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Hullabaloo


Wednesday, March 19, 2014

 
Larry Summers is wrong. It's not about the top incomes versus the bottom. It's the top versus everyone else

by David Atkins

This Politico article highlighting Home Depot founder Ken Lagone's latest foolishness comparing class consciousness rhetoric to Nazism is getting some decent attention. But there's one particular quote in it from our old friend Larry Summers that requires special examination:

“Reducing inequality is good, but it’s 50 times better to do it by lifting those up who are low than by tearing those down who are high,” said Larry Summers, the former treasury secretary whose bid to become Fed chair got derailed by the more liberal wing of the Democratic Party. “The politics of envy are the wrong politics in America. The better politics are the politics of inclusion where everyone shares in economic growth.”
This, perfectly encapsulated, is everything that is wrong with the neoliberalism and the upper echelons of Democratic Party politics today.

People like Larry Summers have an ingrained belief that life is pretty good for most Americans, and that all we need do is expand social equality while ensuring a basic safety net for "those who are low." That is a convenient fiction for men as wealthy as Summers.

In reality, the American middle class is struggling badly. Most who aren't in the top 10% of American incomes--and even many of those who are--are seeing their standards of living decline.

90% of Americans are working longer hours than ever before, with less job security than ever before. Staggering numbers of Americans are underemployed in jobs they hate. The costs of education, healthcare, childcare, housing and retirement are rising rapidly. Entire industries are disappearing almost overnight due to mechanization, outsourcing deskilling and flattening of the labor market.

People are scared and angry. They have every right to be. The top 1% of incomes are taking greater and greater shares of the wealth as everyone else stagnates or falls into decline.

Functionally speaking, there is no way for everyone to share more in economic growth without taking back some of the ill-gotten wealth being hoarded by the top 1%. As Piketty's recent book demonstrates, letting inequality continue to spiral out of control is bad not just for the social fabric, but even for raw economic growth. That's not the politics of envy talking. That's basic economics and common sense.

But Summers' rhetoric is all too typical of the neoliberal error that has helped to seriously damage the Democratic Party's brand. As I said a couple of weeks ago:

Not surprisingly, the Left responded to this by cozying up to moneyed power and by shifting its focus away from questioning the assumptions of the flawed capitalist pseudo-meritocracy, and toward attempting to expand access to that meritocracy to everyone. That shift allowed the Left to hold together its social coalitions while maintaining access and influence to big money donors. The "era of big government was over." Trade protections for workers, regulations on the financial industry, and taxes on the wealthy were all eliminated by bipartisan consent. The left, meanwhile, became singularly focused on social issues and on making sure that the poorest Americans didn't suffer too badly in the brave new plutocracy.

And thus was born the "New Left" whose organizing principle is that society will be perfected when even a transgendered racial and religious minority can also become a plutocrat or head of state, so long as not too many people are dying on the street without access to food or healthcare. Toward that end, the New Left focused on electing politicians who would in turn appoint judges to help that withered vision become a reality.

As an organizing principle in a world of Rightist economic dominance, it's not completely terrible. But it's a guaranteed loser in the present as well as the near and long-term future.

The middle classes in industrialized countries are collapsing worldwide as the plutonomy grows ever more unequal. Households that already pushed women into the workforce to make up for wage deflation and inflation in housing costs no longer have anywhere to turn, except toward the sorts of multi-generational arrangements usually seen in less developed economies. The cost of both housing and education has skyrocketed to the point that younger generations have been basically squeezed out of the economy entirely even as older generations desperately cling to the remaining assets and social insurance they have. Technological change is causing entire industries to disappear almost overnight, with very few jobs to replace them--a trend that is rapidly accelerating.

The result of all of this negative change is a population that is appropriately scared, desperate, and angry. Both the poor and the middle class feel threatened and increasingly pessimistic. Opinions of elite institutions across the board are at an all time low. Whether on the right or left, few believe anymore that anyone in government, business, or politics is actually looking out for their interests. In a world like this, the move to ensure that every single individual in society has an equal, infinitesimal chance to become obscenely rich loses its moral force. The rhetoric around "making sure that no one is left behind" in starvation and penury is far less compelling when the entire middle class feels like it's being left behind.
If the Democratic Party wants to remain a vibrant force in an increasingly desperate future, it will turn away from the likes of Larry Summers and embrace the more populist rhetoric of Elizabeth Warren and Bill DeBlasio. It's not just good politics and good morals. It's good economics, too.


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