Saturday, December 28, 2013

Book Review: Changing Face Of US Politics

This book, by Jack Barnes, is apparently one of the two most important books of the 20th Century:
The struggle to build any revolutionary working-class party must be rooted in continuity with the political conquests of the communist movement won in the course of struggles from those led by Marx and Engels to the Russian and Cuban revolutions. The major lessons of two key turning points in the fight for such a party in the U.S. are codified in The Struggle for a Proletarian Party, first published in 1943, and The Changing Face of U.S. Politics: Working-Class Politics and the Trade Unions, first published in 1981.
The book is a documentary history of The Turn, an initiative the Socialist Workers Party (SWP) began in 1975, when I was still in the Party. The Turn had begun in incipient form as the Party moved away from campus work. The end of the Vietnam war made such a shift inevitable, and as a result we opened up numerous small branches in working class communities. And so it was that I spent my final years as a comrade in Chicago's Hyde Park branch.

By 1978 (with me no longer a member) the Party had sharply defined The Turn as a concerted effort to get comrades into basic industry. This implied not only a move away from campuses, but also from the public employee unions where many comrades were employed, such as AFSCME or the teachers' unions. Basic industry are those unions who have their pulse on the essential core of the economy--the steelworkers, the autoworkers, coal miners, oil, chemical & atomic workers, etc. By 1990 the Party lists nine unions in which they had substantial fractions.

To implement The Turn, comrades were urged to get jobs in basic industry if at all possible. Accordingly civil servants were asked to quit their jobs in favor of new employment on the factory floor. Comrades employed in non-union situations were likewise so pressured. While not stated in the book, my understanding is that comrades who for no good reason resisted this effort were gradually purged from the Party. This eventually led to the split with Socialist Action.

The Turn had three purposes:

  • To "proletarianize" the Party. This goal is denied in one of the early documents, but later on it becomes a major theme. Students are frequently from petty bourgeois backgrounds, a status that will lead to all sorts of trouble for a working class party.
  • To take advantage of the combined nature of the coming American revolution. While Black nationalism, feminism, and environmentalism, etc., were all important parts of the struggle, the ultimate driver of revolutionary change is the proletariat. Thus the Party saw itself participating in these other movements as members of unions rather than from campuses.
  • To position the Party such that it can be effective in the coming class battles. The documents state this in the most mealy-mouthed ways possible, for example, 
"We have entered the initial stages of a preparatory period, which will lead in coming decades to a prerevolutionary upheaval marked by revolutionary struggles of a kind that workers and farmers in the United States have not waged in more than a century."
Initial stages of a preparatory period to a pre-revolutionary upheaval? Not a very confident prediction, yet on this thin reed the Party forecasts that it will increasingly start recruiting young union members to its ranks, and hence grow the Party.

The prediction was based partly on the end of the Vietnam war and the defeat of world imperialism, but more often on what the documents refer to as the 1974-75 "depression." The Party's view was that capitalism could never recover from this economic setback, and this would force the ruling class to put increasing pressure on workers everywhere, leading to a continuing mass radicalization.

The goal (especially in later documents) was to create a cadre of worker-bolsheviks. These comrades would be unionized workers, to be sure, but they would be Party comrades first and foremost. Union work was never to take precedence over Party discipline. To enforce this, comrades were constantly being moved from job to job and from place to place. They were never allowed to develop a social or personal life separate from the Party. Critics have called this practice cult-like. I think that's too strong, but there is no question it made Party membership much harder and less effective than it had to be. After all, the first task of recruitment is establishing trust and friendship. These are earned not just in the work place, but also at the VFW Hall, the church basement, and the local bowling alley. Comrades, by never showing up at any of those venues, essentially forfeited the match.

The net result is that The Turn has been a total failure. Party membership has declined from a high of maybe two thousand to probably 300 today. Worse, comrades are now mostly retired and are in no position to engage in basic industry. Their hope of recruiting "young workers" is today completely hopeless.

And then the Party's political approach was just flat-out wrong. For example, nowhere in the book is Nixon's visit to China mentioned. Yet this was the key watershed event that has led to the collapse of the union movement. The participation of Chinese labor in global production has rendered the American industrial worker simply unimportant. The Sparrows Point steel mill in Baltimore was once a jewel in The Turn's crown--they had a large fraction there. Today the mill is closed and the Baltimore SWP branch no longer exists. Ed Sadlowski, in the mid 1970s, led Steelworkers Fight Back out of Chicago's SouthWorks mill. That mill is now closed, and Sadlowski's District 31 no longer exists. Party branches in such industrial centers as Detroit, Cleveland, and Pittsburgh are all gone.

There is no union in the US that today has the ability to shut down an entire industry. A General Motors strike would bankrupt GM, but there would be nary a hiccup in global auto production--there are plenty of people around the world who'd be happy to take over GM's market share. Accordingly, an autoworkers strike is essentially impossible. The industrial working class toward which the Party turned 40 years ago simply does not exist anymore.

I think the Party is finally reevaluating The Turn. One indication is the previously linked article, which casts closure on the episode in a way that makes it sound successful.
The key accomplishments in building a communist party rooted in the working class in the late 1970s, as laid out in The Changing Face of U.S. Politics, are not registered primarily in the colonization of basic industry carried out universally by the party cadre at the time, but in the political conquests recorded there.
It then goes on to announce an unusual call for a Party Convention to be held in March, 2014.

The second hint comes from an article about Ukraine.
Since then [1990s], the remnants of the ruling bureaucracies in Ukraine and the rest of the Soviet bloc have moved to reimpose capitalist exploitation on the working class. The social crisis resulting from this course is today exacerbated by the deepening crisis of capitalism on a world scale.
This is the first time I recall reading that the former Soviet Union was restoring capitalism. Up until now the Party held to the dogma of secret socialism, i.e., the countries were socialist even though their own populations were completely unaware of that fact.

These two bits of evidence lead me to believe that changes are afoot in the Socialist Workers Party.

Further Reading:

Monday, December 23, 2013

Dusty's Ducks

A fellow named Dusty has posted a video on the Duck Dynasty kerfuffle (h/t Louis Proyect). Mr. Proyect offers it without comment, but he labels it under humor, among other categories. That does seem apt.

A more vituperative, angry response to a TV show is hard to imagine. That said, there are a couple of points where Dusty and I agree.

1) This is not a free speech issue. A&E certainly has the right to schedule its programming as it wishes.

2) It's not actually a reality show. The Robertsons are actors playing a cartoon version of themselves. Like actors the world over, they get into costume before appearing on camera. Dusty calls that "fake," but it's no more fake than any other TV show.

Beyond this, ironies abound.

The duck gang has expressed irritation with A&E for bleeping the soundtrack, as if there were profanity. They deny that they ever use profanity, and I'm inclined to believe them. Devoutly religious people don't use swear words.

Contrast that with Dusty, whose vocabulary consists mostly of profanity. A&E would have to bleep his entire speech! His favorite word is douchebag--that's the term he uses to describe Phil Robertson, all his kin, and Christians in general. This is an odd term: it's related to douche, which refers to "the cleansing product for vaginas." It's hard to know who's being insulted here: Christians because they're like dirty vaginas, or women because they're like Christians.

So Dusty claims that "nothing brings out the Christian love like hating us gay people." That's the felony, but for good measure he adds two misdemeanors: Christians (in the person of Phil Robertson) are ignorant and bigoted. Now I agree with him--Phil Robertson is ignorant. He's poorly educated and not widely traveled. And he's probably bigoted as well.

But he's not hateful. Phil does not threaten violence against gays, or even their civil rights. He just thinks that gays are tempted by their unique version of sin. As I said in my last post, "[i]f a gay man were to encounter a Robertson, the worst that could happen is he'd get an earful about the need for repentance and the saving power of Jesus Christ. And then he'd be invited over for dinner..."

Dusty is the man who is hateful, as the language, anger, and vitriol he directs against the Robertsons demonstrates.

A second irony is that Dusty sports a Darwin fish tee-shirt. I assume he refers to Phil's creationist views. As I said, Phil is not an educated man. He is an entertainer, and not an intellectual or political leader. In this he is similar to any number of other Hollywood airheads, like George Clooney or Prince Charles. You can't take them too seriously.

The irony arises because Dusty ignores the consequences of his own professed belief. As readers of this blog know, there aren't many people who can out-Darwin me, so let me school Dusty.

We live in an environment where birth control is cheap and widely available. It appears that people who use birth control have fewer children and grandchildren than people who don't use birth control. Thus any combination of genes and memes that inhibit using birth control will be favored. On the other hand, more permissive gene/meme combos will be less fecund.

My observation is that devoutly religious people tend not to use birth control. This includes not only fundamentalists Christians, but Mormons, devout Muslims, Amish, orthodox Jews, etc. The Robertson family is a case in point: Phil, at age 67, has thirteen grandchildren, and his parents have around 50 great-grandchildren. (Reproducing the species requires an average of four grandchildren.)

Compare this with a secular crowd. Take elderly Trotskyists for example, and even include some elderly ex-Trotskyists, such as Mr. Proyect or me. Put a random sample of such folks in a room until they, collectively, accumulate thirteen grandchildren (to rival Phil). How many Trotskyists would it take? I'll hazard more than thirteen. The median Trotskyist likely doesn't have any grandchildren, much less thirteen.

Phil Robertson's religion is crackpot--Dusty and I agree--but it is very successful in the Darwinian sense, measured by how many grandchildren you've got. I anticipate getting a few, but from what I know, Dusty's prognosis is not good. I think that's why he's so mad. If present trends continue, religious people will win the demographic culture war.

Duck Dynasty is not popular because of Phil's views about gays or creationism. That might be important to Phil, but its not what makes the show tick. It appeals to middle-aged women because it represents an aspirational ideal for them. Women want 1) a stable marriage with a faithful husband, who 2) is wealthy and has 3) earned his money in a He-Man profession. And while he engages many man-child hijinks, when in the presence of the ladies he 4) behaves like a gentleman.

And on the fourth point, Phil Robertson and I agree. No gentleman would ever call anybody a douchebag.

Further Reading:

Saturday, December 21, 2013

Duck Soup

I'd never heard of Phil Robertson until the kerfuffle.

The kerfuffle happened when the Duck Dynasty star made some uncomplimentary remarks about gays in an interview for GQ Magazine, and that got him in hot water with the suits at A&E. The folks at GLAAD are pretty upset about it, with spokesman Rich Ferraro also claiming that Robertson is a racist. On the other hand, the show's supporters have come out strongly defending their TV star, and Duck Dynasty paraphernalia has sold out of stores.

So I've read the GQ piece (written by Drew Magary), along with much else, and even watched an episode (the first one) of Duck Dynasty over at A&E online. I don't share Mr. Robertson's religiosity, and I don't agree with his attitude toward gays. At the same time, the GQ article is a total hit piece--you'd have to believe the guy is a real idiot. Whatever else you want to say about Mr. Robertson, he is not a stupid man. Nor is he hateful, belligerent, or racist.

Still, A&E is right to filter most of the religion out of the show, for otherwise it would reach only a narrow audience. As is, it's A&E's most popular program, and some articles claim it is highest rated show on cable television. That's not because of Mr. Robertson's overt religiosity.

I vaguely recall reading a piece about Duck Dynasty when the show first came out. It was one of those how far have we fallen articles, describing Duck Dynasty as the pathetic successor to Jersey Shore--a hook-up, stupid-guy-stuff, reality show transplanted to the Louisiana swamps. I resolved never to watch the program, a promise I kept until the kerfuffle.

So who watches Duck Dynasty and why is it so popular?

The Robertsons are a large, Scots-Irish family in Northern Louisiana. Phil is one of seven siblings, including his co-star, Si. Phil and his wife, Kay, have four children. The two on the show are Willie and Jason, who are the lead characters. Willie's wife, Korie, plays a role, but none of their five children are involved. In other words, of the very large clan, only a small fraction of them participate in the show. A scene has them assembled around the dinner table--there are no children present. So it's not a very real "reality" program.

The family is apparently worth about $400 million--the proceeds of their Duck Commander franchise, founded by Phil and now run by Willie. Four or five guys lackadaisically sitting around a table making duck calls (as the TV unrealistically depicts) is not the source of that fortune. The Robertson family has been accumulating capital for three generations now. By comparison, Snooki--the most successful Jersey Shore character--is worth $4 million.

Another difference is that all the leading men on Duck Dynasty have been married to their wives for at least 20 years. Phil & Kay got hitched in 1966. These guys are loyal, unlike the ne'er-do-wells over at Jersey Shore. Snooki is recently married and has a son--we'll see how that goes.

So what's with the stupid guy stuff? First, it's not stupid--these fellows are expert outdoorsmen. They can literally live off the land. When you're expert, you can show off and make it look easy or dramatic or funny. But don't be fooled--this part is real. What you're watching is a lifetime of experience hunting, fishing, camping, and living.

I find Phil and his gang intimidating--I couldn't survive a week in their world. That's obviously the way Mr Magary (the GQ author) felt. So far removed from his native habitat, and so far out of his comfort zone, his article is a panic-stricken attempt to cut the Robertsons down to size. They're not really bigger than life--instead they're just a bunch of nutcases. Never mind that, by age 67, Phil has 13 grandchildren, is worth $400 million, and owns 20,000 acres of Louisiana swampland that he "lives off of." Some nutcase.

So the episode I watched showed Phil eviscerating some frogs while giving advice to one of his grandsons. "I've got these grandkids now, a whole passel of them. My task is to teach them to live off the land. It's a good thing, clean and honorable. Frog killing." He goes on with some marriage advice: "Find you a meek, gentle, spirited, country girl. If she knows how to cook, and she carries her Bible close by, and she loves to eat bullfrogs, then there's a woman. ...See, the first prerequisite for marrying a woman, in my opinion, is  can  she  cook? ... She doesn't have to be a pretty girl. If she looks a little homey, that's all right. It's hard to get a pretty one to cook and carry a Bible anymore."

So whose going to live by this totally retro advice? Not me, for sure. Nor any of my children. None of my friends live that way. I grew up in a petty bourgeois milieu that put a lot of emphasis on individuality and personal choice. There's no loyalty in my clan. You don't marry somebody just because she knows how to cook--how gauche. We all grew up in the undisciplined, divorce culture, where children are a burden and not a blessing.

Even on-line, A&E makes sure you watch some commercials. The ones they fed to me were for sanitary napkins--obviously Big Data has failed. But it's an indication of who they think their audience is--women in the 30 to 50 age bracket. How many of these ladies would love to be loved for her cooking? What number would want a handsome, loyal, rich husband like Phil Robertson? How many divorcees aspire to a husband who is an expert outdoorsman?

It's a very conservative show, but not in any political way. Instead, it is aspirationally conservative--it's a dream for women to live up to. Even though few people can actually live the Robertson dream, the aspiration is a good thing. A couple years ago, Charles Murray wrote a book entitled Coming Apart: The State Of White America, 1960-2010. In it he laments the decline of the family among working class and lower class whites. He sees that as the source of much of our current economic dysfunction.

But the popularity of Duck Dynasty proves him at least partially wrong. The fact that millions of lower-class Americans aspire to live a better life cannot be a bad thing.

Mr. Ferraro of GLAAD suggests that Mr. Robertson should spend more time with gay people so that he might learn something. If a gay man were to encounter a Robertson, the worst that could happen is he'd get an earful about the need for repentance and the saving power of Jesus Christ. And then he'd be invited over for dinner (though I'm not sure I'd want to eat that food). Nothing hateful or untoward would occur.

He should just be grateful that he's not a duck.

Note: Louis Proyect posted a video about Duck Dynasty. Unfortunately I didn't see it until after this post was written.

Further Reading:

Saturday, December 14, 2013

Why New York Is Different

Joel Kotkin and his colleagues over at New Geography have invested many millions of pixels making the case that the suburbs are not dead. Their argument is solid: the so-called back to the city movement is very small scale, Millennials show every sign of wanting to live in single-family, detached houses, and the most thriving locations are suburban-like places, such as Houston, Dallas, or Oklahoma City. New technology looks to strengthen the suburban trend, as telecommuting and driverless cars reduce the pain and expense of commuting.

I totally agree with New Geography on the general trend. The effort to force people into higher density housing is doomed to fail. More mass transit is mostly a waste of money (the Second Avenue subway line being a rare exception). But within that larger trend, there are eddies and countercurrents that flow backwards. The larger movement to the suburbs notwithstanding, there are a handful of cities that will do very well as traditional cities. They are the obvious suspects: San Francisco, Boston, Washington, possibly Chicago. Maybe a few more.

And within that handful, New York City will excel. Unlike as is sometimes implied over at New Geography, New York is a lot more than just a "luxury city." Instead, it has a unique niche in both America and the world that no other city can fill. 

My argument has three parts: The beginning of New York in the 17th Century, the people who live in New York today, and the uniquely incredible value New York adds to the economy.

The Dutch founded New York in 1624. Unlike the British, French, and Spanish, the Dutch had no desire to extract resources from the land. Not for them was taming the wilderness, mining for gold, or raising cattle. Unlike other colonists, the Dutch settled accounts with the Indians as quickly as possible, in legend buying Manhattan for $24. A few of their number got as far up the Hudson as Albany, but beyond that, early Dutch influence on American settlement was negligible.

Unlike any other colony in the Americas, New York was founded from Day One as a commercial center. Think of it as a 17th Century version of Hong Kong. Lower Manhattan--even in 1624--was a shipping, trading, and financial center. It was never a farming or manufacturing town.

That legacy holds to the present day. Colin Woodard has published a now famous map showing the eleven nations of North America. By far the smallest geographically, but unmistakably distinctive, is New Netherlands, a region that doesn't even include all of New York's modern suburbs. How can this be? The Dutch lost their colony to the Brits in 1664--they were only there for 40 years. A negligible fraction of New York's current residents are descended from those original Dutch settlers. And yet that crucial heritage persists.

Today New York is known for having the largest Jewish population outside of Israel. Most of these people came over through Ellis Island, along with a much larger number of other immigrants from other places. Those other folks didn't stick around long--the Swedes headed for Minnesota, the Irish moved to Chicago, and so on. The Jews stayed in New York, and not just because they're lazy. The Jews have been a commercial people since Medieval times, and it made sense for them to settle in a place founded on commerce. The Dutch had built them a congenial home.

The other prominent commercial class in the US are the overseas Chinese. These settled first in California, where today they are disproportionately dominant in Silicon Valley. But by far the largest Chinese community in the Americas is in New York--initially along East Canal Street. Today there are multiple Chinatowns throughout the metropolitan area, nine in the City alone. They deal in everything from rags to restaurants. The formerly slum-like Lower East Side is now a suburb of Chinatown, full of back-office businesses, run by an increasingly wealthy population.

Jews and Chinese--these are Peter Stuyvesant's descendants. They compete with each other. The diamond trade has long been a Jewish business, but recently Chinese traders are gaining market share.

Other cities have ethnic commercial classes. I've mentioned the Chinese in Silicon Valley. Hollywood's studio moguls tend to be Jewish. Mormons play that role in thriving Salt Lake City. But as far as I know, New York is the only city in the country (and likely the world) that has two, large immigrant communities that both bring substantial commercial expertise. Of course there are Jews and Chinese in places like Los Angeles and Houston, but the numbers are vastly smaller, both in absolute terms and as a fraction of the population. Indeed, it is surprising how few Chinese live in Los Angeles.

So why are these ethnic communities so valuable to the cities in which they settle? In particular, the Jews bring an attribute uniquely relevant to Mr. Kotkin's thesis. Observant Jews are not allowed to drive or take the bus to synagogue on the Sabbath--they have to walk. That means they all have to live within walking distance of each other. This enforced close living, augmented by shared religious practice and intermarriage, breeds trust and very high levels of social capital. Trust is a marketable commodity--people will do business with banks where the employees are trustworthy.

Famously, among New York's diamond traders, million dollar deals are sealed with a handshake. So is it any wonder that the money center banks are all headquartered in New York? You can move the buildings and the computer services to North Carolina or South Dakota or wherever. But you can't move the community. Ultimately, banking is about trust, and that is something that close-knit, ethnic communities have in spades.

There are other industries where New York has a lock. The rag trade is one. Perhaps partly because Jews have to walk, New York is a densely settled, very walkable city. The women (and men) are out in public, showing off their duds. Because they're on the street, in public, going about they're daily business, fashion trends happen in New York. Accordingly, New York hosts thousands of blogs like this one. That's how people dress in New York City.

There are three fashion capitals in the world--New York, Paris, and Tokyo. New York and Paris are beautiful cities, adding a marvelous backdrop to any photo shoot. Tokyo, while not beautiful, is nevertheless glamorous. All three cities are built for walking and public transport--it's one big fashion show. Compare that to Houston, where stylish people drive around in cars with tinted windows. How can you model clothes in a car? Houston will never be a fashion center--and neither will Los Angeles, Chicago, or Sioux Falls.

A second industry is food. Yes, they grow the goods in Kansas, package it in Illinois, and eat it around the world. But where do they invent the stuff?

Tyler Cowen says that the best ethnic food is found in suburban strip malls. I think he's probably right. But that's not the food that most people eat most of the time. What most people eat is some creative combination of ethnic and comfort food, tasty and cleverly made. Few are going to eat the oddball dishes they serve at Cantonese restaurants. 

But lots of people patronize a New York fast food chain called Happy Taco. Forget Tex-Mex; think Mexiasian. Or JapoItalian. Or Peruvithai. Or whatever combinations of cuisines you can think of. People like ethnic food, but they like it modified, synthesized, palatable, and recognizable. Creating this nouvelle cuisine requires business acumen, lots of fresh ingredients, educated consumers willing to try, and a labor force with sufficient expertise. And ideally, all the restaurants are within walking distance of each other.

I've just described New York City. What you'll eat at Applebee's tomorrow, they're cooking up in New York City today.

Further Reading:

Saturday, December 7, 2013

All About Me

It's time for that annual, self-indulgent post celebrating the first anniversary of this blog. On December 6th, 2012 I posted About This Blog, where I laid out my mission. Short, civil, critical pieces about American Trotskyism were what I promised, with columns appearing every week or so. I use the word column advisedly, because that's the model I'm emulating. These aren't tweets, but neither are they books. If Paul Krugman and Tom Friedman can live with a 1200 word limit, then so can I. Brevity is clarity.

I promised that my blog would be exclusively about Trotskyism. This is a promise I have not been able to keep--instead half my posts are about other topics altogether. There are several reasons for this. First, I'm interested in other things, and since I can't support multiple blogs, it all ends up here. 

Second, the Trotskyist newspapers are explicitly designed as political propaganda. Trotskyists are out to change the world, and not interpret it. Their papers read more like press releases, unlike most publications that are a forum for ideas and discussion. That means they tend to be repetitive and not very substantive. There just isn't that much to write about.

I started by covering four publications all produced by some of my former comrades in the Socialist Workers Party. These are The Militant, Socialist Action, Socialist Viewpoint, and Solidarity (links all on right). Of these, the best by far is The Militant. This is a bit surprising given the supposed insanity of Jack Barnes, along with accusations of cult-like behavior. But in terms of writing quality, reporting, cogency and professionalism, The Militant has them all beat.

Socialist Action, by comparison, is shrill and bombastic. The writing is much more uneven. There is less original reporting, and they believe anything vaguely Leftish, no matter how outlandish. At its worst, it reads like something printed up in the middle of the night by the Occupy movement.

Socialist Viewpoint isn't really a newspaper, but rather a bi-monthly magazine. It's edited rather than reported, and so isn't really in the same league as the other two. I usually find something interesting here, though I gotta say the November-December issue has let me down.

Solidarity is not really Trotskyist any more (I'll have to post a column about that). Not that that's a sin--I'm not much of a Trotskyist myself--but they've evolved into something that is just not that interesting to me. Still, they are doing a superb job covering Detroit. I'll keep them on my blogroll.

To keep myself busy, I've added two other publications. One is Louis Proyect's Unrepentant Marxist. Like me, Mr. Proyect is a former comrade who has left the Trotskyist movement. But he remains a Marxist, at least in name. His interests are mostly orthogonal to mine--he writes about the arts, history, and Marxist theological philosophical debates. My concerns are more economics, science, politics, and higher education. Still, his blog is my aspirational goal--I one day hope to have a site that is as widely read as his.

Most recently I've added Counterpunch, which looks to be a bigger, better funded version of Socialist Viewpoint. I'm still learning about them.

I do have some people to thank. First and foremost is Mr. Proyect, who has very graciously and generously let me advertise my blog in his comment section. My first readers were from among his audience, and at least on relevant posts, they remain readers today.

Similarly, Joel Kotkin at New Geography and Walter Russell Mead at via Meadia have extended the same courtesy. I am similarly appreciative, and in all cases I have tried not to abuse the privilege.

Looking back of the past year, I think these are my three best posts:
  • My most imaginative post was entitled Food Network And The New Normal. Not many people can turn Chopped into political commentary. 
  • The best explication of a complex idea is Getting Richer While Feeling Poorer. It's my optimistic take on the new economy. Admittedly, it's a bit longer than 1200 words.
  • The best written article is Viva Poverty! If I could produce writing like that twice a week, then I'd have a job at the New York Times.
When my son was in kindergarten, he'd ask preschooler questions like "Daddy, what's the tallest mountain in the world?" That was easy. But then would come the stumper: "What's the shortest mountain in the world?" So, in deference to your inner child, here are a few of the worst things I've posted over the last year. These are the reasons why I definitely am not working at the New York Times.
  • I did read David Leonhardt's book, Here's the Deal. But if this review makes any sense, please let me know what it is.
  • This one is just incoherent. Combining Zimmerman and Syria into one post is dumb.
  • Canaries in the Coal Mine is a great headline. Unfortunately, the article isn't really about that. It's true bait and switch. Click here and you will be--bored to tears.
These, and maybe a few more notwithstanding, I'm generally happy with the quality of my output. I have a day job and other demands on my time--it is impossible for me to produce consistently tightly-crafted work. For an amateur I'm doing OK. Obviously, I find the topics I write about intensely interesting, and it appears there are a few readers out there who share some of those interests. If you're reading this, you're probably one of them. Thank you.

Further Reading:

Thursday, December 5, 2013

The Race To The Bottom

One of the benefits of covering Counterpunch is that I get to read articles by Jack Rasmus, a Leftist economist whose work I (critically) admire. The piece in question is entitled Race to the Bottom, a phrase widely used by Leftists opposed to conservative government.

Mr. Rasmus puts the problem this way.
While the official state corporate tax rates range from 5% to 10%, states in aggregate are averaging only about 2% effectively in corporate tax payments. States across the US have been in a ‘race to the bottom’ to grant more and more corporate tax loopholes and exceptions in order to lure corporations from other states to their state.
In his view, this is a terrible, no-good phenomenon that cheats workers out of their legitimate wages and benefits. It is the major factor in the current difficulties facing state budgets and pension plans. He offers many suggestions about how to remedy this unfortunate state of affairs.

At least as interesting is the question he doesn't address. If the consequences of corporate tax breaks are so unremittingly bad, then why do states offer them? I can think of three overlapping answers he might offer.

First is corruption--the fix is in. The corporations own the politicians, who then pass out the goodies. Even Tea Party types like me will agree with this to some extent, for this describes crony capitalism. It fits Ayn Rand's account of big business in Atlas Shrugged to a tee.

But empirically, this cannot be the reason for the race to the bottom. If true, the most corrupt states would be the fastest racers. Thus we'd conclude that Texas (generous with the corporate candy) is more corrupt than Illinois (chintzy)--obviously not true. Corruption abounds, to be sure, but in this country it is thankfully still a sideshow.

Second, the relatively few people who get jobs from these schemes are visible and vocal, while the much larger number whose benefits are endangered are disenfranchised. While superficially plausible, this argument can't withstand scrutiny. The people who most profit from a bailout of Detroit, for example, are the disproportionately white, retired city workers, whose pensions have been stiffed. Meanwhile, the chief beneficiaries of Detroit's bankruptcy are the current residents, who certainly fit the description of disenfranchised. Far from reducing inequality, Mr. Rasmus' proposal to top off state and local budgets with corporate dollars will effectively transfer wealth from poor people in need of city services to the suburban middle class.

Finally is the Marxist rationale, which claims that We're poor because the rich people stole all the money. In this view, wealth is a zero-sum game, and the role of the State is to extort money from the working class by force, accomplished in part by lowering corporate tax rates. The dirty truth is hidden by the fig leaf of giving a few people some jobs. But then you'd expect every state to be liberal with the corporate discounts. How can a Marxist explain the difference between New York's high, effective tax rates, vs. Texas' low rates? Are New York's capitalists just a bunch of wimps?

The truth is these corporate tax breaks are popular with voters. When phrased in terms of jobs, voters understand that the private economy is vastly more productive than anything government can do. In this context, it becomes obviously clear that raising taxes hurts the economy and lowering taxes helps the economy. Even poor people--who don't generally pay much in taxes--realize that money paid by private business ultimately comes out of their pocket.

But I don't like the beggar-thy-neighbor approach anymore than Mr. Rasmus, albeit for different reasons. The selective tax breaks for footloose companies is grossly unfair to existing businesses (and their employees). Much better would be an across-the-board decrease in corporate taxes, with no loopholes. That way everybody pays the same low amount. (Ideally, we'd go the full Sweden on this, and abolish corporate taxes altogether.)

Taxes ultimately transfer wealth from productive enterprises to unproductive enterprises. Welfare may be necessary, but it is not a good thing. Likewise with healthcare--disease is a cost, not a benefit. Minimizing government expenditure for these items is essential. Rather than minimizing them, Mr. Rasmus supposes that not a penny of current expenditures is wasted, and every last nickel must be extorted out of the productive economy to pay for them.

Accordingly, his solution comes straight from Ayn Rand.
To avoid the state-state ‘race to the bottom’, an ‘Interstate Corporate Equalization Tax’ should be implemented. Corporations that move their (taxable) headquarters from one state to another should be required to pay the ‘losing’ state a fee equal to the difference in the two states’ corporate income tax for a period of three years into a special fund.
This sounds just like the anti-dog-eat-dog-rule from Atlas Shrugged.
The Anti-dog-eat-dog Rule is passed by the National Alliance of Railroads in section 145, allegedly to prevent "destructive competition" between railroads. The rule gives the Alliance the authority to forbid competition between railroads in certain parts of the country. It was crafted by Orren Boyle as a favor for James Taggart, with the purpose of driving the Phoenix-Durango out of Colorado.
As Ayn Rand effectively describes, eliminating competition just makes everybody poorer. An excellent example is found in the history of the shipping container, where the Interstate Commerce Commission successfully lowered everybody's standard of living for half a century. Obamacare will do the same thing for health care.

By preventing competition between the states, Mr. Rasmus' plan enables government to steal more and more money from their citizens with impunity. His scheme permits any state to raise taxes, and then collect even more revenue from other states via the equalization tax. Folks in Texas will be subsidizing New Yorkers even more than they do today. (Today's subsidy comes from the Federal deduction for state income taxes, from which residents of no-tax states derive no benefit.)

Allowing competition, on the other hand, forces states to grapple with the real issue--what is the optimal size of government? In a competitive environment it's hard to get it wrong: if you have too little government (high crime, homeless people on the streets), or too much government (limited opportunity, high unemployment, low wages) people will vote with their feet and their bank accounts. They'll leave.

Productive enterprises produce wealth. Mr. Rasmus and I both agree that some of that wealth has to be shared with people who, for whatever reason, are unable to support themselves. But Mr. Rasmus goes much further than that--he wants to punish productivity. Anybody who makes any profit, or who earns even a penny more than he does, needs to be beaten down and put out of business.

Mr. Rasmus may not describe himself as pro-poverty, but that is exactly what he is.

Further Reading: