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12/16/2003 Entry: "A HELPFUL GUIDE TO WHAT'S LEFT: ECONOMIC POLICY"

A HELPFUL GUIDE TO WHAT'S LEFT: ECONOMIC POLICY.A HELPFUL GUIDE TO WHAT'S LEFT: ECONOMIC POLICY. There is a merry little thread over at Matt Yglesias on the leftness of blogs in general and left bloggers in particular.

We should dispense with a straw man -- the idea that sharpness of partisan rhetoric has something to do with how left someone is. The implication here is that if you call G. Bush a bad president, you're a moderate, whereas if you call him an S.O.B., you're radical. No no no. Political classification ought to go to substance and policy, not rhetoric. A better example is that if you criticize Bush for unbalancing the budget, you're moderate (in either conservative or liberal terms). If you attack him for failing to double non-defense spending for human needs, then you're more to the left. Democratic centrists can be pretty ferocious when it comes to partisanship, especially with an election at stake. In principle, from a moderate standpoint you could reject every policy undertaken by the Administration.

In general what should be called left v. liberal in economics comes down to market intervention. Liberals support tax and transfer policies and public spending but (relatively speaking) shy away from market regulation, especially in the realm of trade. Liberals think you should balance the budget over the business cycle, uphold a minimum wage, expand environmental protection, and absolutely leave trade alone. They also think you should let the Federal Reserve do whatever it likes, to preserve its "independence" (sic) from politics. For liberals, labor is just another "interest group" -- something to superintend and care for, given the limits implied by fiscal moderation, free trade, and Fed supremacy.

The constructive leftist is amenable to deficit finance, as long as debt does not grow too fast. She is more amenable to regulation and a European-style public sector (i.e., 40 percent of GDP, rather than less than 30% as in the US). She would like to incorporate social clauses on human and labor rights and environmental standards into trade agreements. She would like to restructure the Fed towards democratic norms. She looks to labor for industrial action in defense of economic justice, not obedience to Democratic Party orthodoxy.

The liberal is able to reconcile notions like labor, women, and race under a general rubric of benign indifference. All must be treated fairly, where fair is defined as adherence to anti-discrimination laws. Such laws tend to be limited to the overt and superficial. You have a right to stay in any hotel you like, but you have no right to an ability to afford to stay in any hotel.

By contrast, the leftist elevates labor to a central place in social transformation and wrestles with fundamental sources of inequality rooted in race and gender. Obviously, important problems remain to be solved. The left chooses to be preoccupied with such problems. The liberal is more resigned to the status quo, mostly I would say out of a sense of pragmatism and pessimism, not bad faith.

Liberalism was corrupted by the Clintons. Under Clinton, deficit reduction and so-called free trade were transformed into the be-all and end-all of economic policy. This was extreme, though at least it was heartfelt. But there was also the advancement of policies for narrow political ends. Welfare reform is the best example. There was also demagogy about shrinking government; in reality, civil service positions were cut while contracting grew apace.

By this standard, I would classify almost all of the big left-of-center blogs as liberal, not left. "And there's nothing wrong with that . . . " I am not trying to expel anyone from "the movement" or call anyone fake. The movement is mostly liberal to begin with (including most of the kids who go to anti-globalization and anti-war rallies). I would like people to see the difference, the better to comprehend what is truly left, as opposed to what sounds left.

UPDATE: Another thought I should have included. When it comes to inequality, liberals tend to oversell equality of opportunity, in two respects. First, they tend to overestimate the extent to which better education actually expands opportunity. This question lends itself to empirical study. There is no question that anyone is better off with more rather than less education, and nobody left of center would be against more resources for education. But there is at least some evidence that more education does not close gaps by race or gender. The second respect is that money that improves schools is inadequate, in light of disadvantages outside of school that widen inequality of opportunity. There is evidence for this as well.

By contrast, the left views poverty and inequality as more a question of power. One person's want is another's advantage. There was a great program along these lines on public TV some years ago. Unionization is not seen as social policy by liberals, but as the study linked to earlier today shows, market wages for full-time work leaves many poor. Unionization is an anti-poverty program.

The left is criticized for favoring "equality of result" rather than opportunity. The implication is that those so favored are undeserving, unqualified. This assumption is used to prove itself, in rebuttal to actual demographic data on qualifications. A fair selection process for jobs or other opportunities would roughly conform to demographics (including factors going to qualifications, such as education). When results are observed that diverge radically from what we could expect, there is a case for government intervention. Fairness or its lack derives from where the power to control selection is.

Replies: 31 comments

Dear dear Max,

I do love reading your Blog. Keep it coming and more more more.

Jennifer

Posted by Jennifer @ 12/16/2003 03:57 PM EST

Thanks for this excellent post. Hopefully people will pay attention to it.

Posted by Al-Muhajabah @ 12/16/2003 04:12 PM EST

Y'know, it probably is a good observation that moderates ARE by far the most fired up over Bush. Look at the two big issues of the Bush Presidency, the fiscal state and the war in Iraq:

Fiscal State

Liberal: "Oh my god oh my god OHMYGOD look at those &*($ing deficits. We finally loosened the grip of the Reagan debt monkey from our back and here comes this silver-spooned a-hole and puts us further back than ever. I can't #$%&ing; believe it. It will take another 99 freaking generations before the till has recovered enough to even think about fixing transit, school, or our infrastructure."

Leftist: "Ah, money schmoney. Take care of people today and the future will take care of itself. My only problem is how Bush is spending it, not the sums involved."

War In Iraq

Liberal: "Jesus Christ he's tied the entire US Army down in Iraq, he's got an out-of-control bloodfest with people of all nations colors and creeds buying the farm daily, he's lost focus on OBL and he's breeding new terrorists like rabbits."

Leftist (waving a copy of Zinn's book): "I'll admit that they have taken it up another notch, and are certainly more blatant about it, but Clinton bombed lots of places too and you don't think that created terrorists? I don't think there's much evidence that an Al Gore presidency would be a gift to world peace, either. You may argue with me over Nader's "the two parties are indistingushable" contention, but I dare you to argue that what gap there is isn't at its narrowest when it comes to foreign affairs, esp. bombing countries full of brown people. I, in fact, could give the Bushies some bonus points for advancing American Imperialism directly with US troops for a change, instead of paying some poor Third Worlders to do the dirty work as the 'realists' would have."

Now I see why Dennis Kuchinich comes across as way happier than Howard Dean. I had just thought it was because he was a moonbat.

Posted by a different chris @ 12/16/2003 04:43 PM EST

OK, if possible, I'd like to get an economist's response to the following quote (never mind where it's from, people tend to freak out over it; oh, all right, here it is ):

"The outstanding, public held debt of the United States is the lowest relative to GDP of any major country in the world...How come?

"Three answers:

"First answer: From Truman to Carter all our Presidents were adverse to deficits. Reagan was not!

"Second answer: our economy has grown steadily from 1945 to now and the debt is relative to our uninterrupted growth! Our economic growth has almost outpaced our debt accumulation!

"Third Answer: Socialist governments and countries are dominant in this world (France, Canada, U.K., Germany, Italy, Spain, Australia, New Zealand, Philippines, Sweden, Finland, Norway, Denmark). They have all borrowed to the hilt!

"That explains why the Euro has a debt limit: they are already borrowed up to the hilt!"

As always, I apologize for lowering the level of discourse.

Posted by David @ 12/16/2003 04:50 PM EST

While Max's post is dead-on, he is unfortunately going up against 20-odd years of rhetoric and ad campaign from Republicans and conservatives. Much of America has been effectively brainwashed with the notion that anything even slightly left of Reagan is equivalent to Marxism.

Oh, and Max left out one important point about liberals: Many (perhaps most) see taxes as the fee we all pay to live ina civilized society. It is the duty of the citizens to contribute to the commonweal for things that benefit all of society (roads, sewers, garbage collection, police, etc.). (This as opposed to many on the right who view taxes in any form as theft, as see no obligation whatever to contribute to society--at least beyond endless moralizing about the private behavior of others.)

Posted by Derelict @ 12/16/2003 04:57 PM EST

I think there's also a difference in the degree to which liberals and leftist think markets fail.

Posted by praktike @ 12/16/2003 05:10 PM EST

Forgot this from above quote:

General government gross public debt: % of GDP 2002:
69.0 % EURO vs. 34% U.S.

Posted by David @ 12/16/2003 05:14 PM EST

Thanks, Max, for a refreshing reminder that I'm not a liberal. So glad you're here!

Posted by Nell Lancaster @ 12/16/2003 05:25 PM EST

There's no such 'thing' as non-intervention in the market. Tax and transfer policies regulate markets in a different manner than labor laws, say, but they regulate markets nonetheless.

Leftists elevate labor as much due to the asymmetries of power due to the system of property and contract law as they do gender and race. This has something to do with the claim, pace Joan Robinson and many others, that ownership in itself is not productive and as such should not be a source of social [class] power at all. The return on 'capital' thus represents uncompensated labor.

Liberalism was corrupted long before Clinton was born.

Posted by Robert Hale Jr. @ 12/16/2003 06:03 PM EST

Max-

Ran into Nathan Newman at a party recently -- he was deeply offended when I suggested that you were to his left, for essentially the reasons you give here. Of course, he's not one of the bigger left of center bloggers ... and I was still right.

A different chris-

You've performed the rare and admirable feat of accurately summarizing views you evidently disagree with. I'll take both of your "left" stances as written, except I'm not much of a Zinn fan.

Posted by jw mason @ 12/16/2003 07:10 PM EST

I thought different chris did a brilliant job (adding to Max's on domestic policy) on the difference between liberals and leftists, but I couldn't tell what side he was on. Which is to his credit as a writer.

And as someone a bit closer to the left than the liberal, I was a little unhappy with the antiwar liberals who said "We don't have to invade Iraq because sanctions are working." There's moral clarity for you.

Posted by Donald Johnson @ 12/16/2003 07:53 PM EST

JW -- Nathan, or as I like to call him, "NEWMAN!", is clearly a moderate social democrat. I think he would have a picture of John Sweeney on his mantlepiece, if he had a mantlepiece. I would disagree that his blog isn't 'big,' although I noticed his Alexa ranking was posted in scientific notation, the number was so large. That notwithstanding, I think his blog is important, even if nobody else does.

Nathan, excuse me, NEWMAN! is a fine source on labor issues and seems to have been in every important activist struggle that has transpired over the past 15 years. By contrast, I can barely get off the couch to find my remote. (He is also an important progressive authority on telecomm issues.)

But sadly, you are right. I am way to NEWMAN!'s left. The main reason is his unfortunate embrace of fiscal conservative budget-balancing orthodoxy. I won't go into the unpleasantness of his defenses of Bill Clinton.

I once said to Nathan, "You never concede a point."

He replied, "That's not true!"

Posted by Max @ 12/16/2003 08:59 PM EST

It's pretty discouraging for me. I can water down my beliefs a lot and still be an ultra-leftist. I'm really worried that the middle has permanently shifted. Matt Yglesias is a super-smart kid, but at best he's just plain unaware of (or indifferent to) a lot of stuff.

The ones who I have the hardest time with are the moderates who are not aware that no moderate could knowingly support Bush, and the liberals who refuse to get upset.

Posted by zizka @ 12/16/2003 11:57 PM EST

Well put Max. So when do we start the mass movement to repeal Taft-Hartley as I've wanted all these years?

Posted by Barry Freed @ 12/17/2003 12:38 AM EST

Oh, and just to tie in the labor angle with the war in Iraq check out Juan Cole's post Anti-Union Laws and Privatization in Iraq. Cole references this article by David Bacon.

Posted by Barry Freed @ 12/17/2003 12:44 AM EST

Just wanted to say that pierre bourdieu did some nice work showing how education fit into mechanisms of social reproduction. thinking of "les heritiers" specifically but other stuff touches on it.

and yeah, the lack of true lefty blogs is deplorable. gotta agree with mr. z that most of what passes for leftist just ain't. sometimes i think of doing my own...

Posted by che @ 12/17/2003 12:53 AM EST

Thanks guys (blush) I wrote it mostly to amuse myself and I'm glad others got a chuckle.

David, nobody's answered you (mostly because you're wildy OT) and I sure don't know nuthin' about European debt.

But I *was* alive and living in the US of A in 2002 and I swear to God I remember that the GDP was mid-10 trillion and the debt level was slightly over 6 trillion. And I don't remember any states crowing about any surpluses at that point, either- and whatever they had would have been swamped negative with Califonia's case of post-Enronitis.

So HTH does 6 trillion/10 trillion compute to 34%?? Puts the entire post into serious suspicion, for me.

Posted by a different chris @ 12/17/2003 10:58 AM EST

different chris is right, as larger chunks of the European economies fall under government than in the USA.

In theory this should be bad, though they seem to have made it work for themselves somewhat.

Posted by wellbasically @ 12/17/2003 11:36 AM EST

"So HTH does 6 trillion/10 trillion compute to 34%?? Puts the entire post into serious suspicion, for me"

Yeah, but that's because the Europeans are honest about the pay-as-you-go nature of their retirement plans and we pretend that we've been "saving" in the SS Trust. If you eliminate the 50% of the debt represented by Social Security, that comes out as around 30%.

Do US states have significant debts? They may have major deficits right now, but don't most of them operate under more strigent debt rules than the Feds?

The debt-financing of social welfare is the one facet of leftist thought that I can't get behind - why not finance it through today's taxes rather than tomorrow's? I can understand if the program is an "investment" of some sort - NIH, NASA, DOTs, I'd even be willing to accept education in this category. Why is deficit financing an axiom of Left thought?

msw

Posted by msw @ 12/17/2003 01:16 PM EST

Amen to you Max, if I was believer.

Posted by david @ 12/17/2003 01:31 PM EST

Max -- that's funny, when I told him he never concedes a point, he said "Yeah, maybe you're right."

Posted by Jeremy Osner @ 12/17/2003 02:10 PM EST

Thanks for the short course, Max. A brilliant, clarifying post.

Posted by Ross @ 12/17/2003 04:56 PM EST

Bureau of the Budget Debt sez 6.9 trillion, currently this month. GDP 2002 was about 10.4 trillion, from Bureau of Economic Analysis.

I'm sorry, Dave.

Posted by Rich @ 12/17/2003 05:01 PM EST

For what it's worth, I don't have any bone to pick; I just want to see how folks who understand this stuff will react.

Posted by David @ 12/17/2003 06:42 PM EST

Who is Jennifer and why does she love you?

Posted by Tom Street @ 12/17/2003 07:28 PM EST

US State and Local debt topped $1.4 trillion in 2002, so you can add that to the $6.9 trillion racked up by the Feds.

Posted by C Bryan Lavigne @ 12/18/2003 08:41 AM EST

Hi Max -- I like your political taxonomy, with the caveat that those you describe as "liberals" don't always seem to embrace that term. The centrality of labor to the left is spot on. Also, why do you think that "anti-globalization" activists are best described as liberals, not leftists? This certainly isn't my experience. An active hostility to the supposed benefits of the market -- "free" or otherwise -- is a commonly shared perspective.

Posted by Mark Rickling @ 12/18/2003 10:54 AM EST

This is one of the best posts I've read on the nature of the politics of economics. After the collapse of the Soviet Union, Clinton-style liberalism seemed to wholly supplant every other theory. It took a Bush administration to remind us that economic liberalism--particularly in down times--is far from a magic bullet.

Posted by Emma @ 12/18/2003 03:02 PM EST

"Liberalism was corrupted by the Clintons. Under Clinton, deficit reduction and so-called free trade were transformed into the be-all and end-all of economic policy."

Well put. Although it might be more appropriate to say Progressivism instead of Liberalism. Nonetheless, 1993 can be said as a watershed year for whatever "ism" you choose to use. By pushing NAFTA and abandoning both a stimulus package and a middle-class tax cut, the Clintonites broke with both economic populism and Keynes. Only now is the base of the party, free from the spell of Clinton's personality, rebelling against this break with party principle. I hope the result will be to discard "third-way Clintonism" onto the ash heap of history.

Posted by Paleo @ 12/18/2003 04:24 PM EST

These are not the rantings of an economist. Perhaps a sociologist.... political scientist... Not an economist...

Posted by Wha? @ 12/30/2003 11:32 AM EST

free people finder

Posted by free people finder @ 06/10/2004 12:16 PM EST

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