isn't about giving middle class people a thousand extra bucks a year to spend, funded out of the public. He's talking about much, much bigger scale, and he's talking about targeting people on the lower end of the spectrum. The ones who are most constrained from participating not only in the American dream, but also in the functioning economy. It's an interesting argument and I hope he's correct.

 

At the same time, I appreciate that he's not Bernie. In fact he issues a clear rebuke to Bernie-ism here by saying he's under no illusion that economics provides all solutions. Yet, he's also right that improved conditions are a big distraction against people who might otherwise have reason to act on their baser impulses.

 

I'm glad you enjoyed this, TG!

The Bold: Maybe a faster version of 'Trickle down Economics". The theory behind 'Reaganomics" was that as tax cuts were given to job creators more jobs would be created. Those jobs would then be filled by the average Joe who would then place more money back into the economy via their spending. This does work IF the underlined portion doesn't occur. Jobs grew big time under Reagan by a series of events: Gov't spending (military spending created many military related jobs in industry for example) Tax cuts - more money for job creation and more money for average Joe to spend, & Tax increases supporting spending.

 

As the article notes, CEO salary, stakeholder equity and corp profits all rose substantially while wages stagnated at best and decline in actual buying power. Thus the argument for investing not at the top but at the bottom. To speed up the trickle down by going directly to the consumers with a much higher min wage who will spend the money thus accomplishing 2 things - driving many out of poverty level living and stimulating greater growth in the economy. This is 'globalization' localized. The 'raise all boats' argument of globalism is that as we put manufacturing jobs in poor countries, those workers will earn a living, they will spend and also then demand even more advance type jobs, products and services. You can see this happening in many economies around the world. Those base jobs would then move to an even poorer country and the cycle repeats itself.

 

However, we need to do a better job here to help our poor out of the cycle. Once they have more purchasing power, they too will demand more sophisticated products and services and this will spur more economic development. So if we have tried corporate subsidies and they have fallen short, maybe it is time to cut directly to the bottom and create a trickle down that only has one drop - a higher wage. This might create a trickle up that spurs business growth in multiple sectors. And you are hearing this from a fairly conservative guy . Mark Levin would have a hard time with this but compassionate conservatism has to be more than being pro-life and helping unwed mothers, it has to start in the real world of the average worker.

[JJ Husker]

I don't really have a problem with this but I am extremely skeptical if significantly raising lower wages accomplishes anything but more inflation. I don't think it solves the wealth or income gap as the CEO'S etc. will just increase their compensation to maintain a higher standard of living. And those costs that increase will still be born at a higher burden by those with lower incomes. No need to wonder what happens to prices across the board at Walmart if they have a starting wage of $20/Hr with full benefits.

I think the answer is much tougher and will require a fundamental change in how people perceive their worth as compared to others in society. Increasing wages doesn't accomplish that and will only ratchet up virtually everything in the economy. We'll have the same problems only on a larger scale.

[Danny Bateman]

zoogs raises a point fundamental to liberal economists and it's one I strongly believe in:

 

You will get more money in circulation in productive ways within the economy by putting it in the hands of the working class than allowing more to go to the wealthy upper class. It would also increase their quality of life.

 

There's got to be research backing this up I could point you to if you were interested. I could do some digging later and see what turns up.

[JJ Husker]

zoogs raises a point fundamental to liberal economists and it's one I strongly believe in:

 

You will get more money in circulation in productive ways within the economy by putting it in the hands of the working class than allowing more to go to the wealthy upper class. It would also increase their quality of life.

 

There's got to be research backing this up I could point you to if you were interested. I could do some digging later and see what turns up.

No doubt it would put more money into circulation. The lower income workers would be spending a lot more of their income because they would have more and because the cost for everything would increase drastically. Where we differ in thinking is that would change their quality of life. It's not like all of a sudden we would have fewer poor people. The definition of poor (poverty) would just be adjusted upward. I view quality of life in relative terms to others in society. If today a person earns $25,000/Yr and has to live in some crap hole to make ends meet, what changes if they are earning $42,000/YR and all their costs increase, as well as housing costs? I think they're living in the same crap hole and still struggling to pay their bills while the overpaid CEO's, who have also increased their pay at a rate far exceeding $8 per hour, still live in their mansions and still horde their profits. The quality of life between the 2 groups has not changed and I would have a tough time saying it has improved at all for the poor folk. This doesn't apply if you're looking at it on an individual basis. Sure one person receiving that large raise will be better off. But when it happens across the board I think all it does is expand the scale of the same problem we have today.

 

I'm not saying trickle down economics works either. We've seen how that way of thinking has allowed the rich to get exponentially richer. I think the solution will only come about when everyone realizes that no CEO is worth multi million dollars per year while his lowest paid workers are only getting $10/Hr. I don't think the problem can only be addressed from one end. Something has to change on the upper end as well.

[TGHusker]

 

zoogs raises a point fundamental to liberal economists and it's one I strongly believe in:

 

You will get more money in circulation in productive ways within the economy by putting it in the hands of the working class than allowing more to go to the wealthy upper class. It would also increase their quality of life.

 

There's got to be research backing this up I could point you to if you were interested. I could do some digging later and see what turns up.

No doubt it would put more money into circulation. The lower income workers would be spending a lot more of their income because they would have more and because the cost for everything would increase drastically. Where we differ in thinking is that would change their quality of life. It's not like all of a sudden we would have fewer poor people. The definition of poor (poverty) would just be adjusted upward. I view quality of life in relative terms to others in society. If today a person earns $25,000/Yr and has to live in some crap hole to make ends meet, what changes if they are earning $42,000/YR and all their costs increase, as well as housing costs? I think they're living in the same crap hole and still struggling to pay their bills while the overpaid CEO's, who have also increased their pay at a rate far exceeding $8 per hour, still live in their mansions and still horde their profits. The quality of life between the 2 groups has not changed and I would have a tough time saying it has improved at all for the poor folk. This doesn't apply if you're looking at it on an individual basis. Sure one person receiving that large raise will be better off. But when it happens across the board I think all it does is expand the scale of the same problem we have today.

 

I'm not saying trickle down economics works either. We've seen how that way of thinking has allowed the rich to get exponentially richer. I think the solution will only come about when everyone realizes that no CEO is worth multi million dollars per year while his lowest paid workers are only getting $10/Hr. I don't think the problem can only be addressed from one end. Something has to change on the upper end as well.

 

Maybe start wt Hollywood types (see if that compassionate liberalism is just a token jester) and over paid athletes as well?? I saw a comedy act last night in which the comedian said the only people without dead end jobs are athletes. He defined dead end jobs as those jobs that don't pay what the job is worth to society. He pointed out most people aren't paid what they are really worth to society - using teachers, policemen, military, fireman, clerks, waiters and even doctors who serve impoverished people as examples. He said athletes get paid what they are worth and therefore don't have dead end jobs. Why, because their job isn't the game they play but the sneakers they are wearing & therefore selling. They are high paid sales people who get paid beyond their contribution to society thus they don't have a dead end job. The rest of us well that is another story.

[JJ Husker]

 

 

zoogs raises a point fundamental to liberal economists and it's one I strongly believe in:

 

You will get more money in circulation in productive ways within the economy by putting it in the hands of the working class than allowing more to go to the wealthy upper class. It would also increase their quality of life.

 

There's got to be research backing this up I could point you to if you were interested. I could do some digging later and see what turns up.

No doubt it would put more money into circulation. The lower income workers would be spending a lot more of their income because they would have more and because the cost for everything would increase drastically. Where we differ in thinking is that would change their quality of life. It's not like all of a sudden we would have fewer poor people. The definition of poor (poverty) would just be adjusted upward. I view quality of life in relative terms to others in society. If today a person earns $25,000/Yr and has to live in some crap hole to make ends meet, what changes if they are earning $42,000/YR and all their costs increase, as well as housing costs? I think they're living in the same crap hole and still struggling to pay their bills while the overpaid CEO's, who have also increased their pay at a rate far exceeding $8 per hour, still live in their mansions and still horde their profits. The quality of life between the 2 groups has not changed and I would have a tough time saying it has improved at all for the poor folk. This doesn't apply if you're looking at it on an individual basis. Sure one person receiving that large raise will be better off. But when it happens across the board I think all it does is expand the scale of the same problem we have today.

 

I'm not saying trickle down economics works either. We've seen how that way of thinking has allowed the rich to get exponentially richer. I think the solution will only come about when everyone realizes that no CEO is worth multi million dollars per year while his lowest paid workers are only getting $10/Hr. I don't think the problem can only be addressed from one end. Something has to change on the upper end as well.

 

Maybe start wt Hollywood types (see if that compassionate liberalism is just a token jester) and over paid athletes as well?? I saw a comedy act last night in which the comedian said the only people without dead end jobs are athletes. He defined dead end jobs as those jobs that don't pay what the job is worth to society. He pointed out most people aren't paid what they are really worth to society - using teachers, policemen, military, fireman, clerks, waiters and even doctors who serve impoverished people as examples. He said athletes get paid what they are worth and therefore don't have dead end jobs. Why, because their job isn't the game they play but the sneakers they are wearing & therefore selling. They are high paid sales people who get paid beyond their contribution to society thus they don't have a dead end job. The rest of us well that is another story.

 

And I think that is the crux of the problem. Our values as a society are totally messed up. The guy that cleans out your sewer line gets what, $12, $15, hell let's call it $20 per hour or the teacher responsible for educating our youth gets what $30 or $50K per year. All while there are actors in Hollywood getting millions of dollars to pretend to be someone else, while a guy who can throw a football gets $10M per year or while a CEO who sits in a climate controlled office gets a ridiculous payday with extravagant perks. Now think about which of these 5 have a more profound effect on your day to day life. Hint-you can do without the excess amounts paid to the actor, the quarterback and the CEO but what happens when the teacher doesn't do the job or the sewer line backs up? It seems to me the solution to our problem is not necessarily fixing the underpaid people problem but rather dealing with the severely overpaid ones. IMO, that is where society as a whole is not getting a good return on investment. We're taking huge amounts of our economic potential and lighting it on fire.

[zoogs]

Normally my response to this would actually be something about market forces and value and so on, and that's part true. But even actors and sports stars don't necessarily get paid as much as they /should/ be based on their value to their organizations. And this article gave this all so much clarity for me: it's not just about worth. It's about negotiating power. When you are deprived of it, then you have to accept what little you can get.

 

It's not our values as a culture (not totally). It's the fact that our system is one in which negotiating power has been systematically deprived over the years ... and to what end? An utterly necessary one, as will be argued? 'If ___ then the whole economy would collapse!' I don't know. Claims that lead to such rotten outcomes deserve intense scrutiny. And this author is not alone in regarding these claims as bullsh#t.

[TGHusker]

Normally my response to this would actually be something about market forces and value and so on, and that's part true. But even actors and sports stars don't necessarily get paid as much as they /should/ be based on their value to their organizations. And this article gave this all so much clarity for me: it's not just about worth. It's about negotiating power. When you are deprived of it, then you have to accept what little you can get.

 

It's not our values as a culture (not totally). It's the fact that our system is one in which negotiating power has been systematically deprived over the years ... and to what end? An utterly necessary one, as will be argued? 'If ___ then the whole economy would collapse!' I don't know. Claims that lead to such rotten outcomes deserve intense scrutiny. And this author is not alone in regarding these claims as bullsh#t.

Good points. Yes, actors and athletes bring a value back to the shareholders. Perhaps the weakening of unions hurt all of us. But what also hurt the unions was the growing wealth of the union leadership at the expense of the common guy. In some cases their greed ended up hurting the average worker. My dad's company broke the union when the union got way too greedy. Then everyone suffered.

[JJ Husker]

But isn't it our values that have allowed that negotiating power to be deprived?

 

We (society) think nothing of spending $100/$200/$300 to attend a 3 hour football game but then turn around and vote against a 0.2% tax increase for schools. We'll spend $40 to go to a 2 hour movie but balk when the price of a food item increases .20 cents at Walmart.

 

In a capitalistic society value/worth is based on whatever the masses are willing to pay for it. That is why someone can sit back and say the football player who is making $15M per year is underpaid because he is helping his organization earn much more than that even. And we help perpetuate this by willingly paying $300 for that ticket. The same $300 that could feed a family of four for however long. Put into perspective, how about if that ticket was only $20, what better more useful value could society reap from that $280 difference?

 

This is why I believe our values are the source of the problem. We allow CEO's to earn and horde millions while the guy actually making something with his hands or doing excruciating labor gets paid a pittance. We could be making much better progress on our inequality problem, and the negotiating power problem, if we valued things that actually had value.

[zoogs]

I think it's fair to point to "values" as something that allowed for the systematic crushing of unions in the past thirty or forty years. But these are different sorts of values than the ones that say we like football games, etc.

 

I think it's actually hard to put a value judgment on that. Naturally entertainment is broadly entertaining. But I also don't disagree. I wish there were some way we could devote similar attention and resources to "boring" stuff like arts, culture, and history...as we do to football games. I actually have never watched a football game in person. As much as I do like following the Huskers, the team and sport I grew up on, if I sit back and think about it I do find this whole manic industry utterly absurd. There's nothing wrong with sport or entertainment, but football is massive in a way that is a bit uncomfortable for me. A future where nobody (sans a small niche) pays attention to it anymore doesn't seem like the worst thing. What will we lose when office fantasy leagues are no longer a thing?... It's also partly why I've gravitated towards P&R discussions. I love watching the Huskers play. Arguing about how good or not good so and so coach or player or scheme is...has seemed increasingly meaningless. Even if I'm right, what have I accomplished for myself or anybody else?

 

The wages gap of course is not going to be made up here, though, at least not directly. Cheaper tickets doesn't mean Bob Kraft finances people's wages with the difference. Hence, big change calls not for reshaping culture but for responding to existing realities with policy.