clinton center v soft left
here's a nice
soft white bread loaf
to slice into 10k pieces
its by a guy named
josh bivens
god knows why
but
i picture him playing
a pan pipe
==================
Matt Yglesias comments
on the recent debate between
Jeff Faux and Gene Sperling,
" he couldn’t find enough differentiation
between them, and, wondering where all
the vitriol between the Clinton progressives
and paleo-lefties like myself comes from"
I think there are essentially
four main areas of difference.
(1) Scale
(2) Strategy/Priorities
(3) Primary vs. Secondary Distribution interventions
(4) Macro policy: full-employment or budget balance?
The first (scale) is pretty easy:
I'm quite sure that I want to see
more government dollars
going to provide public goods and social insurance
than does (say) Gene Sperling,
our exemplar of the center-left.
I’d like to see government
take over financing of a basic
but not stingy health care package for all,
take up part of the growing shortfall
in private pensions,
and spend a lot more on
education
(especially in early childhood)
and
worker adjustment programs.
My total wish-list
comes to about seven percentage points
of GDP
over and above what we currently spend
.
If it was all about scale, however,
one imagines the heat would be less.
the center-left would restrict
much of their interventions
to roughly the lowest quintile
of the income distribution,
whereas the left would go higher.
This is probably due to our different readings
of recent economic history.
The left looks at the last 30 years
and sees stagnant or declining wage growth
up to the median and above until 1996.
For a brief and great period in the late 1990s,
wage-growth was decent across-the-board.
Since the 2001 recession,
the earlier pattern has re-asserted itself.
The market, in short,
has left behind a lot more
than just the bottom quintile,
and government needs to step up
in a bigger way.
---------------------------
The strategy is mushier
but is I think the source of much
of the friction between the two lefts.
During the Faux/Sperling debate
, a particularly contentious subject
was the fate of the Clinton health care plan.
The Clinton health care plan
was designed to minimize
the visible hand of government
and to preserve the role
of insurance companies and employers
in acting as intermediaries.
The plan’s boosters would argue
this maximized its political prospects;
critics of it from the left
argued that this froze them out
from the beginning
and robbed the push for universal care
of enthusiastic support
from its most natural constituencies.
the push to pass NAFTA
before embarking on serious efforts
to move health care
was subject to a similar debate.
Proponents of NAFTA-
first argued that it showed
that the Clintonites were bi-partisan
and pro-business,
which they hoped would inoculate them
from later charges
of wanting to impose the heavy hand
of government in health care
when this next debate began.
Critics from the left
argued that it forced unions
and other activists to spend money
and time fighting NAFTA
when they could have been fighting
for health care.
By the time NAFTA was over,
much of universal health care’s constituency
was angry and/or had their resources depleted
from the NAFTA fight.
The common thread in all of this,
from the left point of view,
is that the center-left wing relies
on having responsible legislative partners
in the GOP with which to do business,
while taking its own left wing for granted.
Our side would argue that this is
(political, not just substantive) folly:
the GOP is not a responsible legislative partner,
and insisting on treating it as such
will lead only to disappointment.
Further, "reaching out" to moderates and conservatives
to pass policies that the center-left finds desirable
and that the left does not
would be fine,
but only if this was done
after the core concerns
of both groups were addressed.
I don't like NAFTA,
but I could live with a well-written trade agreement
with Mexico and Canada.
But even a decent agreement
that led to increased trade flows
would be a drag on the living standards
of lots of workers I care about
so, I would insist on this agreement
to come only after
(or contemporaneously with)
a ramping up of social insurance
and worker adjustment programs.
We all know the story about trade:
creates more income for the country
as a whole,
but it redistributes more income
than it creates,
generally to the detriment of blue-collar/non-BA labor
. It could be win-win
for all if compensation took place.
The Clinton agenda put the redistribution first
(NAFTA) and then tried
to insure some compensation (health care).
Is it any surprise
that conservatives went along with the first
and killed the second?
This priority-setting is a major source
of the friction between the two wings.
---------------------------------------
The next point essentially comes down to:
should policymakers be concerned about
the primary or secondary income distribution?
The primary distribution is the pre-tax
and transfer array of incomes,
while the secondary distribution
includes the effect of taxes and transfers.
When it comes to offsetting
the insecurity and wage losses
inflicted on too many American workers
in recent decades,
the center-left believe
that the sole intervention point
is the secondary distribution.
In their view, if the market
is generating “too much” inequality,
the government can offset this
through redistributive fiscal policy.
Direct market interventions
(say the expansion of union power
or higher minimum wages
or the recent “Wal-Mart” legislation
that forced it to provide health coverage
for its workers in some states)
are often frowned on by this group.
As an economist,
I freely grant that relying only on the fisc
to alleviate inequality
is the approach that treads most lightly
over efficiency concerns.
But this strategy makes U.S. workers and households
far too reliant on the single instrument
of fiscal redistribution:
as much as we love (say) the EITC,
we can’t ask American workers
to rely exclusively on taxpayers
and politicians continually
ratcheting up their willingness
to offset the degradation
of the wage structure and insecurity.
Economists generally recognize
diversification as a useful strategy
in insulating living standards from risk:
we would, for example,
argue against workers having a 401-k plan
dominated by the stock of the companies
for which they work.
In a similar spirit,
the pursuit of better outcomes
for American workers should not be restricted
only to interventions
in the secondary distribution.
In a textbook world,
these are the optimal way
to insure more equitable distribution
of income and improved living standards
across-the-board.
We don’t live in that world.
-----------------------------------------
Lastly, there's macroeconomic policy.
The center-left celebrates
the full-employment of the late 1990s
but hasn't shown that they appreciate
the benefits enough to really fight for them,
or at least consider them on the same level
of importance as their main macro target:
budget balance.
The Clinton Administration struck a bargain
with the Greenspan Fed --
aggressive moves towards budget balance
would be rewarded with loose monetary policy.
This bargain combined with some short-term good luck
(the stock market bubble)
to get us to full-employment.
The cause of this gaining of full-employment
was a happy accident,
but, the consequence was great
(at least until the bubble broke,
but, hold that aside for now).
Finding a sustainable (this time) path
back to full-employment
is a paramount policy goal of the left,
but not the center-left.
When the 2001 recession began,
left economists
like Wynne Godley and James Galbraith
argued for massive stimulus
(or stabilization) packages.
They were sneered at (well, actually ignored)
by too many center-lefters
on deficit-worry grounds
Of course, we got the deficits anyway,
courtesy of Bush Administration tax cuts
that spent the money
with almost no discernible effect
on growth or employment.
To be clear:
the left isn't for big deficits
all the time.
We're for big temporary deficits
as a means to reach full-employment,
and tolerant of chronic-but-sustainable
deficits in the long-run.
To sum up,
in the TPMCafe debate over Sperling’s book,
Jason Furman asked the right-on question
of what happens when progressive values
collide with efficiency?
I can’t speak for all of us on the left side,
but for me it’s a no-brainer:
efficiency should give way.
This preference isn’t based on ignorance
of the cost/benefit calculus of this stance.
Rather it’s grounded in the knowledge
that the US economy has demonstrated
no problems over the past decade
in generating productivity growth
and income, but it has demonstrated big problems
in making sure it’s equitably distributed.
You attack the problem in front of you,
and, efficiency isn’t it.
Posted by pinky at March 3, 2006 07:55 AM