Still aquiver from the series of moral orgasms induced in them by the financial crisis of 2008–09, progressives have not recovered sufficiently to think with any depth or imagination about our main economic problems. This is evidenced by a symposium published in the current issue of Dissent, under the heading “Beyond Stagnation.”Dissent
is one of the Left’s better journals — possibly its best, given The New Republic
’s melancholy, long withdrawal into intellectual incoherence and The Nation
’s metamorphosis into a lifestyle magazine for aging Champagne radicals whose primary interest is the pleasure of self-regard. Dissent
is refreshing in that it shows the occasional sign of genuine intellectual interest in the Right’s ideas and in that it has resisted the pressure to disguise its ideological commitments as Ezra Klein–style pseudo-pragmatism. Rather, it forthrightly makes the case for a command-and-control economy and a totalitarian politics. (Its editors certainly would object to this characterization.) Dissent
’s contributors have not yet got their heads around the idea that it is impossible to have a government that is simultaneously totalitarian and humane; if they had, they would not be part of the Left, which remains corporately committed to the principle that an effectively unlimited public sector can be put to excellent use so long as its masters have the right sort of moral cultivation. Conservatives, so often put off by the Left’s habit of deputizing its members as thought police, often fail to appreciate the real roots of that crusading inclination: It is not only that they wish to suppress their political rivals and nonconforming ideas, but that they believe it is necessary to establish, by whatever Pavlovian means are necessary, deeply ingrained habits of thought and speech that prevent the emergence of heresy among their own, in order that they may be entrusted with the awesome power that the Left’s politics would deliver unto them.
That being written, if you want to know what the Left is thinking, read Dissent. Even when, as in this case, it is disappointing.
It is worth appreciating that distaste for bailouts launched two very different political movements: Occupy Wall Street and the Tea Party. The intuition that there exists a dysfunctional and morally shabby relationship between Washington and Wall Street touches both ends of the political spectrum, particularly in their more populist expressions. Among those whose knowledge of these issues is more than can be written on a bumper sticker or a placard, there is a surprising level of agreement among people of very different political orientations: that we have not solved the problem of “too big to fail,” that the relationship between the financial sector and the political sector remains mutually corrupting and distorting, that prospects for non-elite American workers look relatively bleak, that this bleakness is in part a result of fundamental global economic changes but also in part the result of bad policy, that financial regulations have not achieved their desired outcomes, that familiar offerings such as education reform or manufacturing incentives are unlikely to prove sufficient meet to current challenges, etc. Given such potentially fertile ground, the Left’s failure to articulate a convincing reform agenda — or, perhaps more important, its apparent inability to even reevaluate its own longstanding assumptions about economic policy — is significant. A productive reform agenda will require fairly wide buy-in, among elites and ordinary voters both, and such a consensus will not be able to emerge so long as the Left remains mired in the assumptions of the 1930s. It is one of the great ironies of our time that the self-proclaimed progressives, who associate themselves with youth and change, are in effect, and more often than not in fact, a bunch of old men, intellectually exhausted and sodden with nostalgia.
“Beyond Stagnation” is introduced by Mark Levinson and John Schmitt, who are, respectively, the chief economist for the Service Employees International Union and a senior economist at the Center for Economic and Policy Research. Their aim, as they put it, is to move beyond recovery, if recovery means only to “re-create the conditions that led to the crash.” I am not aware of anybody espousing that as the goal of economic recovery, but perhaps this can be ignored as rhetorical throat-clearing. The broad outline they put forward is organized around: (1) The achievement of “full employment,” with the sensible observation that “workers’ bargaining power depends crucially on the unemployment rate” — supply and demand turn out to be important. One immediately begins to wonder upon which other targets they might deploy this analysis. (And one will be disappointed.) (2) Reforming the banks and the financial system, to ensure that “the financial sector works for the rest of the economy, not the other way around.” (3)A catch-all category comprising a special effort to look after the economic interests of African Americans and other minorities, an effort that rejects the notion that the problems in these communities are rooted in “self-sabotaging attitudes and behaviors,” along with two laundry-lists of pointillistic progressivism touching on labor laws and a feminist-inflected Great Society revivalism, e.g., child-care subsidies and other proposals from people capable of seriously writing the sentence: “New York City mayor Bill de Blasio has his finger on the pulse of a new vision for working families.” This last set of items, both in the introduction and in the article itself, has the distinct feel of an afterthought.
The full-employment article is written by Dean Baker and Jared Bernstein of, respectively, the Center for Economic and Policy Research and the Center for Budget and Policy Priorities. It is a work of magnificent crudeness. The authors note, accurately, that real wages — meaning wages adjusted for inflation — have stagnated or declined for many American workers, and then in the next breath they make three different cases for inflation: as a form of economic stimulus, as a tool for reducing the trade deficit, and as a means of devaluing debts. The belief that we can as a practical matter devalue the dollar without devaluing the dollars in which American workers are paid is pure superstition, and the offered rationale is illiterate: “If they expect a 4 percent inflation rate over the next four years, this means that they expect they will be able to sell their products for 16 percent more four years from now than they do today. This will give them more incentive to invest and a willingness to pay higher wages if that is necessary to get qualified workers.” That expected 16 percent premium is of course nominal; in real terms, getting 16 percent more dollars that have been devalued by 16 percent is a wash, i.e., in real terms there is no incentive at all. Mr. Bernstein holds a doctorate in “social welfare,” whatever that means, from Columbia, and he served as Joe Biden’s chief economist, a credential out of which one may make what one will; Professor Baker, who teaches economics at Bucknell, has a doctorate in economics from Michigan, and thus no such excuse to let such a sentence stand under his name.
The pair also suffer from a debilitating case of wishful thinking. Effectively, devaluing the dollar, as they correctly note, requires the consent and cooperation of foreign powers whose economic interests are not perfectly aligned with our own. China, especially, is not eager to see its currency appreciate relative to the dollar. Bernstein and Baker’s solution, offered with two straight faces, is to offer the Chinese intellectual property belonging to Microsoft and Pfizer as a buyoff for changing Beijing’s monetary policy: “There is undoubtedly a set of concessions that we can make to China and other countries that will persuade them to raise the value of their currencies against the dollar.” For example, “giving up other demands, like enforcing Microsoft’s copyrights or Pfizer’s patents. Or it means not pressing for greater access for J. P. Morgan and Goldman Sachs to overseas financial markets.” In reality, Beijing has shown itself to be effectively inured against foreign copyright claims. When a Chinese court found that the Shenzhen Reflective Materials Institute had ripped off Microsoft to the tune of some $300 million or more — not through any debatable patent infringement but through sheer piracy — it imposed a fine of $252. And as China continues to evolve from a cheap-labor economy to a technological, high-value-added economy, its interest in patent protection is growing rather than diminishing. Beijing’s stated goal is to see China become the world’s largest or second-largest owner of new patents, doubling its total in the coming years. Given the sorry state of Chinese banks, Chinese firms are looking to do business with overseas banks and financiers, in their own interest. If we’re going to seriously try to buy off Beijing, we’re going to have to think bigger: Think the Senkaku Islands, possibly, or Taiwan, neither of which actually is in our power to offer as tribute. The idea that we can bribe Beijing by turning a blind eye to software piracy and pharmaceutical patent violations is absurd.