Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

01 May 2016

Six Things Bernie Should Say

1. Bernie’s brand of “Democratic socialism” will strengthen capitalism and free enterprise, not harm them

2. Bernie’s revulsion at obscene economic inequality and concentrations of economic power is in the mainstream of American politics

3. Breaking the big banks up through market purchases and sales is the only practical way to reduce their power, prevent further oppression of consumers, and avoid another Crash

4. Economic inequality drives oppression of minorities

5. Global warming is the single greatest threat to happiness that minor children and grandchildren of today’s voters will face

7. As a Jew, Bernie can be an economic handyman

While I was incommunicado on vacation, Bernie lost four out of five primaries, including one in the battleground state of Pennsylvania. So Hillary is looking more and more like the eventual Democratic nominee.

That doesn’t mean Bernie should quit. Far from it. But it does mean he should tone down his personal attacks on Hillary, lest he aid the Devil in the general election. It also means he should think harder about his own message, and how he might improve it.

I still intend to vote for Bernie, as much as I can. How can you not love a guy who says true things that no one else has the guts to say? How can you not love a man who picked up the threads the two Roosevelts, Truman, Kennedy and Johnson left hanging, who reminded us that America is not about bosses, whether in politics or business, but about all of us together? How can you not admire a man who did all that at an age when most of us are basking in pleasant retirement?

But no one is perfect. In staying rigidly on message—more than any other candidate in either party—Bernie has been masterful in diagnosis but weak on cure. In trying to emphasize his independence, he has forgotten to tie his campaign back to the historical mainstream of American business, economics and politics. And in focusing so relentlessly on rule by misguided billionaires and their lackeys, he has failed to give proper emphasis to what will harm our grandchildren more than anything else: global warming.

1. Bernie’s brand of “Democratic socialism” will strengthen capitalism and free enterprise, not harm them. Of all the points that Bernie has failed to make adequately, this is perhaps the most important. He has allowed his opponents to tar him as “idealistic,” a “radical” and “unrealistic,” and he has led many to believe he can’t win. Our nation is so devoted to capitalism and free enterprise that even to appear to question them is tantamount to political suicide.

But opening Medicare to all, strengthening Social Security, giving kids free educations at public universities, providing family leave and guaranteeing a living wage won’t kill capitalism or free enterprise. They will make them work better.

They will do so in so many ways that it’s difficult to enumerate them all in this short post. Perhaps the most important are providing workers the personal security and education to follow their talent and bliss, and giving more workers more money to grow the economy. Henry Ford—a consummate capitalist and notorious industrial tyrant—understood these points. He unilaterally gave his workers a more-than-living wage (an unprecedented $5 a day in 1914), so they could buy the cars they made. That single act of enlightened self-interest created our modern consumer society.

Bernie has showed political courage and integrity in refusing to run away from his previous self-labeling as a “Democratic socialist.” But I’ve never heard him mention “capitalism” or laud “free enterprise,” which produce all the goods and services we enjoy, including the computers and social media that feed Bernie’s campaign.

That was, and still is, a big strategic mistake. Voters need to know that what Bernie wants to do is right in the mainstream of Democratic tradition. They need to understand that his achievements will return us to the Golden Age of (regulated) American capitalism that FDR inaugurated, and which lasted until Reagan’s reign. They need to know that Bernie, like the two Roosevelts (and many others before him) means not to destroy capitalism, but to make it work better. And they need to know that he has a plan similar to the ones many others before him have had.

2. Bernie’s revulsion at obscene economic inequality and concentrations of economic power is in the mainstream of American politics. It’s hardly extreme. It’s also not just a Democratic idea. One of the greatest Republicans, Teddy Roosevelt, fought the very same evils over a century ago, in the twilight of the nineteenth century.

One result of Teddy’s struggle was our antitrust laws, the most important of which is the Sherman Act, adopted in 1890. These laws survive and have been strengthened in some ways. But their enforcement today is weak, and the plutocrats have learned to get around them. The big banks, for example, have circumvented laws forbidding big and anticompetitive mergers by accreting power gradually, in acquisitions just below the regulators’ radar. Over years or decades, the incremental accretions produce aggregations of power far beyond anything even imagined in Teddy’s time—to the point where a few big banks can cause a global economic meltdown and then pass the hat to cure it, without coughing up a dime.

Bernie just wants to do what Teddy and Senator Sherman did: prevent private combines from becoming so mighty they threaten our political and economic system and society itself. As always happens with law, smart, rich men have managed to circumvent it by acting in more subtle and clever ways than malefactors before them. But their goals and their results are much the same: building economic empires big enough to ignore the law, subvert or overcome the state, and oppress the people.

Not only is Bernie’s call to break up the big banks right in the mainstream of American history. It’s also related to the oppression of workers and minorities. Justice Thurgood Marshall understood this point. He knew that free enterprise is one of the few ways oppressed minorities can rise from the depths of oppression to wealth and privilege.

Here is how Marshall described our antitrust laws in a 1972 decision:
“Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. And the freedom guaranteed each and every business, no matter how small, is the freedom to compete—to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster.”
Marshall would have cast a much more jaundiced eye, for example, on Microsoft using its operating-system monopoly to crush Netscape, on Google and Apple using their samrtphone duopoly to control apps, and banks getting big enough to exercise oligopoly power over consumer services and to threaten the global economy. He would have understood that economic empires like these only entrench the privileged and further disempower the oppressed. He would have noticed that none of the parents of unarmed African-American kids shot down by police are business owners.

3. Breaking the big banks up through market purchases and sales is the only practical way to reduce their power, prevent further oppression of consumers, and avoid another Crash. In his infamous interview with the New York Daily News, Bernie fell short of a solution to the very real problems that he had diagnosed. But there is a solution, and the one proposed by Hillary is unlikely to work.

For reasons I’ve discussed elsewhere (see 1 and 2) neither criminal sanctions nor civil suits can contain powerful bankers, for legal reasons. Market forces can’t contain them when they get too big to fail; in fact markets encourage excessive risk taking when they believe the government will socialize losses, even when government doesn’t have the money.

So there are only two practical means of preventing another Crash of 2008, or worse. One is having regulators ride herd on the bankers, scrutinizing their risk taking after the fact and adjusting things like capital reserves accordingly.

There are three serious problems with this approach. First, it works only after the fact. What happens if the regulators act too late? Second, it requires regulators to be consistently smarter and more farsighted than the bankers they regulate, able to foresee and assess the risks better than they. Good luck with that. Finally, it requires that regulators take their jobs seriously and have the expertise to do so. What happens in a laissez-faire administration, or a series of them? Wasn’t that exactly how the Crash of 2008 occurred, after then Fed Chief Alan Greenspan thought broken markets fix themselves?

So in the final analysis, only the other means of preventing disaster is effective: breaking up the big banks so they are no longer too big to fail and to squash competition more friendly to consumers. Hillary says that Dodd-Frank gives regulators the power to do that. But regulators are cautious and under constant derogation by the “anything-goes” boys. Even in an administration as progressive as Obama’s, they won’t break the banks up except as a last resort, likely too late. You think they would act faster if Kasich or Jeb! replaced the Fed Chief, let alone Trump or Cruz? Tell me another fairy tale!

Breaking up the big banks by decree is something that Hugo Chavez or the Soviets might have done. But there is a better way. When a bank stumbles badly, its stock goes down. Then the government can purchase control and exercise it, so as to sell the offending bank piecemeal, to private investors. That’s the proper way to break up the big banks: on the open market. The deal that Hank Paulson struck with the big banks under Dubya missed a crucial ingredient of this plan: Paulson made billion-dollar investments, mostly in common stock, but waived the government’s right to vote the stock. Thus did he leave the foxes not only in charge of the henhouse, but with no chance of any dissent on their boards.

Corporate raiders might do this job, if there were any for banks. But there don’t appear to be. There’s no Carl Icahn or T. Boone Pickens for banks. Why that is so is something of a mystery, but it’s true. The reasons may be a combination of the plutocratic social class that bankers inhabit and the obscurity of their business. In order to become a corporate raider in banking, a man (they are all men) would have to learn all about derivatives and their derivaties, so he might as well become a banker himself.

Lacking any motivated private raider, the government would have to step in, but the current statutes give it no such authorrity. Even Paulson’s limited no-control investment had shaky authority; but being a bold man and a Goldman Sachs alumnus whom no one would challenge, he made it anyway. So much for Obama’s “imperial presidency.”

4. Economic inequality drives oppression of minorities. It’s sad but true that Bernie enjoys far less love from minorities than Hillary. Part of the reason is Hillary’s and her husband’s decades-long cultivation of African-Americans and Hispanics. Part of the reason is that Bernie comes from a lily-white state.

Those are things that Bernie can’t change. What he can change is to make the obvious connection between inequality and oppression of minorities, and to make it with passion. He can point out the obvious: that African-Americans and Hispanics are the economic canaries in our coal mine.

A great wag once said that the law treats everyone equally: it prohibits both rich and poor from sleeping under bridges. Just so, the law allows both rich and poor to be shot down in the streets if the police see them as a threat, or to be exploited relentlessly if they are undocumented immigrants. But somehow the rich don’t seem to suffer this treatment in practice. Blacks are shot down, and undocumented Hispanic immigrants are oppressed, because they lack privilege, money and status, and because the people who have those things, lost in an acquisitive frenzy, are oblivious to their suffering.

If there are plutocrats in the Black Lives Matter movement, or in the vanguard of those seeking legalized status for undocumented immigrants, I haven’t heard of them. Most plutocrats are either too busy augmenting their already obscene wealth to care or (especially in the case of undocumented immigrants) see correcting injustices as depriving them of cheap labor.

Bernie may not be a warm and fuzzy guy. He hasn’t, like Hillary or Bill, spent decades cultivating minority voters. But if he made this simple, logical connection repeatedly and with passion, he might begin to attract some of them. More important, he could begin to educate them to the fact that not all their misery is due to racism; some is due to dismal economic forces that greater economic justice could remedy.

5. Global warming is the single greatest threat to happiness that minor children and grandchildren of today’s voters will face. It easily surpasses economic inequality, as awful as that is. Why is this so? Because inequality will affect their livelihoods, while global warming will change the world in which they live. Global warming at alarming levels is already baked in (pardon the expression), and it is accelerating. Furthermore, physical processes not yet well studied are likely to increase the rate of acceleration, long before we humans can change our collective life styles enough to reduce it.

The dirty little secret of the climate-change “dispute” is that today’s dire scientific predictions are themselves highly conservative. There are three reasons why. First, the deniers have browbeaten scientists, especially the less cautious and careful, for decades. Scientists are by nature cautious and careful; most of them are introverts unaccustomed to political conflict. By nature, they retreat into the position of greatest certainty, i.e., the most cautious one.

Second, scientists are highly specialized. They inhabit specialties as diverse as oceanography, paleoclimatology, and atmospheric and ocean physics and chemistry. In order to produce useful conclusions about global warming, they have to get together. When they do, each challenges the others with new “what ifs” and questions about the adequacy and validity of known data. So the reports they produce resemble a bipartisan political committee’s report on a highly partisan investigation. Group caution rules, on steroids.

Finally, there is evidence of at least four mechanisms of positive feedback in global warming. They are: (1) melting of polar and glacial ice, (2) resulting decrease in the Earth’s albedo (reflectivity for light and heat), (3) the release of methane—a greenhouse gas far more potent than carbon dioxide—from melting permafrost, and (4) the release of methane from methane hydrates in oceans, seas and lakes. Of these four, only the first two are sufficiently well studied to be included in quantitative models of global warming.

We simply don’t have enough reliable quantitative data to include the last two positive-feedback mechanisms in detail. We do know that they work to accelerate global warming further; we just don’t know how much and how fast. On the other hand, we’re not aware of any mechanism of similar potential magnitude that might cause negative feedback and tend to stabilize the Earth’s climate.

Of course scientists won’t say this, at least for public consumption, because it’s all speculative. But chances are the current projection of 2°C warming by the end of this century is far too conservative. The hope that warming can be contained to 1.5° C is likely a fantasy. The conclusion to draw, if you bank on probabilities and not what highly conservative, pushed-to-the-wall scientists will say in public with unassailable caution, is that we are likely to see global warming run away in our minor children’s lifetimes. Bloomberg.com’s interactive presentation of annual temperatures since 1880 corroborates this point; to anyone with a dab of mathematical or physical intuition, it looks like a system beginning to run away.

No one can say with precision how quick and catastrophic the runaway will be. The deniers have huge vested interests in minimizing the risk and alarm. They also have huge megaphones, including Fox. But Bernie can use his position of trust among youth to educate them to the likelihood of warming coming much quicker and harder than anyone in authority now expects. As the threat of more severe impacts becomes clearer—which it is highly likely to do—Bernie’s followers will gain credibility and influence.

7. As a Jew, Bernie can be an economic handyman. When a believer asked Bernie about his Jewishness in one of the debates, he answered lamely. He said he was proud of it and then mentioned the Holocaust—a complete non-sequitur.

Bernie, it appears, is not a religious man. But his entire political life has been consistent with a fundamental tenet of Judaism: tekkun olam. This Hebrew phrase, which means “repair the world,” is congruent with both American progressivism from Teddy to Obama and the notion of industrial and economic “progress” that has animated Yankee thinking from the very beginning.

“Repair the world” doesn’t mean elevating the bank accounts of the 1%. It means improving justice and happiness for everyone. When our Founders wrote of the right to “life, liberty and the pursuit of happiness,” they were expressing the very same philosophy.

As a not-particularly-relgious man from a tiny minority religion, Bernie need not bring the subject up himself. But if it comes up again, Bernie ought to have a much better answer—consistent with the progressivism of his fans and the “can do” spirit of Americans generally. He might even smooth the path for the next Jew to run for president.

* * *

When the dust settles and Hillary (as appears likely) begins her general-election campaign, what will Bernie have accomplished? Of course he will have driven Hillary and the Party to the left, after about two decades of its shifting right in response to the GOP and Fox having moved the goal posts. But by far Bernie’s most important accomplishment will have been education.

He will have taught an entire generation of American youth not to bark and growl at the word “socialism” like Pavlov’s dogs, but to consider the costs and benefits of particular social programs. He will have taught them that the rest of the developed world, which has Bernie’s programs in one form or another, has not made a pact with the Devil. He will have shown them that allowing economic inequality to run rampant, while permitting vast concentrations of economic power to undermine a functioning global economy and the common good, poses far greater threats to capitalism and free enterprise than Bernie’s modest social programs. And he will have proved that none of those social programs is outside the mainstream of American history.

Perhaps during the remaining months of his campaign, Bernie can drive these lessons home, make them more forceful and explicit, and give them a broader audience. Perhaps he can remind the American public that FDR’s reasonable reforms of capitalism saved it both from its worst proponents and from the Communist revolutions sweeping Russia and China, which eventually failed. Perhaps he can get American voters, if only the young, to see beyond the label on the box repeatedly applied by Fox and Rush to the contents inside. If he can do that, Bernie will leave us, as his legacy, intellectual and social groundwork for the “political revolution” that he so desires. It may not happen on his watch or even in his lifetime, but he will have moved it forward and made it possible.



Post a Comment

<< Home