Remember the American GI bill, which put ex-service members through university?
When people talk about how much health care for all will cost, or any other program, you need simply remember the above, or that military spending makes up over 50 percent of all discretionary spending in America.
Spending is a fairly good indicator of a country’s real priorities. It’s easy to afford the cost of something you believe is first priority in a rich country–and the US is still a rich country. And if you don’t “have enough,” well, by historic standards, the US is hardly taxing anyone at all. Remember, back in the 50s top marginal tax rates hovered around 90 percent and corporate tax rates were much higher (and with far fewer loopholes).
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Basically, America can afford whatever America wants to afford, and the same is true of a variety of other countries like France, Germany, and Britain, and so on. The choice not to do something, in rich countries, is a choice, and reflects the goals of the people who run the country, and very little else.
This is especially true because the more a country does, the more it can afford, since doing more means more economic activity and generates a larger tax base.
It’s just a choice. There are countries that are literally unable to choose prosperity, it’s not so easy for them. But all of the major developed countries are perfectly able to do so.
Years ago, I complained to my friend Stirling Newberry that the unemployment rate didn’t seem to track how good the economy felt, or how many people were in desperate need of employment.
The unemployment rate was, then, and is now, taken as a proxy for the health of the economy for ordinary people. However, I could see and feel that the economy was getting worse for ordinary people, and that fact was showing up in other statistics. Plus unemployment rates which were considered a crisis when I was young in the 70s, were now being considered acceptable.
(See: The Economy Has Not Recovered, With Graphs)
Stirling said, “You need to know who an economic statistic is designed for, and what they use it for.”
A little history is necessary here, about inflation. In the 70s, due to the oil crisis and other mishandled economic problems, inflation got out of control in the West. Very high interest rates were used to bring it down, by Chairman Volcker at the Fed.
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Western policy makers became obsessed with inflation. It was considered enemy Number One. They decided that the worst cause of inflation was wage increases and called this “wage push inflation.”
To track this, they turned to a statistic called the non-accelerating inflation rate of unemployment (NAIRU). NAIRU was the rate below which the unemployment rate was assumed to cause inflation.
The unemployment figure measures the number of people actively looking for jobs, compared to those who have jobs, remember. Thus it measures the active demand, in the market, for a job. Therefore, theoretically, if there are too few people looking for jobs, employers are expected to have to raise wages to attract workers.
(This is, to be clear, when wages rise the most, which is something non-economists and non-oligarchs want to happen.)
If you are old enough, you will remember that during the 80s and 90s, and even into the 00s, when the unemployment rate would drop, the stock market would take losses. This is because stock investors expected the Federal Reserve to raise interest rates, which is bad for the economy and bad for stocks.
So, the unemployment rate from late 70s and on, has been used to determine if wages should cause inflation, and to then raise interest rates to make sure they don’t.
Not incidentally, the result is also to crush wages, because, essentially, wages that improve are nothing more than wages that increase faster than non-wage inflation.
The unemployment rate not only doesn’t measure how good the economy feels for ordinary people, it was actually used, with purposeful action, to crush wages.
You’ve all been waiting patiently for your pretty graph, so here it is.
NAIRU (Civilian Unemployment Rate) vs Unemployment (Natural Rate of Unemployment) vs Effective Federal Funds Rate
You’ll notice that while effective federal funds rates (the green line) increase during low unemployment periods (the red line) before Volcker, it is after Volcker that they correlate strongly to whether the unemployment rate is approaching or below NAIRU. Before Volcker, the unemployment rate is often below NAIRU and people get a lot of raises.
Note, in particular, and with amusement, that the flat, blue line rate (the natural rate of unemployment) in recent years shows a period where unemployment has stayed above NAIRU. Note that Yellen started talking about increasing rates as the unemployment rate came closer to NAIRU.
Your wages were crushed, deliberately, supposedly to crush wage inflation.
And this is why unemployment doesn’t have very much to do with how the economy feels for ordinary people, especially not now (it effects how the economy feels some, but not much). Unemployment has to get below NAIRU and stay there for you to get real wages.
I will point out, for completeness, that the idea that wages are the most important source of inflation is questionable, but I’ll deal with that at a later date.
(Read: A more detailed look at the end of the post-war Liberal Era)
Sanders-021507-18335- 0004
Bernie Sanders is taking a lot of heat for making promises everyone agrees can’t be achieved in today’s Washington. However, Sanders is not just smoking free-love-sixties-dope when he talks about universal health care, free college tuition, stopping deportations, and drastically cutting the prison population.
I used to teach negotiation to MBA students and lawyers seeking CLE credit, and have included negotiation content in executive coaching and other consulting work I do. One of the things I’ve sometimes taught was how to use audience effects to gain leverage in negotiations. The best story I know to illustrate this comes from Gandhi, from his autobiography.
Gandhi Rides First Class
Gandhi’s early years as an activist led him to South Africa, where he advocated as a lawyer for the rights of Indians there. One discriminatory law required “coolie” Indians to ride third class on trains. Soon after arriving in South Africa, Gandhi himself had been thrown off a train for seating himself in first class.
Looking for a way to challenge the law, he dressed flawlessly and purchased a first class ticket face to face from an agent who turned out to be a sympathetic Hollander, not a Transvaaler. Boarding the train, Gandhi knew the conductor would try to throw him off, so he very consciously looked for and found a compartment where an English, upper class gentleman was seated, with no white South Africans around. He politely greeted his compartment mate and settled into his seat for the trip.
Sure enough, when the conductor came, he immediately told Gandhi to leave. Gandhi presented his ticket, and the conductor told him it didn’t matter, no coolies in first class. The law was on his side. But the English passenger intervened, “What do you mean troubling this gentleman? Don’t you see he has a first class ticket? I don’t mind in the least his traveling with me.” He turned to Gandhi and said, “You should make yourself comfortable where you are.”
The conductor backed down. “If you want to ride with a coolie, what do I care?”
And that, my friends, illustrates the strategic use of creating an audience effect to gain leverage in a negotiated conflict. The tactic can be applied in any negotiated conflict where an outside stakeholder party can be made aware of the conflict and subsequently influence its outcome.
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It’s the Conflict, Stupid
A couple of weeks ago, members of the neoliberal wonkosphere and others in the pundit class tut-tutted, fretted, and wearily explained to Sanders’ band of childish fools and hippies that his “theory of change” was wrong. Well, not merely wrong, but deceptive, deceitful, maybe even dangerous. False hopes, stakes are too high, and all that. This was Clinton campaign, and more to the point, political establishment ideology, pushback. When Ezra Klein starts voxsplaining how to catalyze a genuine social, cultural, and political movement, you know you’ve entered the land of unfettered bullshit.
Bernie Sanders, like Gandhi, Martin Luther King Jr., Franklin Delano Roosevelt, Occupy Wall Street, and Black Lives Matter before him, wants to use mass appeal audience effects to renegotiate the country’s political and economic contract. The strategy, writ small in Gandhi’s train ride tale, is perfectly applicable–and has proven successful through history–in bringing about successful, peaceful, radical change.
These movements operate by forcing conflict out into the open, on favorable terms and on favorable ground. Make the malignancy of power show its face in daylight. Gandhi and the salt march. MLK and the Selma to Montgomery marches. FDR picking fights and catalyzing popular support throughout the New Deal era, starting with the first 100 days. OWS changed American language and political consciousness by cementing the frame of the 1% into the lexicon. BLM reminded America who it has been and still is on the streets of Ferguson.
One FDR snippet is instructive to consider in light all these discussions–and dismissals–of Sanders’ “theory of change.” As FDR watched progressive legislation be struck down by a majority conservative court, he famously proposed legislation that would have allowed him to add another justice. He failed, but:
In one sense, however, it succeeded: Justice Owen Roberts switched positions and began voting to uphold New Deal measures, effectively creating a liberal majority in West Coast Hotel Co. v. Parrish and National Labor Relations Board v. Jones & Laughlin Steel Corporation, thus departing from the Lochner v. New York era and giving the government more power in questions of economic policies. Journalists called this change “the switch in time that saved nine.”
This was a constitutional overreach by FDR, and it caused him political damage, but forcing the conflict created pressure on the Court, making its actions highly visible to the mass of people who wanted change, who voted for change, but did not always see or understand how the elite establishment acts to thwart change.
Your Mistakes are My Ladder
The paths to change for all of these movements are neither linear nor predictable. By nature, they act like guerilla movements. They force conflict and force an entrenched enemy into the open. Then, once exposed and vulnerable, the guerilla tactic is to attack opportunistically on strategically favorable ground. In peaceful social movements, “winning” means winning the hearts and minds of the majority of the society’s stakeholders to the point where they actively choose sides. First make them witnesses, then convert them into participants in the conflict. That’s exactly what Gandhi did with the Englishman in the first class compartment.
This is why calls from pundits and Camp Clinton for Bernie to lay out the fifteen point plan of how he gets from here to there are, at best, naïve. The social revolution playbook requires creating cycles of conflict and contrast, taking opportunistic advantage of your opponent’s mistakes. No one can predict with certainty where and how those opportunities will arise, though you can choose where to poke. If the Clinton campaign wants to know how Bernie can run that playbook in action, it need only review its own performance campaigning against him.
Does Sanders Have a Plan?
So, is Bernie Sanders the underpants gnome of political change? Is his theory “1) Call for revolution 2) ????? 3) Profit!”? Or does he have something else–some other historical precedents–in mind? Everything I hear and see from the Sanders campaign suggests the latter.
Take a look at this ad from Sanders:
To me, this ad says that Sanders understands very clearly what kind of coalition and movement he needs to ignite to accomplish the vision he’s putting out in his campaign. It’s an aspirational vision, sure. And neither he nor any movement he helps create can or will accomplish all of it, just as FDR was unable to accomplish all he set out to achieve. Still, accomplishing as much as FDR did, relatively speaking, would be pretty damn good. Democrats used to say they liked that sort of thing.
Or how about this ad, where Sanders is introduced by Erica Garner explicitly as a “protestor,” invoking the lineage of MLK:
Yes, I’d say Sanders has a very clear, and historically grounded “theory of change.” What those who question it’s validity are really saying is either: 1) they lack imagination and can’t’ see beyond the status quo; 2) they lack knowledge of history, including American history, or; 3) they understand Sanders’ “theory of change” very well and want to choke it in the crib as quickly as they can.
They may succeed. Elites may beat Sanders himself but they will not beat the movement he’s invigorating but did not create. However, saying Sanders may fail is not the same as saying he doesn’t know what he’s doing, or that what he’s setting out to accomplish is impossible.
Because, if history shows us anything, it is, indeed, possible.
So, Michael Clarke in the Guardian writes that the Saudi Arabian threat to invade Syria isn’t credible (it isn’t, if acting alone, but Saudi Arabia claims Turkey is onside, and Turkey is a credible threat.)
He then goes on as follows:
Militarily, the Saudi threat issued at Munich has to be made credible. If a ceasefire does not materialise soon, the Russians, Iranians and Assad himself have no incentives to quit while they are ahead. Only the possibility of Arab ground forces, from Saudi Arabia, Jordan and the UAE, heavily backed by western logistics and intelligence, air power and technical specialists, could force Assad and his backers to make a strategic choice in favour of cessation. Only the US could make that work for the Saudis and others – and only Britain could bring along other significant European allies.
So, he wants America involved in this invasion in a big, visible way, along with Europe.
The sheer crazy here is awe-inspiring. Clarke believes that a “vengeful Assad” would be a huge problem for the West if he reconstitutes Syria.
Big enough to risk nuclear war?
Why?
It’s a small country, destroyed by war, run by a pragmatist. I suppose it is possible Assad could sponsor terrorism, but he’s unlikely to risk anything truly large that would entail risking his own life in retaliation, nor could he expect Russia to defend him if he was truly sponsoring terrorism.
There is nothing in Syria, and never was, that was worth a war there, at least not for the West. Destabilizing Syria has caused nothing but headaches for the West, including the current refugee crisis, which is likely to seen, historically, as one of the causes of the EU either breaking up or becoming a largely toothless and ceremonial organization. (The main cause will be that the EU cripples its own members economically.)
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I am shocked at the level of political thinking which the Guardian considers worth publishing. Truly shocked, not just rhetorically. Insane NeoCon warmongering is one thing when you’re dealing with countries like Iraq and Libya, it is another when you are dealing with a country where one of the world’s great nuclear powers is currently fighting.
Stupidity like this could get a lot of people very dead, and not just Middle Eastern people the West doesn’t care about.
Nothing in Syria is worth risking a war with Russia over. Nothing.
It’s hard for me to credit anyone for being so careless, but the Independent reports that:
Saudi Arabia is sending troops and fighter jets to Turkey’s Incirlik military base ahead of a possible ground invasion of Syria.
…
“At every coalition meeting we have always emphasised the need for an extensive result-oriented strategy in the fight against the Daesh terrorist group.
“If we have such a strategy, then Turkey and Saudi Arabia may launch an operation from the land.”
So… they will claim that they are fighting ISIS, which is, by this point, I suppose, traditional. Turkey is already shelling Kurdish positions in northern Syria.
Of course, Saudi Arabia is not credible on this (at least with regards to a large commitment), with their involvement in Yemen, especially as they are also considering invading that country. But Turkey is. I hope this is just bluster, intended to sway negotiations.
If it isn’t, this is a fiasco, a catastrophe, waiting to happen. Unlike the other foreign forces with boots on the ground (Iraq, Iran, Hezbollah, Russia), these forces would obviously not be invited by the Syrian government.
Syrian forces, backed by Russian airpower, are now fighting quite close to the Turkish border. Their aim has been to close that border so that various rebels (including ISIS) can’t receive supplies from Turkey.
It should be pointed out that if Daesh/ISIS has a government ally in the world, it is Turkey. As for Saudi Arabia, well, Daesh’s theology is a very close descendant of their branch of Islam.
Perhaps more to the point, all those armies tromping around in a rather small country risks war between Russia/Syria/Hezbollah and Saudi Arabia/Turkey.
Russian supply lines to Syria are not the best, to put it mildly. Turkey can close the direct sea route from Sevastopol, and alternative routes require going through some dangerous territory.
I wonder what Russia would do in such a situation. The Turkish military is very large and right on the border. A Turkish attack on Syria can’t be considered an existential threat to Russia, so Russian nuclear doctrine doesn’t call for use of battlefield nukes, but… I get twitchy when a NATO member goes up against Russia, and Turkey is a member of NATO.
Russia created “facts on the ground,” which have led to a realization that Assad will probably survive and that the rebels are doomed.
It seems those who wanted Assad gone the most now want to create their own “counter-facts” on the ground. Either they get rid of Assad in peace deals (assuming they avoid outright conflict), or they divide up Syria, with Turkey getting a good chunk of it.
That’s the plan. If they do invade, I find myself almost hoping the plan “works,” because if it doesn’t “work” that will most likely be because of general war between the powers.
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This is an absolute catastrophe waiting to happen. I find it unlikely this could be done without the US’s approval, and, given Obama’s recent statement about how Russia should stop hitting “moderate” opposition targets in Syria, I can only assume he’s greenlighted this.
Were I in the White House, I’d be telling Saudi Arabia and Turkey not to. If they insisted on doing it anyway, I’d go public with a warning not to, and a UN Security Council motion with the US voting against Turkey and Saudi Arabia.
And let’s be perfectly, brutally frank here: If they want to do this, I’d tell Turkey that NATO’s “an attack on one is an attack on all” principle will not apply here. You do this, we’re not getting into a nuclear war for you. This is not self-defense.
As for Saudi Arabia, I’d have a pointed conversation about the price of oil and their budget. However, as much as they think the price of oil will increase if there is a war in Syria, their economy is still in bad shape, and the US could total it tomorrow if they chose to–simply through Treasury sanctions. Likewise, an end to parts and ammunition for their military would curtail them.
These are stern, even radical steps. Avoiding a war with Russia justifies them. There is nothing in Syria worth the risk of having all these armies stomping around, especially after Turkey has already shot down one Russian plane.
That would be illegal under NAFTA, and long odds under the WTO. Certainly under TPP, if it’s in force then.
Someone should straight up ask Trump if he’s willing to leave those treaties.
If he is, and the Dem candidate is not, he will win the election.
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Once more, Trump is a nativist populist. If he wasn’t so racist and for torture, I’d be pushing him hard. As it is, he’s beyond the pale, but a lot of working and middle class folks aren’t going to give a damn.
I will not pretend to be saddened. He caused a great deal of unnecessary suffering. Cruz is calling for Congress to stall Obama so the next President chooses him, thus making it more likely Obama does choose the next Justice (Congress hates Ted Cruz.)
I have no idea who is on Obama’s short list. We’ll see plenty of stories about that soon enough. Sotomayor, his first nomination, has been a reliable member of the liberal bloc of the court, but is hardly radical.
(Source: Supreme court justice Antonin Scalia dies at 79).
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Update: I see that McConnell is also saying this. I guess it will the GOP line. They have really enjoyed having that reliable five judge conservative majority on the court.
Sanders statement:
Shorter Sanders: I’m sure there are people who mourn Scalia and I feel bad for those people.
Update 2: It’s worth noting that if a new Justice is not appointed until 2017, most issues which would have split 5-4 cannot be settled and the lower court ruling will stand.
44.6 for Hillary. 44.3 for Bernie. Statistical dead heat.
More interesting is that a month ago Sanders was at 30.7% vs. Clinton’s 50.3%.
Internals show men do more go for Bernie. Under 30s go massively for Bernie, women are only slightly for Clinton. Blacks are -20 for Bernie, so that’s a major challenge for him.
But this is why Clinton’s campaign is lashing out. Bernie is now officially a threat
I agree with Pachacutec that Bernie looks stronger in a general than Clinton. The more people hear of his message, the more they like it, and Clinton has high fixed negatives.
Trump vs. Sanders. Socialist v. Nativist Populist, looks likely.
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Of course they admire each other and are friends.
And I’m not just referring to Clinton’s vote for Iraq, I’m referring to her involvement in Libya and Syria.
As for Kissinger, in addition to his genocide in Cambodia and Laos, amongst his other crimes is Kissinger’s support for Pinochet in Chile.
I want to remind you of something about Pinochet’s Chile.
Hillary Clinton and Henry Kissinger both belong in the dock at a war crimes trial.
I believe in humane treatment of prisoners, however. Since they are friends, they can be cellmates.
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Update: I want to say one more thing about this. That Clinton thinks this is acceptable, that it is not shameful to embrace Kissinger, shows just how little not just Clinton, but American elites, think of human rights and war crimes. Clinton simply can’t imagine why people are so upset over Kissinger, all the victims somehow don’t register with her
Now, it is possible that Kissinger is a great thinker one must listen to, despite him being an abominable human, but in such cases one doesn’t publicly embrace him.
Ok, this was triggered by a Politico article (I know, Politico), which included this throwaway line, “The economy has largely recovered.” The conclusion to be drawn is that a lousy economy can’t have anything to do with young people loving Bernie.
Wrong.
Here’s the thing: People take the unemployment rate as meaning something to ordinary people, though it almost never does. Here’s the unemployment rate chart:
Unemployment Rate to Dec 2015
Now, looking at that you could be forgiven for thinking, “Ian, the economy really has largely recovered. Are you on crack?”
No Sir, I am not on crack. I am too poor to afford crack.
Here is the ratio of employed people to the population:
Employment Ratio to Dec 2015
Oh.
There has been no meaningful recovery in the actual percentage of Americans employed. The jobs do not exist. The unemployment rate is what it is because people have stopped looking, and what the unemployment rate measures is the percentage of people who are actively looking for a job, as compared to the people who are employed (the labor force).
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Now here’s a nifty graphic from the New York Times to round out the picture. Less people are working, as a percentage of the population, AND those who are working are earning less money:
Wages by Decile from 2006 to 2014
The economy sucks. If you aren’t in the top 10 percent, it never recovered. It didn’t mostly recover, it mostly didn’t recover.
I will discuss what unemployment really measures in a later article. It doesn’t measure…unemployment.
