Some somewhat evidence-oriented thoughts on #BernieOrBust (Kevin Drum Addendum)

[I added a section at the end about a provocative Kevin Drum blog post, if it were its own post, I would have titled it “Is Kevin Drum Conning Us Youths?”]

Will try to be succinct. I wanted to write up at greater length my thoughts on this article about #BernieOrBust. There are some tangential points, like the bizarre claim that Sanders supporters are dominated by white males… even though young women are actually more likely to vote for Sanders than young men, meaning that the difference in support is almost entirely about age, not gender or race (Matt Bruenig has addressed these tendentious arguments over and over again). Here we go: Continue reading

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How-to: Breaking up big banks with Bernie

A bunch of pundits and political commentators have written and talked about this Bernie Sanders interview with NY Daily News. They, apparently, read the transcript and freaked out because they say he doesn’t seem to think deeply or know anything about income inequality and breaking up big banks, his signature issues!

Not so, says Mike Konczal, a Fellow at the Roosevelt Institute whose expertise is in finance and financial reform,

Bernie Sanders gave some fairly normal answers on financial reform to the New York Daily News editorial board. Someone sent it to me, and as I read it I thought “yes, these are answers I’d expect for how Sanders approaches financial reform.”

You wouldn’t know that from the coverage of it, which has argued that the answers were an embarrassing failure. Caitlin Cruz at TPM argues that Sanders “struggles to explain how he would break up the banks” and that’s relatively kind. Chris Cillizza says it was “pretty close to a disaster” and David Graham says the answers on his core financial focus is “tentative, unprepared, or unaware.” Tina Nguyen at Vanity Fair writes that Sanders “admits he isn’t sure how to break up the big banks.”

This is not correct. Sanders has a clear path on how he wants to break up the banks which he described. Breaking up the banks doesn’t require, or even benefit from, describing the specifics on how the banks would end up, neither for his plans or the baby steps Dodd-Frank has already taken.

Generally, I believe Sanders would benefit from taking the important points Clinton has made in expanding how to tackle the financial sector as a whole. But bad arguments are bad arguments, and the arguments against Sanders here are bad.

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What Does Capitalism Even Mean: Thinking About Scandinavia and the U.S.

Matt Bruenig, a favorite economics and policy writer/Twitter troll of mine, wrote up some analysis of the continuing comparison between the U.S. and Scandinavian countries. This has been particularly salient because Senator Bernie Sanders’ Presidential campaign is arguing for policies that are popular in Scandinavian countries (Secretary Clinton is arguing for many similar policies, though often with a more conservative approach, while bashing the idealism/childishness of Sanders).

In this post, I just want to highlight three topics, first: (1) employment and work hours; and (2) innovation. Breunig is the leading crusher of Very Serious arguments (especially from Brookings) about how Scandinavian countries are less innovative or more lazy, and suffering under high taxes compared with the hard-working entrepreneurial U.S. Of course, a cursory glance at the evidence shows that the story is not the simple, and probably just wrong. I also wanted to (3) highlight a think-piece about how people in Scandinavian countries might to think about their welfare state.

On employment and work hours, Scandinavian countries tend to work fewer hours per worker, but when you look at hours per citizen the difference is negligible. This seems to be because prime-age people 15-64 are less likely to be employed in the U.S., while elderly people are far more likely to be employed in the U.S.

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Searching for Inequality in Political Power

I loved this lecture by UC Berkeley Political Science Professor Paul Pierson (it is well worth a read).

He highlights the difficulty in measuring inequality in political power. Most studies of political power are about political issues over which there is significant open contestation. In other words, we only measure the political controversies we can see. This is a core debate over how to view American political economy.

The argument over pluralism remains sufficiently familiar that the broad contours need only to be quickly recapped here. Pluralists such as Dahl and Lindblom maintained that power was widely dispersed in modern polities (Dahl 1961; Dahl and Lindblom 1953). They stressed that the existence of a variety of political resources and the potential access to diverse venues of political activity (especially in the American separation-of-powers system) prevented the concentration of power. Influence was not equally distributed, but it was widely dispersed.

Critics countered that this analysis rested on an overly narrow conception of power (Bachrach and Baratz 1962; Crenson 1971; Lukes 1974) – specifically, forms of influence that were visible in open contestation over political alternatives. The anti-pluralists insisted that this open contestation was only the “first” dimension of power. They argued that there were other dimensions that were less visible but more significant. Typically, these are called the second and third dimensions.

The second dimension refers to cases where competing interests are recognized (at least by the powerless) but open contestation does not occur because of power asymmetries. This dimension, encapsulated in the overarching term mobilization of bias, was more than a bit fuzzy in most formulations. It can usefully be divided into two quite distinct components, which highlight different dimensions of potential influence. The first is what can be termed “non-decisions.” It refers to the ways in which formal or informal decision rules may favor some actors’ concerns over others. …

The other central mechanism in the second dimension is that of anticipated reactions. Here, too, potential issues are “organized out” of politics, but the way in which this happens is fundamentally different. Sometimes open contestation does not occur because the weaker actor rationally chooses not to engage in light of their weak position. Contestation is costly, both because of the need to expend resources and, if you are weak, because of the prospect that the powerful will retaliate. To underscore what we are talking about, retaliation can mean the loss of a job, social ostracism, or physical violence against you, your family, or friends. Given these costs, choosing not to act may be completely reasonable if defeat seems likely.

The crucial point is that the decision not to contest takes place in the shadow of power relationships. Looking at “open conflict” reveals a tiny sliver of power, and a misleading one at that. If a slave chooses not to rebel, we should not take the absence of open contestation as a sign that there is no power involved. Again, this dynamic is widely appreciated in some modern contexts – anticipated reactions feature prominently in standard game theoretic analyses (such as those employed in the study of international bargaining, or the analysis of presidents’ veto powers). It is not, however, well-integrated into core understandings of political influence in democratic polities, because it has limited relevance to the act of voting that is seen as the cornerstone of these systems. Voting is private, and for the most part voters don’t have to worry about the reactions of the powerful to their use of the franchise.

Finally, critics of pluralism pointed to what is typically termed the third dimension concerns ideational elements of power. Powerful actors can gain advantage by inculcating views in others that are to their advantage. In essence, this involves what Marx termed false consciousness. Those with influence over the media, schools, churches, think tanks, or other key cultural institutions may foster beliefs in others (about what is desirable or possible) that serve the interests of the powerful. Again, what looks like consensus on the surface may reflect underlying inequalities of influence.

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Flavors of Protectionism

I constantly need economist Dean Baker to remind me of the absurd limits of our definition of the Overton Window and that the state of economic policy is not natural, but determined by a set of conscious (and subconscious) decisions.

The “free” trade agreements sold in the U.S. were always meant to create inequality, and they themselves are underpinned by actively protectionist policies. The hot new thing in the election cycle is Trump, Sanders, and now maybe Clinton bashing past trade agreements, like NAFTA. Some economists and elites freak out about this rhetoric, but what they don’t tell you is that their problem isn’t protectionism in general — it is protectionism that targets less well-paid and less well-educated workers. Because our system does a massive amount to protect highly-paid professionals from international (and internal) competition.  Continue reading

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Private charity taking over the government’s role: Fantasy and fallacy

This article by Mike Konczal combines politics, history, philosophy, sociology, and economics to explain why the idea that volunteer-based private individuals and charities could do a better job helping the poor/providing social insurance than the government is based on historical fallacies and ideological fantasies. He focuses on ubiquitous risks facing members of nearly any society,

[what] progressive economist and actuary I.M. Rubinow described in 1934 as the Four Horsemen of the Apocalypse: “accident, illness, old age, loss of a job. These are the four horsemen that ride roughshod over lives and fortunes of millions of wage workers of every modern industrial community.”

I think one of the most compelling points for people who care deeply about private charities is that government-provided public services and social insurance can actually allow private charities to become narrow, flexible, and, ultimately, more effective by allowing them to focus on specific issues and groups.

In our real world, attempts at private social insurance have not helped those who need it most and can easily become drivers of inequality by subsidizing the rich (and even hurting the poor!). The two most obvious Horseman we’ve failed to deal with are illness and old age. Our health insurance system is a bloated, private-sector mess, which still often subsidizes the rich and healthy at the expensive of the poor, unlucky, unemployed, and/or sick. Obamacare has made significant improvements, but, I believe, we cannot actually fix until health insurance is socialized.

Our social insurance system for old age, in the form of Medicare and Social Security, are the most effective anti-poverty programs in history. But we had relied upon private-sector defined benefit pension programs to provide better standards of living for seniors (not just raw poverty-prevention), unfortunately defined-benefits are going into extinction, and to replace them we have tried to use defined-contribution or 401(k)-type programs. This post by Ryan Cooper at The Week highlights Economic Policy Institute research about the failure and insufficiency of the 401(k)-based retirement saving system that has left millions of seniors who are about to retire with almost nothing to supplement their only source of future income, Social Security. The logical conclusion, though I’m sure many people won’t come to it, would be to expand Social Security benefits (instead of cutting them) to continue to keep seniors out of poverty and ensure them decency and dignity living to old age in the future.

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Obama Doctrine

Jeffrey Goldberg’s article in the Atlantic about President Obama’s foreign policy is awesome. I can’t help but appreciate the deep thoughtfulness with which the President approached the world and our country’s place in it.

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